Placentia is one of Orange County, CA’s cities that are located in the north. At the 2010 census, it had a population of 50,533, which represented a nearly 4,000 rise since the previous census held in 2000. The Atwood community is also included in Placentia, as it is found in the quadrant furthest to the south. Placentia is mainly a bedroom community, which means that the majority of the residents have to travel to another place for their work. This city is quiet and has excellent public safety.
While mainly a commuting city, there is a huge Metrolink project to the value of $20,000,000, which began in 2013 in the downtown area. This project has been set up together with the OCTA (Orange County Transit Authority) and aims to help in the continued revitalization of Placentia. For this Metrolink project, more transit housing will be constructed as part of the train station. Retail properties, mixed use properties, and entertainment properties are also being constructed. The project has been made possible in part with the help of the city of Fullerton that provided around $580,000,000 in order to construct overpasses and/or underpasses at both the city’s north-south roadways. All crossings are set to be completed in 2017.
Although still a bedroom community, Placentia is changing. It also has a number of large employers, such as the Placentia-Yorba Linda Unified School District, the Placentia-Linda Hospital, Hartwell, Premedia, and the City of Placentia. The economy in the city is growing strongly.
Placentia Commercial Buildings for Sale & Lease
Because Placentia is growing rapidly, it is also a very interesting location for those who want to start a business, or plan to invest. The commercial real estate (CRE) sector is growing rapidly. However, if you are a business owner and you want to set up shop in Placentia, there are many things to think about. One of the biggest decisions you will have to make is whether you want to make a purchase from the available commercial buildings for sale & lease, or whether you want to rent. Unfortunately, there is no clear-cut answer to that.
One of the reasons why this is such a complex issue is because there are significant advantages and disadvantages to both a purchase and a lease. Comparing the two, therefore, goes above and beyond solely putting the monthly price of the mortgage or of the lease contract side by side. Both have specific tax advantages, both incur different associated costs, both have different legal ramifications, and so on. This is why you need to properly consider all the options available to you before you come to a decision.
Placentia Commercial Property for Sale
One place where you can begin when comparing your options, whether you want to run a business or make an investment, is in CRE trends. For Placentia:
- Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% increase during the last three months, and a 10.5% rise in one year.
- Office properties in the county usually cost around $311.66 per square foot. This represents a quarterly decline of 0.2%, but equates to a 11.3% year on year rise.
- Industrial properties in the county usually cost around $222.13 per square foot, which equates to a 2.7% rise in three months and a year on year increase of 10.9%.
- Retail property costs have been stagnant during the last quarter at around $408.88 per square foot. Year on year, however, they have increased by 14.5%.
Placentia Commercial Property for Lease
If you want to operate a business in Placentia, it is likely that you will end up leasing a property. CRE in this city is generally quite expensive. On top of that, you have to put down a 30% deposit if you are to be accepted for a mortgage. This is money most business owners do not have, and even if they do, they would prefer not to spend it on a commercial property for sale as it would usually be better put it to use in growing the business.
Choose a Broker
As such, if you have decided to go for a commercial property for lease, you need to learn about how this system works. Leases are very different from residential tenancy agreements. Even finding a property that is available for lease is different than what it is with residential properties. Hence, the first thing you have to look for is a broker, who can help you identify various available properties for lease. In general, the prospective landlord is responsible for paying the broker’s fee. You can choose a tenant broker, who generally works for your personal best interests, but such a broker will require you to sign a representation agreement, meaning you can only work with him or her. Alternatively, you can work with a leasing agent, who works for the best interests of the landlord, but doesn’t require you to sign a representation agreement so you could potentially look at more deals.
Find a Lawyer and an Accountant
Generally speaking, opting for a tenant broker is the better idea, not in the least because you will have to negotiate every point on your leasing contract if you are to make sure that you get a good deal. In fact, once you have identified a property of interest, you should get a team of professionals behind yourself, including a lawyer and an accountant. These three can get to work on making sure the deal is as good as possible, that it is completely legal, and that you can afford.
Items to Negotiate On
- The length and extent of your personal guarantee
- How much you have to pay each month for the lease itself, and what that it is 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 expires
- The possible rent increases, what they are based on, and how much is the maximum increase
- Who will be in charge of maintenance
- To what extent you are able to change the inside of the building and who will pay for 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 kinds of exit clauses are in place should you want to exit 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 for your security deposit
Clearly, leasing a property is incredibly complex. The above pointers are just some of the things you need to take into consideration. Unsurprisingly, lease contracts tend to get backwards and forwards between the landlord and prospective leaser until an agreement is reached and both are happy with. It can take a long time, therefore, before you can actually start using the property.
Why Investing in a Commercial Property for Sale Makes Sense
The other option, as previously stated, is to purchase a CRE property. This can be interesting for a variety of reasons. First of all, CRE is an excellent investment with very low risks and very high potential for returns. Even if you don’t run your own business out of it, you can be a landlord and still earn money. Many businesses actually purchase CRE because it gives them an added level of security as, should their business go under, they could lease their property to someone else. They could even sublease some of it should their business contract.
The Zoning Restriction
There is a small issue with CRE purchases to contend with, however, which is zoning restriction. This means that, depending on where your property is located, you will only be able to use it for certain types of commerce. For example, you may not be allowed to have an entertainment venue in a residential area, or a factory in a shopping mall. You can, if need be, apply for re-zoning but this is costly and complex, and you have no guarantee of being successful.
Advantage of a Commercial REIT
A bigger issue, however, is getting together the deposit that is required for being accepted into a mortgage. This is a deposit of 30%, which is far more than most people are able to afford. As a result, most who are interested in CRE as an investment join a commercial real estate investment trust (REIT). A REIT means that you invest in a proportion of a property, and that you will receive your dividend as and when it is available. You will not, however, be a landlord. This is great for those who don’t want to take property management on, but can be less good for those who want full freedom on their investments.
Conclusion
Buying and leasing, clearly, both have their own pros and cons. You need to start by considering what your personal needs and requirements actually are, as well as your financial capabilities. Once you know this, you will be able to start looking for your commercial real estate in earnest.