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Commercial Real Estate

2017’s Main Lessons for Commercial Real Estate

Highlights in commercial real estate in the year 2017

The year 2017 is now behind us, and we have entered 2018. 2017 proved to be a good year for the Orange County commercial real estate market. It continued to grow, values continued to break records, and the up-trend is now longer than what it has been in decades. Of course, some people continue to be cautious as a result of the 2009-2010 calamities, but there are now cases where prices are three times higher. Meanwhile, lease rates are showing similar trends. So which lessons have been learned from commercial real esate in 2017 that can be applied to 2018?

1. You Have Not Yet Seen It All in Orange County

A lot of new and unexpected things happened in 2017. For instance, Ten-X, the Orange County online real estate firm, was sold for over $1 billion.

Ten-X, a national online real estate firm founded in Orange County 10 years ago, said Thursday it’s selling a majority interest in the company to a Boston investment firm. Terms of the deal weren’t disclosed, but industry publication Inman News reported the sale price at $1 billion or more.

Ten-X was originally founded in Irvine, where it maintains its headquarters. It also has some 500 employees across Orange County alone.

Meanwhile, there is still a possibility that Orange County will be home to Amazon’s HQ2, although there are some rumors that Atlanta, GA will have won the bid. Lots of other surprising events have also happened on more individual real estate deals, which shows that just about anything is possible in Orange County.

2. You Can Sell Anything

Commercial real estate in Orange County is a huge market and demand continues to outpace supply almost constantly. This is important, because it also means that people want to buy. If a property is priced properly, it will attract interested people, even from non-traditional areas. For instance, there has been a significant increase in re-zoning applications.

To change the Zoning designation for your property, submit a rezoning application, fees and necessary documents to the Planning Division. The application is reviewed and presented to the Planning and Zoning Commission, which makes a recommendation to the Board of County Commissioners. Final approval is made by the Board.

3. Real Estate Professionals Cannot Become Complacent

2017 saw the renewal of a lot of commercial leases across the county. Lease prices have sky-rocketed, however. What this means is that there is less interest in new long term leases, because prices are so high that people want to wait for a bit longer. The result is that there has been an increase in demand for discounted three year leases, and property owners are agreeing to this.

4. Commercial Real Estate Continues to Be Poorly Understood

There continues to be a lack of understanding on how commercial and residential real estate are different. This is because there is a lot of overlap between the two. A commercial real estate professional sells and leases buildings, including renewing leases. Usually, these professionals are paid solely on commission, receiving no salary at all. This can happen with residential brokers as well. However, a residential broker will focus almost solely on sales, and not at on leases (or tenancies).

5. This Is the Greatest Up-Trend in History

As with all elements of the economy, commercial real estate usually follows the so-called Juglar Cycle.

The first authority to explore economic cycles as periodically recurring phenomena was the French physician and statistician Clement Juglar, who in 1860 identified cycles based on a periodicity of roughly 8 to 11 years.

In commercial real estate, the downturn usually starts one year after that of the residential market. However, the up-turn started to happen in Q3 of 2009, and it has only been growing since then. Perhaps it is time for some sort of adjustment.

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What to Look for in a Commercial Building

What to Look for in a Commercial Building

Are you thinking about purchasing a commercial building? Anyone can buy a commercial property, but there are several factors to consider making sure you get the best deal. Read on to learn more about finding the commercial building that best fits your particular needs and make you more successful.

Why You Need a Commercial Building?

Do you know what a commercial building is? Commercial real estate is for business, whether you use it yourself or rent it out to other companies or individuals. Commercial buildings aren’t meant for people to live in like regular real estate properties. Figure out why you are looking for a commercial building before making any rash rental decisions.

Are you planning to create your retail store selling homemade necklaces? Do you want to rent out office space for advertising companies? You need to know why you are searching for a commercial building before you begin your search because knowing your motivation will help you target and streamline your business goals.

You don’t want to spend thousands of dollars on a property with no planning beforehand. You could end up losing the property soon after renting or buying it because you never figured out why you initially bought it. Having a thorough plan for buying a building can keep you motivated in making your business a success. It will also give you a more general idea of what type of building you need.

So, make sure you know why you need a commercial building. It can prevent significant stress and loss of money you could lose because you didn't prepare.

Which Commercial Building Do You Need?

Do you know what type of commercial building you need? There are several types that you can browse online or you can get a professional real estate agent who help you find what you need. You might consider:

  • Industrial
  • Apartment Complexes
  • Retail
  • Office Building
  • Other

The buildings you search online will heavily depend on the business you want to create for yourself. There’s a vast difference between buying a building to rent apartments to tenants and needing the space for your new jewelry shop.

Size of the Commercial Building

Once you’ve picked your property type, the size, and floor plan there are other decisions you need to think about. If you want to use your mad chef skills in the kitchen by owning a restaurant, then you will need to figure out how big you want it.

