Garden Grove Commercial Real Estate for Sale & Lease

The city of Garden Grove is found in Orange County, CA’s northern part, and is considered home by around 170,883 people. It is just 34 miles to the south of Los Angeles (LA), and many people who live in Garden Grove commute to LA. As such, it is known mainly as a residential town. Nevertheless, there are some industries to be found there as well, with the city’s top employers being Air Industries Corp., American Apparel Knit & Dye, Prime Healthcare Services, Walmart, Saint-Gobain Performance Plastics, Office Max Inc., Hyatt Regency Orange County, GKN Aerospace Transparency Systems, Inc., Kaiser Foundation Health, and NBTY Acquisition, LLC.

Garden Grove Commercial Buildings for Sale & Lease

Garden Grove is not know for its diverse economy, being mainly a residential city. What industry it does have is very large scale. This means that the majority of those looking for commercial real estate (CRE) do so to lease, rather than to purchase. What properties are available for purchase tend to be picked up by large multinational corporations, rather than by investors who look at leasing out some spaces, however. This means that it can be difficult for small businesses or startup companies to find somewhere to set their business up, as they are often unable to raise the down payment for a mortgage.

There are many things to consider when it comes to deciding to go for commercial buildings for sale & lease, be that as an investment or to run a business from. Both require some money up front, which is either a security deposit on a lease or a down payment on a mortgage. While the down payment is usually larger than the security deposit, the monthly mortgage is usually lower than the monthly rent. To further complicate the financial comparison between the two options, there are also various associated costs and financial benefits, such as:

  • Possible tax deductions
  • Insurance prices
  • Renovation costs
  • Maintenance costs

If you are interested in CRE, therefore, regardless of the reasons why, it is very important that you first seek professional advice on the matter.

Garden Grove Commercial Property for Sale

If you want to go for a commercial property for sale in Garden Grove, it is important that you have a baseline of understanding of how much this will cost you. Unfortunately, the trends in Garden Grove in particular are poorly understood, and trends only exist for Orange County as a whole. This can be problematic, as Orange County is not always representative of the cities contained within it. Furthermore, it means that there is no data available on how much you can expect to charge in rent for these types of properties, which could make investing a risky decision. That said, the statistics in terms of purchase prices for Orange County as a whole are:

  • Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% rise compared to the last three months, and a year on year 10.5% rise.
  • Office properties in the county usually cost around $311.66 per square foot. This is a quarterly decline of 0.2%, although a 11.3% year on year rise.
  • Industrial properties in the county usually cost around $222.13 per square foot, which equates to a quarterly rise of 2.7% and a year on year rise of 10.9%.
  • Retail properties usually cost around $408.88 per square foot, which has been stagnant over the past quarter. Year on year, however, this is a 14.5% rise.

Garden Grove Commercial Property for Lease

If you do want to choose a commercial property for lease, you will quickly find that this can be quite difficult, albeit not impossible, in Garden Grove. The first thing you need to do, therefore, is find a broker to work on your side. In almost all cases, broker fees are paid for by the landlord, even though you get to choose which broker to work with. Make sure, therefore, that you choose a tenant broker who works solely on your side, and not a leasing agent, who works on the side of the landlord.

Choose a Tenant Broker

Usually, a tenant broker will ask you to sign a representation agreement. This means that you agree to not work with any other broker for a set period of time. This can be somewhat limiting. however, particularly since properties in Garden Grove can be hard to find. If you do not sign a representation agreement, it is more likely that you will have to pay some supplemental fees. Only you can decide whether or not this is worth it, and whether you can afford it.

A tenant broker can do a lot more for you than simply find a property, however. This professional can also help you to negotiate your lease itself, and this is an incredibly valuable service. Without this, you will end up getting a poor deal, which is one that strongly favors the lessor. However, even if the broker helps to negotiate a better deal, you should still have it looked over by both your accountant and your lawyer. They will be able to determine the financial viability and the legality of your contract.

Some of the things covered in your contract, which are all negotiable, include:

    1. Whether you need to put down a personal guarantee, meaning that if your business does not have enough income to pay for the lease, you will be responsible for it yourself. This means that you will also be credit checked. You can negotiate how long your personal guarantee needs to stand for.
    2. The amount of lease you pay every month, and why. Usually, this is calculated based on space, and you need to make sure it is the usable space that you are charged, and not the entire space of the building itself.
    3. The type of lease that is offered to you, such as the gross lease, the net lease, the triple net lease, and the percentage lease. With the latter, you can negotiate how much of a percentage of your sales you have to add to your monthly lease amount.
    4. How long your lease will last, which can be anything from three years to 175 years. Make sure it is as short as possible, but that you have solid arrangements for lease continuation at the end of your contractual lease period.
    5. When your lease amount will be increased, and by how much. You should negotiate a cap, as well as understand which consumer price index is used to determine the rent increase.
    6. Who will maintain your property. You can usually get a discount if you agree to be responsible for the maintenance yourself.
    7. How you can renovate and decorate the inside of your property, and who will cover those costs. It is quite common in leases of 10 years or more for the landlord to finance this, as well as to give you a discount on your monthly lease while work is being completed.
    8. How you can signpost to your business on the outside of the property
    9. Whether you can sublease the property if you don’t need as much of it, or you don’t need it at all anymore, but your lease hasn’t ended yet
    10. The exit clauses, fees, and penalties that are in place should you be forced to leave early
    11. Whether the lease can be signed over automatically under the same terms and conditions to the new owner, in the event that you have to sell your business
    12. Whether there is, or needs to be, a co-tenancy or exclusive use clause
    13. How much of a deposit you have to put down

These are just some of the complexities involved in setting up a lease, and there are many more. What this demonstrates is the importance of having a team of professionals on board who will work tirelessly to get you the best deal possible. Besides your tenant broker, this should include an accountant and a lawyer, as mentioned previously, but you may also want to hire a contractor who can determine the work that needs to be done to the property first.

While investing in CRE in Garden Grove is very difficult due to the high prices, it is not impossible. Again, it is of the utmost importance that you do your research in terms of what possibilities are available to you. One consideration that a lot of people make is to invest in a REIT (real estate investment trust) that focuses specifically on CRE properties. This is because CRE can be incredibly expensive, particularly in an area such as Garden Grove, and not everybody is cut out to be a commercial property landlord. By investing in a REIT, you effectively own small pieces of a certain building, and this is in turn managed by an agent who works for the REIT. In areas such as Garden Grove, this is often the only opportunity people have to actually invest in commercial properties.

There are a lot of things to think about if you want to start a business or invest in property in Garden Grove. Take your time to consider all your different options, as well as the potential financial impact those options will have.