Aliso Viejo is found in the south portion of Orange County, in the San Joaquin Hills. At the 2010 census, the city was home to some 47,823 people, which represents a nearly 7,000 increase since 2000. On July 1, 2001, it become the 34th city in Orange County and it was the only one to have been incorporated into the county since 2000. Laguna Beach, Laguna Hills, Laguna Woods, and Laguna Niguel border Aliso Viejo.
Aliso Viejo has a strong economy, with many tech firms, online retailers, construction contractors, restaurant chains, vodka companies, insurance companies, car manufacturers, and medical manufacturing companies being based her. It’s top employers are the United Parcel Service, Pacific Life, Capistrano Unified School District, Fluor, Quest Software, QLogic, Renaissance ClubSport Aliso Viejo, Pepsi Beverages Company, Smith Micro Software, Merit Property Manager, Buy.com, Lenna, Target, Bausch & Lomb, Ambry Genetics, The Covington, LenSx Laser, and Lowe’s.
Aliso Viejo Commercial Buildings for Sale & Lease
Because Aliso Viejo has such a diverse economy, it is a popular place for new businesses and property investors alike. Commercial real estate (CRE) is generally available as a purchase, or as a lease (for businesses only). Making a decision between buying and leasing, however, can be a complex one and it is very important to be aware of all the relevant factors before coming to a decision in terms of which one to go for.
Unfortunately, this means looking at more than solely the monthly financial obligation (monthly lease vs. monthly mortgage payment). There are issues to think about such as upfront cost (security deposit vs. mortgage deposit), tax benefits, insurance, contract limitations, maintenance fees, renovation fees, and so on. Hence, coming to a decision should first and foremost be about getting a team of experts around you and carefully considering all the relevant pros and cons of commercial buildings for sale & lease.
Aliso Viejo Commercial Property for Sale
One place to start when comparing your choices whether to go for a commercial property for sale or for lease, whether you want to run a business or make an investment, is in CRE trends. For Aliso Viejo:
- Multifamily properties in the county usually cost around $314,841.90, which indicates a 0.7% rise in the last three months, and 10.5% rise for one year.
- Office properties in the county usually cost around $311.66 per square foot. This is a quarterly decline of 0.2%, although it equates to a 11.3% year on year rise.
- Industrial properties in the county usually cost around $222.13 per square foot, which represents a quarterly rise of 2.7% and a yearly increase of 10.9%.
- Retail properties usually cost around $408.88 per square foot, which has been stagnant over the past quarter. For one year, however, this is a 14.5% rise.
Aliso Viejo Commercial Property for Lease
In the case of a business looking for a property to operate out of, leasing is often the only viable option. Commercial real estate (CRE) is usually very expensive and most businesses do not have the available capital to tie up into a mortgage for long periods of time. That said, if you intend to be in the same premises for more than seven years, the official recommendation is to consider a purchase rather than a lease. Either way, you need to have a team of professionals around you, which starts with a broker.
Broker, Lawyer and Accountant
There are two kinds of brokers available: the leasing agent and the tenant broker. The leasing agent is mainly concerned with the interests of the landlord, whereas the tenant broker is more concerned with your interests. Considering the landlord usually pays the broker fees, it is often much easier to find a leasing agent. Furthermore, if you do find a tenant broker, they will often want you to sign a representation agreement. That said, finding a tenant broker will serve your personal interests better.
Besides a tenant broker, you should also enlist the services of a lawyer and of an accountant. They can ensure all transactions are completely legal and above board, and that they are viable. This is true, by the way, whether you want to lease or purchase your CRE. Looking specifically at a lease, however, one of the main reasons why you need these professionals on your side is because they can negotiate your lease agreement for you. This is a highly complex document and landlords often hope that people do not know that they can negotiate, thereby ending up with a deal that only furthers the opportunities for the landlord.
By having a team of professionals together, however, each element of the contract can be negotiated in your favor. Some of the most common issues they look at include:
- The length and extent of your personal guarantee. A personal guarantee is based on a credit check in your name and leaves you personally responsible for lease payments, rather than your business. This can be very problematic should your business file for bankruptcy.
- How much you have to pay each month for the lease itself, and what that is based on. This should be based on usable space, whereas many landlords will try to push for total space. This can make a huge difference.
- 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 the maximum allowable increase
- Where the responsibility for maintenance will lie, which is usually tied into the type of lease that you have. A triple net lease, for instance, means that you are responsible for maintenance.
- To what extent you are able to change the inside of the building and who will carry those renovation costs. Generally speaking, if you sign a lengthier lease, the landlord will cover these costs, as well as discounting your monthly lease amount for the time during which renovation takes place.
- Whether you can signpost your store on the outside of the building. This may be limited if the building is listed
- Whether you can sublease the space and, if so, under what conditions. Usually, you may be able to sublease to a new business if you were to go out of business, and at a cost no greater than the one you paid
- 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, so that they can remain in the same property
- Specific clauses such as exclusive use or co-tenancy
- The amount of security deposit and what this is based on
Clearly, there are many different things to take into consideration, and a lease is a very complex legal document. You do not have to worry about any of these things if you were to make a CRE purchase rather than a lease, with exception of how much you can change the outside of the building. Additionally, if you purchase a CRE, you can decide to use all of it for your own business, sublease some of it to other businesses, or lease all of it so that you become a property investor. That said, buying, as interesting as it sounds, is not for everybody.
Investing in Commercial Buildings for Sale & Lease
It is a known fact that CRE properties are excellent investments. No matter what happens to the economy, those types of buildings continue to be in high demand. And, if the downturn is so significant that demand drops as well, it often picks up very rapidly again and price increases are much quicker as well. Furthermore, it provides business owners with a level of security because, if their own business fails, they can become a landlord instead and lease their space.
One downside to CRE, however, is that you are restricted by zoning. This means that you can only run a certain type of business out of it. The bigger downside, however, is that you will usually have to be able to put down 30% of the purchase price before you can get a mortgage. This is usually a very significant amount of money that only a few are able to access. The alternative solution is to join a commercial Real Estate Investment Trust (REIT), which has the advantage of you not having to hold responsibility for being a landlord, but the disadvantage of you never fully owning a property and being able to use it as anything other than an investment.
Clearly, there are a lot of things to think about when it comes to a choice between leasing or buying CRE. It is important that you don’t take this decision lightly, and that you consider all the pros and cons that are involved with it. You need to be able to find the solution that is the most financially beneficial to you overall, and that takes some work to identify.