You need to plan by figuring out a general layout of what it might look like. You probably don’t need a three-story building for a restaurant unless you plan other business ideas to go with it, like adding a bar. Buying a commercial building that’s too small for your restaurant idea might end up costing you if you can’t make it work.

Therefore, you need to figure out how much space you need before you look at any commercial buildings. Knowing the specifics like how many customers you plan to serve, how big the kitchen should be, and making room for extra office space or storage plays a vital role in making a successful business.

Perfect Location for a Commercial Building

Finding the ideal location for your commercial building can also impact the success or failure of your business endeavor. The location is crucial to any business you turn the commercial building into.

Choose Places Near Your Competition

If you are using your commercial building as a retail store, having competition near your business is smart. Why is this? Most people think they should be far away from the competition. If you are selling handmade necklaces, then you need to set your business near other jewelry stores. It helps you get more customers when there are other similar shopping stores in the area since people like to get their shopping done in one location.

Also, other customers that frequent your competitors will be in the area. When they see a new jewelry store, it could pique their interest enough to check your store out. Plus, you might obtain more of their customers by marketing your excellent sale prices or other exciting discounts.

Neighborhood and Community

According to Commercial Orange County, one of the top three things people look for in a commercial building is how secure the area is. Buying an apartment complex in the neighborhood with significant crime will likely not get you many paying tenants.

Even if you redesign the property with high standards, people won’t feel safe enough to live there. So, location plays an essential role in picking the right commercial building. You got to think about the surrounding crime, school districts, and other potential perks that will entice tenants to live or rent in your building.

Price of Your Commercial Building

Whether you rent or purchase the commercial building, you need to make sure the price range matches your financial situation. This means knowing all the extra expenses that can come with buying a commercial building. It is when you have to deal with unexpected issues you lose more money than you have budgeted.

Restoration Expense

If your're lucky, you might get a good deal on a property near the coastline. Figuring out all the parameters of what it takes to care for commercial property near the coast or restoring the building's damages is something to think about before buying. Sometimes something if it sounds too good to be true it is too good to be true. So always plan for the future.

You might also need to do some repairs or remodeling after you purchase the property. As stated by Small Business Services, you need to get permits and other types of approval from government agencies before you make any change to your property. Kno all the permits you require before you buy a property. Otherwise, you might get behind on your business plan by having to get permit after permit. Also, if you are renting, then you need to know all the policies and rules your landlord has on restoring or remodeling their property.

Do you think you are ready to look for a commercial building? You should research and put together all the particulars for your building to ensure your business prospers. Creating a plan will give you the best chance of getting the perfect commercial property for your needs. So, take a chance and make your business into what you’ve always pictured by looking for the property that makes your dreams come true!

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Commercial Real Estate

Orange County Commercial Real Estate Remains Bullish

Orange County Commercial Real Estate Remains a Difficult and Competitive Market

Since the inauguration of President Donald Trump just over one year ago, there has been a major buzzword: “reform”. A variety of different things affecting the economy have been or will be reformed. One of the most significant ones is his tax reform, the Tax Cuts and Jobs Act.

The law cuts corporate tax rates permanently and individual tax rates temporarily. It permanently removes the individual mandate, a key provision of the Affordable Care Act, which is likely to raise insurance premiums and significantly reduce the number of people with coverage. The highest earners are expected to benefit most from the law, while the lowest earners may actually pay more in taxes once most individual tax provisions expire after 2025.

Interestingly, the majority of Republicans representing California voted the bill down. However, it is believed that, coupled with the healthy GDP (gross domestic product) the country is experiencing, as well as the fact that the region has seen some significant job growth, the state will remain bullish for many years. This is particularly true in the Los Angeles and Orange County areas, and even more so within the commercial real estate market. This was revealed in the latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey.

The Winter/Spring 2018 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey reflects the favorable changes to the CRE market caused by the recent federal tax overhaul. The tax bill is expected to increase the rate of return on commercial real estate and makes investment more attractive. Survey participants predict it will cause moderate though uneven growth.

The survey is conducted twice per year and was recently released. It is offered to a panel of anonymous executives in the commercial real estate market. Their aim is to determine what they believe will happen to industrial, multifamily, office, and retail industries. The latest one reveals that the panel has taken an optimistic view for three of those, but that they have a pessimistic view for the retail industry. This was explained by the Operating Partner at Allen Matkins, John Tipton.

He believes that one of the key reasons why the retail market is not looking as good, is because of the rise of ecommerce. Strip malls and other retail outlets across Orange County, and the country as a whole, are changing and focusing more on experiential themes, entertainment, and restaurants nowadays. Over the years, a lot of retail properties were constructed but it is now far easier to purchase things online instead. Tipton feels this is a fundamental shift. It suggests that, while retail will always continue to exist, it is no longer a bullish market because the supply and demand equation has shifted.

