The city of Cypress is found in the northern part of Orange County, CA. At the 2010 census, its population was 47,802, making it a reasonably small city. It has some notable natives and residents, including Scott Aukerman (Comedy Bang! Bang! host), Tiger Woods (golf legend), Matthew Morrison (actor), and John Stamos (actor).
The city is also home to a number of company headquarters, such as Mitsubishi Motors North America, Bandai America, Vans, and Real Mex Restaurants. It is also home to the Los Alamitos Race Course, which is interesting since it is called “Los Alamitos”, which is a neighboring city. The city’s main employers in 2014 were UnitedHealth Group, Cypress College, Siemens, Christie Digital, the Yamaha Motor Company, Vans, Costco, Manhattan Beachwear, Mitsubishi Motor Sales, and The Home Depot.
Cypress Commercial Buildings for Sale & Lease
The economy of Cypress has always been reasonably strong, making it an attractive place for those who want to invest or start businesses. Property investors, for instance, can decide to purchase commercial real estate (CRE) and become landlords. But CRE is equally interesting for people who actually want to start and run a business. For them, a purchase may be a possibility, but they could also decide to lease. Choosing between leasing and buying is a complex decision to make, however. Generally speaking, the recommendation of financial experts is to purchase CRE if you intend to run a business out of it for at least seven years. While this may be so, purchases are not always possible for everybody.
One of the complexities of the decision is finding out which one is more financially viable. For instance, there is more to the comparison than just looking at the monthly lease payment and the monthly mortgage payment. With both options, there are other things to think about, including associated costs, down payments, contract limitations, and more. As a result, if you are considering commercial buildings for sale & lease, you must investigate the pros and cons of both before coming to a final decision.
Cypress Commercial Property for Sale
Whether you want to run a business or make an investment, one way to start examining your options is to look at CRE trends. For Cypress:
- Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% increase during the last quarter, but a 10.5% rise in one year.
- Office properties in the county usually cost around $311.66 per square foot. This is a quarterly decline of 0.2% but an 11.3% year on year increase.
- Industrial properties in the county usually cost around $222.13 per square foot, which equates to a quarterly increase of 2.7% and a year on year rise of 10.9%.
- Retail properties usually cost around $408.88 per square foot. This has not changed over the past quarter. However, this represents a 14.5% rise in one year.
Cypress Commercial Property for Lease
It is quite common for potential business owners to be only able to lease. CRE property is generally very expensive to purchase, particularly because a 30% down payment is required in order to be accepted for a mortgage. And even if a business has that amount available, they usually need it to grow their business and not tie it down in a lengthy mortgage. Hence, a commercial property for lease is more viable, but it is also incredibly complex and quite different from a residential tenancy.
Get a Team of Professionals
Because of this, it is very important that you surround yourself with a team of professionals. The first one you will need to find is a property broker, whose fees are usually paid for by the landlord. Here, immediately, you will see just how complex leasing a CRE property is. There are two types of brokers to choose from, each of which has its own pros and cons. These are:
- The tenant broker, who works mainly on your behalf, ensuring your best interests are represented. However, signing up with a tenant broker means signing a representation agreement, which means that you can only see the properties in the list of the said broker, effectively limiting your option.
- The leasing agent, who works mainly on behalf of the interests of the landlord. However, you can work with multiple leasing agents, which means that you have the opportunity to see far more properties, which increases your chances of finding the one that is most suitable to your needs.
Once you have found your broker and identified a property that you are interested in, you need to help of other professionals. Leasing contracts are fully negotiable on every point, which is something that also sets them apart from residential tenancy agreements. Landlords expect lessees to negotiate on the different points, while at the same time hoping that you either don’t know you can do this, or are not a good negotiator. This is why you need more people working on your side, namely a lawyer who can ensure all of legal aspects, and an accountant who can ensure you can afford the proposal. As a team, they can negotiate on the following points:
- The length and extent of your personal guarantee
- How much you have to pay each month for the lease itself, and what that would be based on
- The type of lease that is most beneficial to you (percentage lease, net lease, triple net lease, or gross lease)
- The duration of your lease and what happens when it comes to an end
- The possible rent increases, what they are based on, and how much is the cap
- Who is responsibility for maintenance
- To what extent you are able to change the inside of the building and who will in charge of those renovation costs
- Whether you can signpost your store on the outside of the building
- Whether you can sublease the space and, if so, under what conditions
- What types of exit clauses are present, should you want to leave early
- Your right to transfer your lease if you were to sell your business to a third party
- Specific clauses such as exclusive use or co-tenancy
- The amount of your security deposit
Benefits of Buying Commercial Buildings for Sale & Lease
There are indeed many points to think about if you are going to get a lease. This shows how important it is to have professionals who will work to ensure that your interests and rights are protected. None of these issues are of concern to you if you were to buy a commercial property for sale instead. In that case, you have a property to do with as you see fit. You are just limited by issues such as building codes, local ordinances, and whether or not your property is listed. When you own a CRE property, you are able to lease it out and become a landlord, sublease some of it if you have extra space, or even sell it if property prices suddenly rise. However, you do have to be able to purchase commercial real estate if you want to use these opportunities.
Low Risk Investment with High Returns
Commercial real estate is a strong investment with low risk and high potential for solid returns. This is because the commercial sector is always strong, even during times of economic downturn. In fact, it is commerce that drives the economy and this means that, although it can contract during times of difficulties, it will generally start to grow again quite quickly. The added benefit of owning the property is that, should your business go out of business, you can still choose to become a landlord and thereby retain your property investment until the time is right to sell it at a profit.
There are some limitations to contend with, however. One limitation is that CRE is subject to zoning. Zoning means that only specific kinds of industries can be run out of them. This, for example, prevents a manufacturing plant to be established in the middle of a shopping street. Another difficulty is having to put a 30% deposit down, which is generally a bigger hurdle. If this is something you are not able to afford, you have the option of investing in a commercial real estate investment trust instead. In such a case, you don’t truly own the building, so you can’t do with it as you please, but you do get the benefits of increased property values. Furthermore, you don’t have to worry as much about the responsibilities of being a landlord.
As you can see, there is a lot to think about when you are considering buying or leasing a commercial property. This is a decision that you have to make based on solid research, having considered all your options and all their associated advantages and disadvantages. What you should identify is which one of the two options is more financially beneficial to you, not just now but also in the future. It is therefore advisable to consult your professional team before making a decision.