Laguna Niguel is known as a “bedroom community” in California’s Orange County. This means that it is a suburban city where most people live, while commuting elsewhere for their work. At the 2010 census, there were some 62,979 inhabitants in Laguna Niguel. It is in the southeast portion of Range County, in the San Joaquin Hills. This means the Pacific Ocean is close by. It is also near San Juan Capistrano, Mission Viejo, Laguna Hills, Laguna Beach, Dana Point, and Aliso Viejo. Most of the working age population of Laguna Niguel work in one of those cities.
The origins of Laguna Niguel are quite interesting. The city stems from the Mexican land grant, Rancho Niguel, which was purchased by the Laguna Niguel Corporation in 1959. It became one of the first master planned communities in the state. Always designed for residential purposes, it continues to be a bedroom community to this day, with jobs being mainly in the center and north of Orange County. The city is affluent with the median income for households being 31% higher than the average of the county as a whole. Additionally, it is around twice as high as the average for the country. The city is known for its many public trails and parks, its low crime rate, and its mild coastal climate.
As stated, because Laguna Niguel is a bedroom community, the majority of its residents work out of town. Newport Beach and Irvine are particularly popular places of employment. While there are some jobs in Laguna Niguel itself, these are mainly related to the service industry.
Laguna Niguel Commercial Buildings for Sale & Lease
Laguna Niguel is not the most interesting city in Orange County for commercial real estate (CRE), due to its limited amount of demand. Nevertheless, it isn’t non-existent. The service industry is booming, and there is a demand for at least some shops. As a result, investing in CRE can be interesting, both in terms of becoming a landlord, or becoming part of a commercial real estate investment trust (REIT), whereby you only enjoy the benefits of the rise in value. It can also be interesting for those who want to purchase CRE to run their own business out of.
The alternative, at least for those who want to run their own business, is to lease some space in one of the commercial buildings for sale & lease. This means that you pay a monthly amount to the property owner, rather than having to pay a mortgage. It is very important that you carefully consider all the pros and cons associated with either buying or leasing before you decide to go ahead with either. Both mortgage and lease contracts are lengthy contracts, for starters, which means you cannot opt for either just to try it out. Additionally, comparing the two should be about a lot more than simply checking the monthly lease price and the monthly mortgage amount. This is because both have significant associated costs, and both have a number of specific tax advantages.
Laguna Niguel Commercial Property for Sale
One place to start with comparing your options, whether you want to run a business or make an investment, is by checking CRE trends. For Laguna Niguel:
- 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 it represents 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 not moved over the past quarter. Year on year, however, there is 14.5% rise.
Laguna Niguel Commercial Property for Lease
Those who want to start their own business almost always want to lease a CRE property in Laguna Niguel. This is because prices are high, and purchasing a property usually means putting down 30% of its value in order to obtain a mortgage. Even if a business has that type of capital, it is generally better to invest the amount in growing their operations, and not for paying a mortgage.
When starting to look for a commercial property for lease, however, you will quickly find that there are many things to take into consideration. Leasing a CRE is very different from leasing a residential property, unfortunately. This means that, before you even start to look, there are two main things you need to do:
- You need to have an excellent awareness of your particular needs and requirements, so that you can make sure the property is fit for purpose.
- You need to build a team of professionals around you. This includes a broker, a lawyer, and an accountant.
Get Advice from Various Professionals
You need a broker because he or she knows where the properties are that you may want to consider. There are tenant brokers, who mainly concern themselves with giving you the best deal, and leasing agents, who are more interested in giving the landlord a good deal. Generally speaking, landlords pay the brokerage fee. As a result, they prefer it if you find a leasing agent rather than a tenant broker. Meanwhile, tenant brokers want to make sure that they get paid, so they will generally ask you to sign a representation agreement, which means you cannot see a different broker.
You also need a lawyer, because they will make sure that the lease contract you are offered is legal. They are also best positioned to negotiate on your behalf on issues such as:
- The length and extent of your personal guarantee
- How much you have to pay each month for the lease, and what that this is based on
- The type of lease construction 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 responsible for maintenance of the property
- To what extent you are able to modify the inside of the building and who will take take care of the 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 in place should you want to
- 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 security deposit.
Finally, your accountant will be there to make sure that the contract you eventually agree on would be financially viable for your needs and capabilities.
As you can see, there are a lot of different things to take into consideration, and you have to be very knowledgeable to negotiate a good deal. None of these is of concern should you purchase the property instead. In fact, nothing will need to be negotiated at all, as the property will simply be yours to do with as you please.
Drawbacks to Be Aware of When Getting a Commercial Property for Sale
There are three specific drawbacks that you do have to be aware of when you purchase. The first is that you may be limited in terms of what you can do to the outside of the building, particularly if it is very old, listed, or otherwise has important significance. The second issue has to do with zoning. Zoning ordinances are always in place to ensure that only certain types of businesses can operate out of particular kinds of buildings. For example, offices and car dealers usually have to be found in business parks, manufacturers on industrial estates, and shops in malls. The final major drawback is the deposit, which is usually as much as 30%.
All that being said, the reality is also that CRE is a fantastic investment type. Because commerce and trade are always required even during economic downturns, it is generally an area of investment that stays strong, thereby yielding high returns while enjoying low risk. You are almost guaranteed to be able to make a significant return on investment and, if you run a business out of it or lease it to a third party, you can expect significant profits as well.
Commercial REITs
The issue of the 30% deposit, however, is a barrier that makes it nearly impossible for most ordinary people to purchase CRE. This is where the commercial REIT becomes interesting, however. With a commercial REIT, you can invest in parts of CRE and effectively enjoy any profits that are made when the property is sold. With some REIT constructions, you can even receive a percentage of the money that is raised by leasing the property out to businesses, if that does happen, without having to hold the landlord responsibilities.