The report did show a great deal of optimism in relation to industrial, multifamily, and office markets, particularly in Orange County and Los Angeles. In the latter, there has been a significant rise in the number of jobs in tech and gaming, particularly in Silicon Beach. Furthermore, Hollywood is now home to a wealth of video streaming companies and other forms of tech entertainment businesses. These sectors are driving demand for new office buildings and it is likely that this will continue for many more years. There was a slight drop in demand over 2016 in Orange County, but this has now completely rebounded. The panelists believe that this is due to the very diverse economy of the area. They predict that, by 2020, there will have been a noticeable drop in vacancy rates and rise in rental rates.

Meanwhile, the panel also looked at the industrial real estate market and they found that, in Orange County and Los Angeles, there had been an improvement. Indeed, the panelists themselves were planning new industrial projects. Demand is being driven by e-commerce and an increase in Asian imports, in particular, which is benefiting all of Southern California. The view of the panel, therefore, is strongly optimistic and they believe that rental rates will continue to increase over the coming years. One of the reasons for this is because industrial real estate includes such a wide variety of properties.

Types of industrial property include factory-office multiuse property; factory-warehouse multiuse property; heavy manufacturing buildings; industrial parks; light manufacturing buildings; and research and development parks.

The distributing warehouses, which are required to maintain the increase in demand of e-commerce, for instance, show just how much growth the area can expect. And lastly, the panel showed optimism in relation to multifamily properties for the next five years. Trump’s tax reform is, in actual fact, what made the panel so optimistic. California is traditionally an expensive state to live in, being listed as one of the most expensive in the country.

The median home value in the sunny state is $429,000, and homes generally list for a median price of $425,000 ($256 per square foot). As a renter, you’re looking at a median rent of almost $1,900 and housing and rent prices in some California cities – like San Francisco – are among the highest in the nation.

What this high cost of living has caused is that home ownership is not so attractive for people anymore, and this means more people are interested in renting properties. It is for this reason that two thirds of the panel are actively involved themselves in developing new multifamily properties across all of California. However, they are limited to a certain degree by the available land and, as always, by the cost of development.

Constructing new properties is becoming increasingly expensive. This means that the question is whether or not economic and job growth is sustainable or not. Overall, the panelists are still optimistic, but they do also feel that it is a market to watch.

The entire commercial real estate market, clearly, is bullish and it looks like it will continue to be so for a number of years. This makes Orange County in particular a very interesting area for property investors and developers alike. The true impact of the new tax reforms will have to be seen, however, to determine whether the predictions are right.

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Commercial Real Estate

3 Dangers To Be Aware Of In A Commercial Real Estate Deal

how to be cautious during a commercial real estate deal

In order to run a business, you need a building. Finding that piece of commercial real estate property is a long and complex process. And once you have found the property and you have spent many weeks negotiating every single point of your deal, you feel like you are ready to come to an agreement. The sale or lease document is prepared and is several pages long. All that remains to be done is for you to sign on the dotted line and the process will have been completed.

So how do you proceed from there? One option is to go over the document yourself and find the most important elements of your lease or purchase.

If you’ve never been involved in renting commercial space, your first glimpse of a commercial lease may be overwhelming. They are lengthy, full of jargon and unfamiliar terms, and always written to the landlord’s advantage. But they are negotiable.

However, it is not usually recommended to do this yourself because of said jargon and other potential legal pitfalls. Another option is to search for a professional real estate lawyer, who can change the deal so that you are the only real beneficiary. This doesn’t set you in a very good light and it is quite opportunistic. The final option is to speak to your agent, but agents aren’t qualified to provide you with legal counsel. Hence, you must find a way in which you can combine all three of the above options. You should go through the main points of the deal yourself, speak to your agent about where he could advise on some areas of concerns, and have those specific areas looked at from a legal perspective. Let’s take a look at three key issues to be aware of.

1. Warranties and Representations

This is the element that your legal advisor will likely focus on the most.

Every contract has representations and warranties, which are basically the underlying matters or facts as they are being presented in terms of the contract. When selling something such as real estate, the seller represents himself to be the owner, who has the legal authority to sell the property. He warrants that the property is as he represent it to be.

The sellers, in this case, will say that their clients aren’t representing at all, and the buyer wants to have a warranty on every current fault and future ones, until the end of times. Neither, of course, will get what they want, which is why they are arguing for opposing extremes with a view of meeting somewhere in the middle. You do have to make sure, as a buyer, that the seller actually has the authority to sell the property.

2. ‘As Is’ Purchases

Few people really understand the ‘As Is’ clause. Sellers assume that it means the buyer has to accept the faults that are found in the property and that the buyer simply has to accept it. Needless to say, this raises concerns about hidden problems. The ‘As Is’ clause comes with a contingency period, however. This period gives the buyer the chance to determine whether there are any problems. Essentially, it means that they don’t have to simply take a seller’s word for things.

