Buena Park Commercial Real Estate for Sale & Lease

Buena Park Commercial Real Estate
Buena Park is found in the northwest portion of Orange County, CA. It is just 20 miles outside of downtown Santa Ana, which is the county seat. In 2010, the census noted that there were 80,530 residents. The economy of Buena Park is driven largely by tourism, with a number of attractions, including Knott’s Berry Farm, being based there. Additionally, it is found in the metropolitan area of Los Angeles, which also attracts a lot of tourists.

Knott’s Berry Farm is Buena Park’s largest employer. Other main employers are Prologis, Leach, Access Business Group, PepsiCo, J.C. Penny, ADP, Yamaha, RIA Financial Services, and the City of Buena Park. Additionally, it is home to 99 Ranch Market, the supermarket chain. In 1965, a Nabisco factory was built there, employing as many as 500 people, but it was eventually shut down. The building itself was demolished in 2006.

Buena Park Commercial Buildings for Sale & Lease – Which One Should You Choose?

Commercial real estate (CRE) is interesting for two types of people. Firstly, there are business owners, who want to occupy a property in Buena Park. They can choose to either purchase a CRE property, or lease one. Both options have a number of advantages and disadvantages, and it is important to consider all of these before coming to a decision. One of the biggest advantages of purchasing commercial buildings for sale & lease is that the monthly payments tend to be lower than those of a lease. However, the biggest disadvantage is that, in order to get a CRE mortgage, a 30% down payment is usually required, which is something that most businesses are unable to afford. The second type of people who would be interested in CRE is a property investor. They purchase these buildings in order to become landlords and lease it to small business owners who are unable to purchase their own. While for investors, leasing is not an option, business owners have a lot of different things to take into consideration before deciding how to move forward.

Buena Park Commercial Property for Sale

One place to start with comparing your options when considering a commercial property for sale, whether you want to run a business or make an investment, is in CRE trends. For Buena Park, those are:

  • Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% rise compared to the last three months. This represents a year on year increase of 10.5%.
  • Office properties in the county usually cost around $311.66 per square foot. This is a quarterly decline of 0.2%, although a 11.3% year on year rise.
  • 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%.
  • Retail properties usually cost around $408.88 per square foot, which has been stagnant over the past quarter. Year on year, however, a 14.5% rise has been noted.

Buena Park Commercial Property for Lease – How To Do It

If you have decided to go for a commercial property for lease, which is generally the only real option for many business owners, you still have a lot of things to think about. Your starting point, long before you try to find a property, is to build a team of professionals around you. You will need at least a lawyer and a financial advisor on your side, as well as a CRE broker. CRE broker fees are generally paid for by the property owner. As a result, they are likely to direct you to what is known as a leasing agent, who tries to maintain the best interests of the owner. If at all possible, you should try to find a tenant broker instead, as they are more concerned with your best interests. It is likely that they will ask you to sign a representation agreement, which means that you will not go to a different property broker in the meantime.

Importance of Hiring a Team of Professionals

Leases are incredibly complex contracts, with many different points to negotiate. Inevitably, the first contract you will be presented with will heavily favor the property owner. This is why you need the services of a lawyer, a financial advisor, and a broker, as they can make sure each point within that contract is looked at, and negotiated in your favor. Some of the elements within your contract that have to be looked into are:

  • How long would be your personal guarantee, what amount, and what you have to provide for this (a credit check is commonplace)
  • Your monthly lease amount and how that is calculated. In your first contract, it will usually be based on total space. What your team needs to do for you is make sure it is actually based on usable space.
  • What type of lease you will have to pay. Percentage leases are common for retail stores, for instance, but there is also the net lease, the triple net lease, and the gross lease, each of which has its own advantages and disadvantages.
  • How long the lease will be in place, and what the procedure will be for extending it, should you want to extend it at the end of the term
  • How often your monthly lease amount can be increased, and based on which consumer price index. Usually, your team will also negotiate a cap on possible increases.
  • Who will be responsible for the maintenance of the property. This usually depends on the type of lease you have. If maintenance is your responsibility, then you can expect to pay less for your monthly lease.
  • How you can renovate and refurbish the interior of the property, and who will foot the bill. If a lease of 10 years or more is signed, it is customary for the landlord to pay for the refurbishment, and to also provide a discount on the monthly lease amount while refurbishment work is being done.
  • What you can do with the outside of the building, including the facade, in terms of signposting to your store. This can be a particularly important issue if the building is historic or listed.
  • Whether you can sublease the property if your business contracts or even goes under and you aren’t at the end of your contract yet. Usually, this is allowed but not at a profit.
  • What type of exit clauses are in place and what fees are associated with leaving early
  • Whether you can transfer your lease to a new owner if you were to sell your business
  • Whether you can have a co-tenancy agreement or, on the other side of the spectrum, an exclusive use clause
  • How much you have to put down for a security deposit and how that will be held

As you can see, there are a great deal of things to take into consideration when you decide to lease a CRE property. These contracts are long and complex, and they must be investigated properly. None of this is of concern to you if you were to purchase the property yourself. Other than building codes and local ordinances that you must comply with, you can do with your property as you see fit if you have purchased it. However, purchasing, and particularly in an area such as Buena Park, is not always possible.

Investing in Commercial Buildings for Sale & Lease

CRE is known to be a strong form of investment. This is because, even in times of economic downturn, retail stores and commercial industries continue to survive, albeit not as strongly. In times of recession, it is common for businesses to go under, but it is equally common for new businesses to start as people who have been made redundant and have decided to try working for themselves. As such, it offers a very solid type of investment. Even if you purchase a CRE property to run your own business, you will have the peace of mind that you can still earn an income as a landlord should your business go down.

Limitations when Buying CRE

There are some limitations when buying CRE, mainly the fact that they are zoned. This means that different areas can be used for specific types of businesses only. The second big problem is that you will have to come up with a down payment for your mortgage, which is usually 30% of the property value. This is usually a significant amount, above and beyond what would be paid on a residential property. This is why purchasing is simply not an option for the majority.

Investing through a REIT

If you are only interested in CRE as an investment, however, and not because you want to become a landlord or run your own business, you also have the option of investing in a commercial real estate investment trust (REIT). This means that many investors pool their money together in order to purchase properties, which are then managed by the trust itself. This means that, while you will never own a property in full, you can benefit from the associated investments, without having to invest your time in the actual management of being a landlord. Clearly, there are a lot of things to think about when it comes to CRE.