From the CFAI books they say leases should be treated as operaing if basically you don’t use up most of the value of it / own it.
But a ton of companies seem to employ operating leases for real estate that they’ll never really leave. I notice a lot of companies just renewing operating leases every year or two despite holding onto the locations for 10+ years at the very least.
So my question is how are they actually able to do this legally? I understand why they do it. Is it because building lives and values are usually veryyyyyyyyy long?
Any analyst worth his or her salt will capitalize those
A lot depends on the legal framework and the overall legal protection of rights.
Eg in Russia, you will barely find a real estate lease lasting longer than 1 year. The great uncertainty re your future existence (mainly small and mid-size businesses, forget Gazprom) does not allow you to enter into long-term lease relationships.
So the above leases are indeed operating. Though they may be rolled over yearly.
At the same time in the UK most leases are for the very long-term. There is a huge legal framework suporting such leases as well as extensive tax legislation to tax with such leases. Once you establish your business you want to secure the site for the very long, so that no competitor takes advantage of your site when your lease expires and you are thrown away on the street.
Obviously, the UK is a much safer haven for small and mid-size businesses than Russia, where they are hardly existent.