3. Contingency Waiver

The contingency period is a big one and if during that time, buyers discover something they are not happy about, such as a leak in the roof of an office building, for instance, they may cancel the deal. Generally, there are rules associated with this if the prospective buyers also want to have their deposit refunded.

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Commercial Real Estate

Who Should You Have In Your Real Estate Network?

Who Should You Have in Your Real Estate Network

For those who want to be involved in commercial real estate, whether to run a business, use it as an investment, to be a landlord, or for any other reason, it is very important to have the right contacts. Indeed, networking is vital in any industry, regardless of the type of work you do, but you do have to network with the correct people. In the world of commercial real estate, you have to deal with lending, escrow, titles, architecture, construction, deeds, leases, and more. This means that your network has to include certain types of workers, such as accountants, lawyers, architects, construction workers, and so on.

Importance of a Good Commercial Real Estate Broker

Building your network has to start with finding a commercial real estate broker.

A commercial real estate broker is a licensed professional who helps clients buy, sell, or lease properties that will be used for business purposes. They represent and act as mediators between buyers and sellers. Real estate is a very competitive field.

A good broker can help you to make sure you find the parcel that is right for you, or that you find a buyer if you are looking to sell a property that you already own. The value of a good real estate broker simply cannot be underestimated. However, you will need other contacts as well, since a real estate transaction involves so many different elements and so many different players. The reality is that there are always problems with securing a real estate deal. Something will always go wrong, and you have to be prepared for that. You also need to make sure, therefore, that you have the professionals in your network who can resolve whatever the issue is that you are facing. The issues could be anything from a leaking roof to unexpected zoning restrictions.

Municipal or local government laws that dictate how real property can and cannot be used in certain areas. Zoning laws limit commercial use of land in order to prevent oil, manufacturing or other types of businesses from building in residential neighborhoods. However, these laws can be modified or suspended if construction of the property will serve to help the community advance economically.

There are obvious players in your network, including the aforementioned accountant, lawyer, architect, and so on. However, there are some less obvious professionals to consider as well. While it is likely that you won’t often require their skills and knowledge to help secure your real estate deal, it is always better to be safe than sorry. That way, should certain eventualities occur (and they aren’t that rare, in actual fact), you will be ready to take appropriate action.

1. A Project Manager

Whenever you are dealing with commercial real estate, whether to buy or sell, you are talking about moving an entire business entity. After all, either a new business will move into the property, or one will move out. That is a significant project that often leads to significant downtime. Having a project manager on board who can help properly manage this move is very important. They can make sure all the different details are thought of, from signage to installing new computers. They can also help with determining whether tenant improvements should be made, should you lease the building out. Essentially, they have a huge variety of skills that they can offer you, and you can usually pick and choose which elements you want to use.

2. A Land Use Attorney

Anyone involved in any kind of commercial real estate transaction will have links to an attorney. However, many forget the importance of having contacts with specialized legal professionals, such as a land use attorney.

Depending on the land use issue, you may want to work with an attorney who practices real estate or municipal law. If you are challenging an eminent domain claim by the city, your attorney may take a close look at the municipality’s “public use” claim to make sure it’s valid. If you are looking for a new location for your company’s headquarters, your legal counsel probably would research the zoning laws of each prospective location.

A land use attorney doesn’t just look at zoning, however. They may also focus on things such as solar panels that power multiple parcels, shared usage of car parks and access, and more. If you are looking at a parcel that has a neighboring property, which most parcels do, then it is likely that you will need a land use attorney, even if it is solely to confirm that all is in order.

3. A Specialty Building Expert

There are numerous different types of specialty buildings, such as schools, churches, and restaurants. Restaurants and bars, for instance, are very commonly found in areas such as Anaheim, which thrives on the tourism industry. Finding specialty buildings can be difficult, as can selling such a building. If you have an interest in such types of properties, then it is recommended that you work with a specialist as well. Some real estate professionals focus solely on certain types of specialty buildings. While they are usually somewhat more expensive, they may be able to save you a great deal of money overall.

4. A Fire Sprinkler Consultant

Last but not least, you may have to work with a fire sprinkler consultant. If you have a warehouse or other storage facility, then you must meet the relevant fire code standards.

The International Fire Code (IFC) is a model code that regulates minimum fire safety requirements for new and existing buildings, facilities, storage and processes. The IFC addresses fire prevention, fire protection, life safety and safe storage and use of hazardous materials in new and existing buildings, facilities and processes. The IFC provides a total approach of controlling hazards in all buildings and sites, regardless of the hazard being indoors or outdoors.

