Brea, which is the Spanish word for “tar” or “oil”, is located in Orange County, CA. According to the 2010 census, it had a population of 39,282 at that time. True to its name, Brea started as a place for crude oil production. However, its economy really started to boom once citrus production started. Furthermore, the city has always invested heavily in its economic development. As such, the Brea Mall is now one of the most important retail centers in the area. Additionally, Brea Downtown has been completely redeveloped as well. Also, in 1975, the city started an extensive public art program. Today, this is still going on and it now contains a collection of more than 140 works of art all over the city itself. This public art program has inspired many other similar programs all over the country.
Brea has a very strong economy. Its biggest employers are the Bank of America, the Mercury Insurance Group, Beckman Coulter, Albertsons, Kirkhill-TA, the Brea Olinda Unified School District, Harte-Hanks, VPI Pet Insurance, The Hartford, and Avery Dennison.
Brea Commercial Buildings for Sale & Lease
Commercial real estate (CRE) in Brea is very popular, with many people hoping to start up a business there, often focused on retail and the arts. As a result, units are often reasonably small, which makes them affordable for buyers and lessees alike. If you are a property investor, then buying is obviously the only option available to you. However, if you want to run a business, then the situation changes somewhat. In this case, you can choose to purchase the property, which usually means having to put 30% of the price down in order to get a mortgage, or you can choose to lease the property, which means you are tied to a pretty rigid contract for a long period of time.
It is incredibly important that you consider all the options that are available to you when it comes to commercial buildings for sale & lease. There is more to this than simply calculating which one of the two options costs the least on a monthly basis, since there are various associated costs and benefits as well. These include taxes and maintenance, to name but a few. So how do you choose between buying and leasing – if you have the option to make that choice?
Brea Commercial Property for Sale
One way to start with the process of making a choice, whether you want to run a business or make an investment, is to take a look at the CRE trends. For Brea:
- Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% increase for the latest quarter, and a year on year 10.5% rise.
Office properties in the county usually cost around $311.66 per square foot. This represents a quarterly decrease of 0.2%, but for one year, it equates to a 11.3% rise. If you own office space, you can usually charge a yearly rent of $22.87 per square foot in Brea, which is a 2.1% increase over the past three months, and a 5.6% increase over the past year. Those prices are lower than 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 year on year rise of 10.9%. If you own an industrial property, you can usually charge rent of $9.59 per square foot per year in Brea, which has been unchanged over the past three months and represents a 0.5% increase over the past year. That price is lower than the county, metro, and state area.
Retail properties usually cost around $408.88 per square foot, which has been stagnant over the past quarter. Year on year, however, this indicates a 14.5% rise.
Brea Commercial Property for Lease
It is quite common for people who want to run a business go for a commercial property for lease, mainly due to the fact that the 30% deposit they would have to put down on the mortgage is money that will be better used in growing the business. If you are looking for a property to lease yourself, there are a few things that you must understand.
The first is that there are big differences between a CRE lease and a residential property tenancy. In fact, even finding the property so you can start discussing leasing possibilities works differently. You need to get the services of a broker in order to help you find a possibility, which is usually paid for by the landlord. There are two types of brokers, both with their own pros and cons:
- The tenant broker, who works to ensure your best interests are maintained, but who will ask you to sign a representation agreement so that you can only see properties in their portfolio.
- The leasing agent, who works to ensure the best interests of the landlord are maintained, but you can see more properties as you are not tied to a single broker.
Besides getting one of these two brokers, you also need other professionals on your side. You absolutely need a lawyer to make sure that, once you start negotiating on your lease agreement, everything is above board and legal. You also require an accountant so that you know which options work best for you financially. As a team, you then need to start looking at the proposed leasing contract and negotiate every single point so that it is more in your favor, while remaining acceptable to the landlord. Some of the points you can discuss are:
- The length and extent of your personal guarantee
- How much you have to pay each month for the lease and what is that 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 comes to an end
- The possible rent increases, what they are based on, and how much is too much
- Who is in charge of maintenance
- To what extent you are able to change the inside of the building and who will shoulder 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 available 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 your security deposit
What this demonstrates is just how important it is that you have a professional team around you to make sure that your interests are protected. Clearly, leasing contracts are hugely complex pieces of documentation and they are not contracts that you should enter into lightly. Of course, your other option is to purchase the CRE instead.
Buying a Commercial Property for Sale
Purchasing CRE has disadvantages. The biggest one is that you have to put down 30% of the value of the property in order to get a mortgage, and that is money that you would rather use for running your business instead. That being said, in the event that you no longer want to operate your own business, you can also decide to lease out the property you own and become a landlord. Buying a CRE property is always an investment, and generally a very good one as well. It is classed as a high yield, low risk investment because its value rises quite consistently, even during economic slumps, and you can earn an income from the property at the same time.
The other great benefit of purchasing CRE is that you don’t have to deal with the entire list above. That is, unless you become a landlord yourself, in which case you do need to go through that again, only from the opposite perspective. That is something you do have to take into consideration, of course.
It is also possible that you want to buy CRE solely as an investment, not to run a business out of. In that case, you again have two options available to you. Firstly, you can purchase property yourself (again with the 30% deposit) and become a landlord, or ask for your property to be managed by a property management company. This does mean, however, that you need to have a serious amount of capital to your name.
Using a Real Estate Investment Trust
The other option is to become a member of a commercial real estate investment trust (REIT). With a REIT, a group of investors pool their money together in order to invest in property. Sometimes, these properties are simply flipped for a profit. At other times, the properties are maintained and managed, enabling other businesses to operate out of them. The benefit of investing in a REIT is that you have solid investors advice to help you out and none of the hassle of having to be a landlord. On the other hand, you don’t have much control over your investment.