Laguna Hills is one of the cities in Orange County, CA near the Laguna Canyon and Laguna Beach, from which it got its name. Other cities nearby have followed suit with their names, however, so it is important to not confused Laguna Hills with Laguna Woods or Laguna Niguel, for instance. According to the 2010 census, it had a population of 30,344. It is a predominantly white, working community.
Laguna Hills is home to the Laguna Hills Mall and near it is found the Laguna Hills Civic Center. The Civic Center started housing the City Hall in 2004. Additional space within the building is rented out commercially. This means that the city has been able to raise a positive net income from the property.
The backbone of the economy for Laguna Hills, however, lies in the small to medium sized businesses. This is particularly true for the small family owned restaurants that are found throughout the city. It is classed as one of the best places to live and start a business in all of Orange County.
Laguna Hills Commercial Buildings for Sale & Lease
If you are interested in the economy of Laguna Hills, then there are a number of options to consider, specifically leasing or buying commercial real estate (CRE). Choosing between those two is a complex decision, however, and there are many factors to consider. Buying CRE is interesting for:
- Commercial property investors who want to become landlords
- Commercial property investors with insufficient funds or time to become landlords, and who therefore invest through a commercial real estate investment trust (REIT)
- Business owners who intend to stay in the same property for at least seven years
- Business owners who also want to invest in property and perhaps sublease parts of the building
Leasing, meanwhile, is only suitable for those who want to actually run a business from the CRE property. However, as you can see, that category of people could also decide to purchase instead. For them, deciding on which one of the two is the better option can be a highly complex decision. Some of the factors that they need to take into consideration when considering commercial buildings for sale & lease include:
- Whether they can raise the 30% down payment that is usually needed in order to be considered for a mortgage on a commercial property
- If they can raise that 30%, whether they are also able to afford that money being tied into their mortgage, rather than being available for them to grow their business
- The terms and conditions are of their lease, should they opt for a lease
- The tax advantages of either a lease or a mortgage
- The associated costs, such as maintenance and insurance, of a lease or a mortgage
- The monthly cost of the mortgage or the lease
- Types of properties that are available
Clearly, deciding between the two options take a lot of research and consideration, and you must give this the proper amount of time. After all, either way, you will be tied to a property for a long period and you have to know that it will be financially beneficial for you in the long run.
Laguna Hills Commercial Property for Sale
One place to start when comparing your options, whether you want to run a business or make an investment, is in the CRE trends. For Laguna Hills:
- Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% rise during the last quarter, 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. If you own office space, you can usually charge a rent of $25.54 per square foot in Laguna Hills, which is a 2.9% increase over the past three months, and a 12.6% increase over the past year. Those prices are higher than in the county, metro, and state areas.
- Industrial properties in the county usually cost around $222.13 per square foot, which equates to a quarterly rise of 2.7% and a rise of 10.9% in one year.
- Retail properties usually cost around $408.88 per square foot, which has been stagnant over the past quarter. Year on year, however, this represents a 14.5% increase.
Laguna Hills Commercial Property for Lease
In many cases, small businesses have very limited funds available, which means that they have to lease. Raising 30% of the property value of a CRE is often impossible. However, that doesn’t mean that there aren’t options out there when it comes to the lease. In fact, there are many things to do and consider before signing up for a lease. Before you start, however, you must learn to understand your own particular needs and requirements when it comes to the property where you want to run your business. That should, at all times, be your starting point. After that, you have to get a team of professionals around you to support you in getting the best possible deal for a commercial property for lease. You need:
- A lawyer. Lease agreements are complex legal documents that are different from residential tenancy agreements. You will have to negotiate many points on it, and it is vital that everything is above board and legal.
- An accountant. This professional will calculate what you can and cannot afford and make a prognosis on how your business will develop to make sure that you will be able to continue to afford your lease.
- A broker. This professional is responsible for helping you find the property in the first place. The cost of the broker usually falls on the landlord rather than you. You have two types of brokers to choose from. First, there is the leasing agent. The advantage of this is that you can hire multiple agents to help you find a property, but the disadvantage is that they mainly represent the landlord. The other option is the tenant broker. The advantage is that these brokers work on your behalf, but the disadvantage is that they will want you to sign a representation agreement, which means you may not actually be able to see the best properties for your needs.
Once you have a team together, and you have viewed some properties and chosen one that you like, it will be time to negotiate the contract you are sent. Usually, landlords expect that you will negotiate, but hope that you won’t. As a result, they will create a contract that favors them greatly. Each of those points can be negotiated on, however, and a long period of time usually passes between finding a property and actually signing the contract. Some of the most important things that you can negotiate on are:
- The length and extent of your personal guarantee
- How much you have to pay each month for the lease, and what that 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 maximum allowable increase
- Who is responsible for maintenance
- To what extent you are able to change the inside of the building and who will carry 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 in place 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 security deposit required
Leasing, as you can see, is highly complex. However, unless you can afford to buy CRE, it is the only option available to you if you want to run a business. If you do have the capital to raise the 30%, however, things can be different but there will still be some issues to be aware of, particularly zoning. Zoning means that you can only run certain types of businesses from the location where you are at, so you must be aware of that. And, should you purchase the property as an investor and become a landlord, then all of the above will once again become applicable to you, only from the landlord’s perspective.
Conclusion
Overall, however, CRE is known to be a very good form of investment. It is classed as a high yield, low risk, with prices consistently rising and riding out economic downturns. And, if you were to invest through a commercial real estate investment trust, you don’t even have to worry about being a landlord, as this will all be arranged through that trust.