The rules and regulations contained within those codes are quite complex. Essentially, in a warehouse, you are allowed to build a storage stack, but how high that can be will depend on how flammable are the items stored in the warehouse. Exceptions can be made if the sprinkler system is the most up to date and upgraded one, however. This is a significant complexity and you should consider hiring a fire sprinkler consultant to make sure you are fully compliant.

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Commercial Real Estate

What Do You Do If You Do Not Get A Response After Making An Offer For A Commercial Property?

Not getting a response on a commercial real estate offer

If you are in the market for a piece of commercial real estate and you believe that you have found what you are looking for, it is time to make an offer. Sometimes, however, you receive no reply in response. This can be both frustrating and confusing, as it is hard to understand why a seller wouldn’t at least provide you with some feedback if they don’t want to accept the offer that you have made. There are a number of reasons why your offer may get ignored.

1. You Made a Bad Offer

Obviously, if you have made an offer so low that it is nearly scandalous, it is understandable that you will get ignored. However, commercial real estate is about creating a win/win situation, for both the buyer and the seller.

The concept is that both parties should come out of a real estate closing happy, having made a good deal. If you approach any commercial real estate deal from the perspective of mutual respect and understanding, then negotiating is much easier.

Unfortunately, the seller may have completely unreasonable ideas.

2. You Have Competition

In places like Santa Ana, there are so few commercial properties available, that anyone who wants to sell can expect to receive a wealth of offers.

Please don’t believe you’ll waltz out into the market and lease or buy the first thing you see. You won’t have many choices. Time will be needed for more spaces to come available.

3. The Seller May Be More Complex than You Realize

Often, when an offer is made, we believe it is done to a single individual. In reality, commercial real estate is often owned by multiple people. It is possible that there is some disagreement between those people as to how to react to your offer, which has delayed the matter.

4. There Is a Snag

Life happens, even with sellers of commercial real estate. Perhaps the seller is ill or has gone on vacation, for instance. They may not have responded because they are not there due to other circumstances.

5. Your Offer Is Too High

Because there are so few good properties available in Orange County, you may be tempted to make a full price offer instantly. While you may be sincere, the seller may be suspicious of this and wonder whether they have priced their property for too low. Generally speaking, negotiating a deal is a lengthy process, so a seller may find it very strange if they are offered exactly what they asked for immediately.

Buying a piece of property is a give and take process. The seller quotes a price and the buyer counters with a lesser price or seeks certain concessions. Negotiations take place until both parties see eye-to-eye and agree on the terms. If both the buyer and seller believe a good deal was made, then negotiations were successful.

6. There Is a Chain in the Negotiation

The market in Orange County is so tight that if someone is selling their commercial real estate, they may struggle to find an alternative location themselves. They may have not expected to sell as quickly, or they didn’t plan properly for how long it would take them to find something. Either way, if there is a significant chain in the negotiation, things will slow down significantly and the seller may even be tempted to ignore you for the time being.

These are just some of the reasons why you may still be waiting for a response from the seller. If this is happening to you, speak to your broker about the next steps to take. They will usually be more than happy to send the seller a gentle reminder to find out what is going on. On the other hand, you may find that they advise you to simply hold tight. After all, you don’t want to seem too eager either, as this can go against you in the negotiations.

There is also a chance, albeit a less likely one, that your offer being ignored is some kind of a sign. Sometimes, the time to purchase simply isn’t right. If this is the case, you being ignored may turn out to be a lucky escape for you.

Low interest rates, speculation and a number of other factors are combining to flood the market with REIs, and in a haste to snap up a great deal, a lot of investors overlook the fact that what they’re dealing with may not actually be a great deal.

As stated previously, the market in Orange County is incredibly tight. All the good properties are gone and those who own them are clinging on to them because they know what they are worth. What is left, therefore, is usually something that has significant problems and issues attached to them. If your offer is being ignored, perhaps now is the time to look elsewhere, or at least to look again.

A final thing to remember is that, as much as being ignored is annoying for you, as it puts a stop to your own plans, it is the sellers’ right to ignore you if they want to.

Sellers are under no legal obligation to respond or otherwise entertain an offer. To improve your chances of gaining a seller response, follow the offer instructions precisely and make your offer competitive.

In the vast majority of cases, your real estate broker or agent will be able to tell you what is going on. It is likely that they know the seller or at least have some sort of professional ties with them. In every commercial real estate deal, your broker is your partner and for good reason. They have extensive knowledge of the market and they are likely to have advised you on what offer to make as well. They also have their ear firmly placed on the grapevine, meaning they know what is going on. If your offer has not yet received a reply, therefore, they should be your first port of call as they are likely to know exactly what is happening. Sometimes, you just have to wait.

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Commercial property

6 Tips for Finding the Perfect Commercial Property

6 Tips for Finding the Perfect Commercial Property

Finding the perfect commercial property requires more tact and research than most people plan for. Your choice of commercial property is a strategic business decision. It affects profitability, production costs, branding, and bottom line. This is why you must find a perfect property that promises great potential as per these factors. Here are 6 tips to landing a perfect deal.

