I've been in the modular building business since 1988. In 2022, I can candidly say that there is a significant trend led by large modular building companies to quote significantly high "buyout" prices to current renters. This trend is nationwide and seems to include every type and size of modular office, mobile office trailer, and portable classrooms. The big question is why?

For the sake of this post being informative but not reading like a long-term lease agreement, I will keep to the facts and figures with the hope that some readers will take away a few good ideas and make a smart buyout decision if necessary. 

Here's why your modular office trailer buyout price is really high.
The large modular building dealers in the United States have thousands of modular buildings, office trailers, and portable classrooms in their fleets. Keeping a steady flow of rental income from these structures makes for a very profitable business model and a very valuable company in the eyes of investors and bankers. So, there is very little incentive to sell off an asset for a depreciated price if it has long-term earning potential from the same renter or a new customer. The only viable buyout option for the owner is to sell the asset to the renter for the same price it will cost to purchase a new unit. Boom! 

So, let's say you have been renting a 24'x60' modular office trailer for the past three years, and it's time to make a financial decision. Of course, you prefer to own the structure instead of paying more rent, so you call your modular building supplier and request a buyout price. In response, you receive a proposal that shocks you and your CFO. But, you can't afford to disrupt the business by replacing the office and displacing people. Now you start to see how narrow your options are, and so does the supplier. 

In some cases, I have dealt with situations like this where the tenants actually decided to turn the modular office trailer back in and upgrade to a larger space and a more user-friendly floor plan. Half of the time, these tenants also changed suppliers because they felt as if their business was not fully appreciated and better options were presented by their competitors. 

Are you in the same situation?
If you are considering renewal or replacement of an existing modular office trailer, or several, I suggest that you weigh all the available options. Renewal, return replacement, and possible replacement with brand new modular office space. I would also consider shopping the mid-sized and smaller firms as they have far more flexibility than the larger firms, and would love to win your business.

Your chances are always best if you want to renew the rental / lease agreement for the long term. Keep in mind the condition of the modular office and if it needs to be remodeled or maintained by the owner before you renew. Try to negotiate as much as possible if you are going to sign up for another three to five years. If the modular is in poor shape, be extremely careful that you don't renew or buy out a major problem. 

Here's my recap for you and your management team:

1.) Weigh the options of renewing the rental agreement vs. replacement of the existing modular office with a newer or brand-new unit. 

2.) If you plan to renew the rental agreement, negotiate to have the modular maintained, repaired, and in good condition for the next rental period. Remember, the owner wants it to be in good shape as much as you need it to operate properly. 

3.) If you will return and replace the modular office trailer, be sure to shop around with mid-sized and smaller suppliers. Negotiate the purchase of a used or new modular office and never pay rent again. 

I hope this post is helpful. You can always call me directly at (800) 806-7485 with questions or if you want my assistance in making the smartest facility decision possible. 

This blog post was approved by iModular.com, a GBM Marketing, Inc. web property.