Mission Viejo Commercial Real Estate for Sale & Lease

Mission Viejo Commercial Real Estate
Mission Viejo is part of Orange County, CA, within the Saddleback Valley. It is a master planned community, and actually the largest ever built in the country under a single project. In 2014, some 96,346 people lived there. The culture of Mission Viejo is very suburban, with mainly residential properties. There are some businesses and offices as well, but it is mainly known for its beautiful neighborhoods, which have even been recognized by the National Arbor Day Foundation. Mission Viejo’s top employers are the Mission Hospital, Saddleback College, the Capistrano Valley Unified School District, Nordstrom, Macy’s, and Target. Additionally, the headquarters of Marie Callender is also located there.

Mission Viejo Commercial Buildings for Sale & Lease

Before you find a commercial property for sale & lease in Mission Viejo, you need to decide whether to buy it or lease it. There are pros and cons on both sides, and you should investigate these before coming to a decision. Generally speaking, the recommendation is to always purchase a property if your plan is to stay there for more than seven years, as the cost will be lower. However, you also have to make other considerations, including the fact that you will have far greater out of pocket expenses at the start if you buy, and this money may be better spent on growing your organization. Furthermore, seven years is a long time and you have to be realistic about whether it will continue to be suitable for you. Plus, if you do decide to buy, all the maintenance and repairs will be yours to do as well.

Tax savings are also an important consideration. You can deduct the cost of your lease from your tax return, but not the cost of your mortgage (except for maintenance costs, interest, and depreciation). Plus, buying a property yourself means having to put between 10% and 30% of its value down, which is a lot of money that could be put to other good use as well. On the other hand, monthly mortgage payments may be substantially lower than monthly lease payments.

Mission Viejo Commercial Property for Sale

If you do want to purchase a commercial property in Mission Viejo, be that for a business or as an investment, you should also consider what the current trends are. Mission Viejo is part of Orange County, and its current statistics are:

  • The average asking price for multifamily properties is $314,841.90, equating to a 0.7% rise over the past quarter, and a year on year 10.5% rise.
  • The average asking price for office properties is $311.66 per square foot, equating to a 0.2% decline over the three months, and year on year rise of 11.3%. The rental rate for an office property in Mission Viejo averaged on an annual payment of $25.27 per square foot, equating to a 0.8% increase over the past quarter, and a year on year increase of 7.8% increase. The rental rates in Mission Viejo are also 1.9% higher than in the rest of the county.
  • For industrial properties, the average asking price was $222.13 per square foot, equating to a rise of 2.7% over the past three months, and a year on year rise of 10.9%.
  • The average asking price for retail properties is $408.88 per square foot, a quarterly rise of 0.0%, and year on year rise of 14.5%. On average, the rental rate for a retail property in Mission Viejo was $27.87 per square foot per year. This is a 2.3% increase over the past quarter, and a 2.7% decrease year on year. The rental rates in Mission Viejo are also 0.9% lower than in the rest of the county.

Mission Viejo Commercial Property for Lease

A lot of people decide to lease a commercial property for their business, and this means they need to learn about the ins and outs of arranging that. Commercial real estate and residential real estate are very different. In fact, you may even find it hard to identify properties in the first place, and understanding the issues like zoning restrictions can be highly complex. Hence, try to find a broker, whose fees tend to be covered by the landlord, to help you out.

The broker should be a tenant broker and not a leasing agent, as they will specialize in helping people like you when looking for a commercial property for lease. This broker may ask you to sign a representation agreement, which means you cannot work with other brokers. If the property you are looking for is small, then this agreement may work in your favor (you could get a discount). If you want a larger property, however, you shouldn’t limit yourself in that way.

You also have to be ready to negotiate. Most landlords will offer you a contract heavily in their favor, hoping that you, like most others, will simply sign it without thinking. In reality, however, there are lots of different things you can negotiate.

Some of the things to negotiate include:

  • Your personal guarantee, meaning that, if your business cannot pay the lease, you will. Make sure you negotiate how long this guarantee has to stay in place, with between one and five years being the most common.
  • How much you pay per square foot. Usually, you will be quoted for total space, but that is not the same as the usable space. Hence, you have to negotiate just how much you pay for the space you will actually use.
  • The type of lease that works best for you. You can choose a percentage lease, common in retail real estate, whereby you pay base rent and a percentage of your profits. The triple net lease, whereby you also pay the CAM (Common Area Maintenance) fees, or the net lease, whereby you pay taxes and insurance. Or you could pay the gross lease, which means you pay all the fees that exist in one lump sump.
  • The length of your lease, with shorter but flexible contracts being the best. Ideally, if your business were to go under, you wouldn’t be left with years of lease to pay. At the same time, if your business thrives, you should be able to simply extend your lease, rather than risk loosing the right to use the property. Most leases are between five and 10 years in length, although they can be much longer as well.
  • How the rent will increase over the years. Most landlords will follow a set consumer price index. You need to know which one that is and negotiate a better one if need be. Furthermore, you need to set a limit in terms of how much your lease can increase.
  • Who will be responsible for maintenance. In residential properties, landlords are always responsible for maintenance, but this is not always the case with leases. Hence, negotiate terms that are favorable to you when it comes to maintenance.
  • Whether you can alter the building to suit your needs, and who will pay for that. Usually, if you sign a lease of over 10 years, the landlord will pay for the remodeling. Furthermore, if this means you cannot operate your business during that time, you should receive a discount on your lease.
  • How you can signpost to your business once you have leased it
  • Whether you can sublease the property yourself should you go out of business, in an effort to continue to make the lease payments. Usually, this is allowed but in such a way that you cannot profit from it yourself
  • The termination fees that are included in your contract. If things happen and you do have to end your lease early, you need to know exactly how much that will cost you
  • Whether the lease is attached to your business or to you as an individual. If you sell your store, for instance, then the new owner may need to take the lease over.
  • Whether there is either a co-tenancy clause or an exclusive use clause. A co-tenancy clause means that you work together with another store in the vicinity, whose visitors often come to your store as well. Should the other business leave, you can then cancel your lease as well. An exclusive use clause, by contrast, means that the landlord cannot put someone in direct competition with you in the vicinity of your business.

A final thing to consider is the security deposit. Landlords can ask for a deposit as they see fit, meaning the amount is not capped. This is one of the main reasons why you should always at least look into buying a commercial property as well. Sometimes, the security deposit is so high that you may as well use it as a down payment on a purchase instead. You must, at all times, consider all the options that are available to you. Running a business is something you don’t do on a whim, but rather something that you study and approach with a strategic mind.