1. Define your Commercial Property Parameters

A perfect commercial property should suit your business needs. To find the right property, you need to define your needs. Narrowing down your needs helps you save time and money that would be used for future adjustments. Some of the factors to consider include:

· Floor Plan

What kind of floor design do you need? What size is most appropriate for your business? Every business has different floor needs and space use. The rule of thumb is to have four to six employees for 1,000 square feet. The property should allow movements, display, accessibility, and meetings as your business may require.

· To Rent, Lease, or Buy

This decision determines property use. it also affects your budget. If you are buying, you may need to think about tenants that may come in the future. If you are leasing, you may need a property that allows modification.

· Availability of Target market

When finding the perfect commercial property, consider the flow of your target market.

· Financial Position

Different locations come at different prices. Central business district is more expensive than suburban location. Strike a balance between the other needs discussed and your financial ability.

2. Location

I could write a book about location, and why it is the most important consideration when finding the perfect a commercial property. Here are a few considerations when it comes to location:

· Zoning Restrictions

A location with favorable zoning laws makes it easier to run a business. The business should operate freely without zoning restrictions to its main economic activity.

· Rental Rates in the Area

If you are buying the property, you might need to rent or lease it out to the tenant. Therefore, consider areas that fetch more rental income. If you are renting out, understand the market rates of the area. Modern spaces and those close to central business districts will cost more.

· Human Traffic and the Right Community

Establish your business and property in the right community. Today, people are all about convenience. Millennials want to shop, work, and eat in the same area with less commuting. Have these developments in mind.

· Visibility

A commercial property should be visible and well-maintained. Some marketing experts consider it a perfect branding strategy.

· Community Safety

Security is one of the three top things people consider when finding the perfect commercial property. It must guarantee safety of its users. Do not start shopping property in areas notorious with crime and lack of safety no matter how convenient they may seem.

3. Ask your Employees

How do your employees feel about moving to a new business location? Ask them how they find it in terms of commuting, work environment, safety, and ambiance. We all know office environment can affect performance. You could release a survey to find out how they feel about the new location. When you go shopping, once in a while step out with an employee or two and find out how they feel about it.

Customers that often visit your business need to have say in your location. Will your customers find it tedious coming to you? Is it going to be more expensive? Some zoning restrictions may impose difficulties to customers. You need to find these answers before settling on the property.

If you want to know the truth about a property, engage the bystanders as well. They will let you know more about the landlord and the prevailing rates.

4. Legal Considerations

Several legal issues such as health, planning permission, insurances, safety, and fire regulations and licenses feature significantly. When you choose to purchase the property, you need to pay stamp duty. For a rental commercial property, you will need to comply with lease terms. Involve a solicitor when buying or leasing commercial property.

Find out if you are legible for assistance with business rates such as the Small Business Rate Relief. Ensure that the building complies with environmental and building conditions assessments. Ensure that the building is zoned for your business needs and that it complies with the best practices. For instance, you cannot take a property zoned for office space and convert it to a restaurant.

5. Lease Terms

When looking to rent your commercial property, have a budget and long-term business plan in mind. With this, you can ask the property manager the right questions.

  • How much is the rent?
  • How much is the security deposit and for how many months?
  • Does that include utilities and operating costs?
  • Does the landlord take care of property taxes and maintenance including repairs?
  • Are there additional fees such as parking or penalty for late payment?

Make the next step and examine the terms of the commercial lease. These include location, structure, and space of the property. Find out if there are any rules and policies such as:

  • Permitted use – specified business activities for the property
  • Sublease/ Assignment – are you allowed to sublet or sublease the space to a new tenant especially with extra space?
  • Signage
  • Lease duration – is it fixed or month-to-month lease
  • Insurance – who caters for property and contents insurance?
  • Improvements and modifications- find out if you can renovate or remodel the space to fit your needs, or add or remove furnishings

Ensure you understand all the terms before signing. Read through every punctuation mark.

6. Work with a Good Real Estate Broker

Even a bad real estate broker knows more than a typical tenant. Find a real estate broker that understands the location well. Even though you may have to pay extra for the services for some properties, brokers come with several benefits. They help you negotiate better lease terms, they have knowledge of more commercial properties that you can compare, they take care of the hustle and they can give you facts about the property: landlord, traffic, safety and other underlying issues

If you are in the process of finding the perfect commercial property around Orange County, we have both tips and great deals on commercial property. Visit our website and tell us what you are looking for.

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Commercial Real Estate

Bixby Land CEO Bill Halford Dies At Age 58

bixby ceo dies

It has been announced that Bill Halford, the CEO of Bixby Land Co., died on February 26, 2018, at the Ronald Reagan UCLA Medical Center after battling a certain illness. Bixby Land Co. is based in Newport Beach and is one of the most respected companies of its kind in Southern California. Halford became the company’s CEO in 2006 and he was responsible for turning the century-old family-owned company into a real estate operator, developer, and investor. Halford was just 58 years old. Bixby Land credits Halford with achieving their vision of pioneering exceptional value.

Bixby Land Company is defined by innovative thinking, disciplined action and performance. We acquire, redevelop and operate industrial, office, and R&D properties in select Western U.S. markets. Driven by results, backed by experience and mindful of our century-old legacy, we are committed to building value in the assets we own and for the investors we serve.

Halford’s leadership put the executive team in place and enabled the strategic direction and culture of the company to change for the better. Before he took over as CEO, the company owned a random selection of office, industrial, and retail properties. He transformed this into a strong portfolio of industrial and office properties in very select markets.

It took Halford just 30 months to acquire industrial properties to the value of $450 million. He was respected for his innovative mind, particularly in terms of creative office spaces. Indeed, he worked on 30 different creative office buildings in the state and the Pacific Northwest. Only recently, he acquired $400 million worth of industrial properties by working with AXA Investment Managers.

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Bill’s team respected him for his vision and for this strong ability to provide motivation to people, encouraging them to work beyond what they believed to be their limits. Unfortunately, only a week after finalizing the AXA partnership deal, the popular CEO passed away.

Bill’s vision and ability to motivate people to perform at a level higher than they may have thought possible was instrumental in establishing the investment performance and integrated services platform that today defines Bixby Land Company. His leadership has made an immense impact on the company and has left it positioned for future success.

Bixby Land has had a presence in Orange County since the middle of the 19th century. Halford graduated from UC Santa Barbara, after which he took on positions in Silicon Valley, working for IBM and Xerox. He then ventured into commercial real estate by joining the Transpacific Development Co. He joined Irvine Co. in 1994, presiding over their division of office properties. He also joined Bixby Land Co in 1994, when he was a board director.

He became the 8th president and CEO of Bixby in 2006 when he left Irvine Co., while at the same time sitting on the advisory board of UC Berkeley’s Fisher Center for Real Estate and Urban Economics. He has also received numerous awards and a lot of recognition for his creative, energetic, passionate leadership, inspiration, and friendship. He will be greatly missed in Orange County and in the world of commercial real estate as a whole. No information has been provided as of yet as to who will be replacing Bill Halford at Bixby Land Co. either in the interim or as a permanent solution, nor is there any clarity on how this will affect ongoing deals.

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Commercial Real Estate

How Technology Impacts The Commercial Real Estate Market

Technology has an impact on commercial real estate

Automation is an important tool of capitalism. Its overall aim is to reduce outgoings as much as possible, thereby increasing profits. Any business’ greatest expense is its workforce, which means that if cuts have to be made, this is where employers take a look first. Naturally, the workforce is also a business’ greatest asset, as nothing can be delivered without it. Hence, what companies now try to do is find ways to replace the human workforce with automated systems as much as possible. And it is working. It is known as digital disruption and it impacts every element of society, including commercial real estate.

The real estate industry is already feeling the effects, as technological advances are rapidly disrupting the conventional ways that people live, work and shop. These advances will have a profound impact on all real estate asset classes, from office buildings to shopping centres to warehouses. In an age of disruption, no real estate is immune.

So will commercial real estate brokers find themselves obsolete, replaced complete by technology? Eventually yes, but it looks like there will continue to be a need for human intervention in the immediate future. Perhaps a good place to see this in action is across Orange County, where modern technology is often accepted with open arms.

Why Tech May Not Be Able to Replace the Broker

Commercial real estate brokers will tell you that each parcel is different. Perhaps they are working on two retail properties in the same city, with the same square footage, yet the value would be very different. This is in part due to the fact that commercial leases are negotiated on by people, which means agreements always end up being different.

There’s no standard agreement for commercial leases. In fact, negotiating the terms of commercial leases is usually expected. Depending on the state of the commercial real estate market, a business may be able to obtain significant concessions from a landlord. A property owner with a largely vacant business park, for example, will most likely make allowances.

There are numerous factors that can make one property seemingly worth more (or less) than another. Perhaps it has been leased below value for a long time due to a special arrangement between the landlord and the tenant. Or perhaps one of the two properties has recently improved its plumbing system. Those are all unique factors that influence price points.

Furthermore, the way commercial real estate businesses, not just in Orange County but across the nation, share their data is unique each time. This is because there are different services to choose from, most of which are on a paid subscription basis and most of which are not customer facing, which means each broker makes different decisions. The only reasonably constant service that brokers can sign up to, and also one of the only customer-facing ones, is LoopNet.

LoopNet is the leading mobile and online real estate marketplace that connects tenants and investors to commercial real estate available for sale and lease.

LoopNet is an excellent service, which is why it is one of the leading providers in the country. However, the listings are still quite minimal, particularly if they are compared to residential listings. The reason for this is that all residential real estate brokers must share their data by law with realty boards that aggregate all of the available properties, so consumers never have to miss out on a property.

Another important reason why brokers are unlikely to be replaced by tech any time soon is because the transactions involved in this sector are hugely complex. For years, attempts have been made at standardizing the way a lease or sale is created, but this is seemingly impossible. With variables such as environmental evaluation, tenant improvements, title issues, city permitting, tenancy, financing, contingency periods, and more, it seems impossible to automate everything. That said, a good attempt has been made by Ten-X, which was able to automate the marketing of a sale and its execution, but continues to require listing brokers to do their work.

Ten-X has completely revolutionized real estate, empowering people to safely and easily buy and sell residential and commercial property whenever they want to and from wherever they happen to be. It’s the only real estate platform that allows buyers, sellers, and real estate professionals to search, list and transact properties completely online.

Commercial real estate transactions are related to leases in 75% of cases, and there are currently no services that have been able to automate even the marketing element of this in full.

Despite efforts to use technology to replace human transactions, commercial real estate deals have to follow a number of steps that tech simply cannot perform at this point in time. These steps are sourcing, locating, qualifying, controlling, creating, and billing a deal, after which payment is received. Today, technology seems to only be able to take over some of those steps, but not all of them. Perhaps this is because there is one thing that technology will never be able to have, and that is an instinct about the local market.

Why Tech May Soon Replace the Broker

At the same time, it is important to understand that overarching businesses want to cut out the middleman. The middleman – the broker – costs billions overall, and there are substantial savings that can be made by eliminating that person in the equation. Sooner or later, some developer will be able to figure out how to replace brokers. Unfortunately for the broker, it feels like that the time has almost arrived. CoStar, for instance, has made it possible for deals to be completed globally. LoopNet has created a consumer portal and Ten-X allows for auctions of distressed properties without external involvement.

One quick look at how the residential real estate market is moving, and it becomes clear that the commercial real estate market will soon follow suit. Almost every element of the residential deal has now been automated and the agent workforce is dwindling as there is less need for their skills. People no longer have to speak to realtors directly about properties because they can simply go online.

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Commercial Real Estate

Bank Of Southern California Moves Further Into Orange County

The bank of southern california moves to Orange County as it expands due to success

The Bank of Southern California is an institution that has, as a community bank, helped businesses and individuals across Southern California meet their financial needs. Being a community bank, they believe in offering a personalized experience as they understand that any financial product they offer benefits the community as a whole and therefore also their own organization. The bank has become a true institution in the San Diego area.

As a local community business bank, we are dedicated to providing you with a personalized banking experience. Our team of knowledgeable, solution-driven bankers work with you one-on-one to help you achieve your personal and professional financial goals. We are committed to providing our local businesses and individuals with the personalized banking solutions that they need to achieve their goals.

The bank has been doing so well that they have started to expand further into Southern California. With this move, they specifically aim to have a greater reach into Orange County as a whole. To achieve this, they have attracted new members of staff in the person of Sam Tuyen and Stephen Whang.

Sam Tuyen is taking on the role of Vice President of Commercial Real Estate and SBA Lending. He is highly experienced in this and knowledgeable of Orange County, having come from CDC Small Business Finance in Orange County, where he was the Senior Commercial Lender.

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With 20 years of experience under his belt, Mr. Tuyen is set to become a key asset of the company. He is also truly local, having obtained a business management and economics degree from the University of California in Irvine.

Meanwhile, Stephen Whang will take on the position of Vice President, Business Development Manager. He will hold responsibility for making sure that the financial needs of entrepreneurs and businesses in both Los Angeles and Orange County as a whole will be met. Like Mr. Tuyen, Mr. Whang has a wealth of experience behind him, with a background in relationship management and business lending. He has been in the industry for over 15 years, helping businesses across Southern California become successful. Before his position with the Bank of Southern California, Stephen Whang was with the Bank of the West.

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Similar to Mr. Tuyen, Mr. Whang is also a true California native, having obtained his bachelor’s degree at the University of California, Los Angeles. The appointment of these two financial bigwigs has even been reported on in Coleman Movers & Shakers, who quoted the bank’s Executive Vice President and Chief Banking Officer, Tony DiVita.

We are extremely pleased to have these outstanding bankers join Bank of Southern California. They bring a comprehensive understanding of the Los Angeles and Orange County business community, and they both offer a wide range of expertise that will enable us to best serve the financial needs of business owners, entrepreneurs, and professionals in those markets.

The Bank of Southern California has gone from strength to strength over recent years. Being able to attract experts like Sam Tuyen and Stephen Whang is a testament to that. The bank builds relationships with each of its customers across its seven different branches and Orange County production office, setting themselves apart as members and integral parts of the community as a whole.

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