North Tustin Commercial Real Estate For Sale & Lease

North Tustin Commercial Real Estate
North Tustin is a CDP (Census-Designate Place) in California’s Orange County. It is an unincorporated community. According to the 2010 census, some 24,917 people were living there at that time, indicating a population increasee since the past census in 2000. The community is found just outside of Tustin’s city limits. Prior to 2005, the community was called Tustin Foothills.

North Tustin is home to various unincorporated communities, such as Red Hill, Panorama Heights, North Tustin, Lemong Heights, East Tustin, and Cowan Heights. In the 1960s, the FCA (Foothill Communities Association), a nonprofit corporation, was launched. Their aim is to preserve the communities’ living environments. Today, the FCA represents more than 10,000 homes there.

North Tustin Commercial Buildings for Sale & Lease – What Are Your Options?

North Tustin is a residential community, and people tend to go to surrounding cities, including Tustin, for their shopping. Because of this, there is little opportunity to build on the community’s economy. That said, there are always developments possible, which means those interested in commercial real estate (CRE) may have opportunities available.

Within the world of commercial real estate, there are two main options available. The first is to purchase a property, which is interesting for those who want to be landlords and property investors as well as to businesses who want to operate themselves. The second option is to lease a property, which is interesting solely for those who want to run a business.

Choosing between these two options of North Tustin commercial buildings for sale & lease, if you are a business, is incredibly complex because there are a lot of different factors to take into consideration. It would be too easy to simply look at how much your monthly mortgage is, and to see whether this costs more or less than the monthly lease. Both choices have different advantages and disadvantages on financial terms. For instance, a mortgage requires a 30% down payment, which is a significant amount of money, whereas a lease usually requires one or two months’ lease as a security deposit. However, a lease property never becomes yours, which means there is no return on it, whereas a purchased property can potentially be sold at a great profit later. Then, there is the fact that both have different associated costs, including insurance, renovation costs, taxes, and more. As such, it is a very complex decision and you need to take the time to review all your different options.

Trends in North Tustin Commercial Property for Sale

One place to start with comparing your options, whether you want to run a business or make an investment, is in trends for North Tustin commercial property for sale:

  • Multifamily properties in Orange County usually cost around $314,841.90, which is a 0.7% increase compared to the last three months, and a year on year 10.5% increase.
  • Office properties in the county usually are selling around $311.66 per square foot. This is a decrease of 0.2% compared to the past quarter, although an 11.3% year on year rise. If you own office space, you can usually charge a yearly rent of $29.36 per square foot in Irvine, which is a 1.9% increase over the past three months, and a 7.1% 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 an increase of 2.7% compared to the previous quarter and a year on year rise of 10.9%. If you own industrial property, you can usually charge rent of $15.17 per square foot per year in Irvine, which is a 2.5% increase over the past three months and an 7.5% increase over the past year. That price is higher than in the county, metro, and state areas.
  • Retail properties usually cost around $408.88 per square foot, which has been stagnant over the past quarter. Year on year, however, this is a 14.5% rise. If you own retail property, you can usually charge $24.16 per year per square foot. This is a 0.7% decline over the past three months, but a 4.7% increase over the past year. It is also slightly less than the county and metro area, but slightly more than the state average.

North Tustin Commercial Property for Lease –  Negotiations

In many cases, leasing a property is the only viable option, mainly due to the initial financial commitment required for a purchase. However, even a North Tustin commercial property for lease is not necessarily straightforward, and it certainly isn’t something that you organize overnight. Whether you want to lease or purchase, you need to work closely together with a lawyer and an accountant. They can make sure you act within the confines of the law, and that your finances are in order. However, these two will not be able to help you actually find a property. For that, you need a broker.

How to Choose a Broker

With commercial real estate, broker fees are almost always paid for by the landlord, which is a great financial advantage to you. However, you do have a choice to make: do you go with a tenant broker or a leasing agent? Leasing agents work mainly on behalf of the landlord, whereas tenant brokers work on behalf of you. While this may therefore seem like a clearcut choice, it isn’t really. This is because tenant brokers, in return for acting on your behalf, expect you to sign a representation agreement. This means that you could potentially be limited in terms of how many properties you can actually view, as you can only see those that they manage. Therefore, if you want to make sure you see all the properties that are available, you will need to choose the leasing agent instead.

Negotiating the Lease Contract

Once you have viewed the properties and you believe you have found one that is suitable to your needs, the next step begins, which revolves around negotiating your lease contract. Unlike residential tenancy agreements, which are non-negotiable, you can ask the landlord to change different points in the contract to be in your favor. Just some of the bigger issues that you could negotiate on, together with your lawyer and your accountant, include:

  • The length and extent of your personal guarantee
  • How much you have to pay each month for the lease itself, and what that would be based on
  • The type of lease that is most beneficial to you (percentage lease, net lease, triple net lease, or gross lease).
  • The length of your lease and what happens when it ends
  • The possible rent increases, what they are based on, and how much is the maximum
  • Who will handle maintenance
  • To what extent you are able to change the inside of the building and who will pay for the renovation costs
  • Whether you can signpost on the outside of the building
  • Whether you can sublease part of the space and, if so, under what conditions
  • The kinds of exit clauses that are in place should you want to exit the lease early
  • Your right to transfer the lease in the event that you would want to sell your business to a third party
  • Specific clauses such as exclusive use or co-tenancy
  • The required security deposit

As you can see, a lease contract is a hugely complex document with many different points that you need to get in your favor. This is a lengthy process. Landlords often hope that you didn’t know that you can negotiate or, if you did, that you will quickly get tired of the negotiations and accept an offer that mostly favors the landlord. Seeing how complex these issues are, you may be tempted to purchase property instead.

What About Purchasing Commercial Real Estate in North Tustin?

Commercial real estate is a very solid investment. It has very low risks and a very high potential for good returns. In fact, the value of these properties usually remains stable during economic uncertainty, and rises very quickly during strong economic times. But there are some significant issues to remember here as well. Unfortunately, there are some restrictions and complexities with purchases as well:

  1. You still have some limitations in terms of how much of the property you can change, depending on building codes, local ordinances, and whether your property is listed.
  2. You are subject to zoning, which means that although the property is yours, you can only use it for specific types of businesses. You can apply for re-zoning, for which you have to pay yourself, but this is rarely successful.
  3. If you want to lease or sublease any of the building, you become a landlord, which means you have to deal with all the complexities of leasing, but from the other perspective.

The biggest issue for most, however, is the 30% deposit, which is money that most people simply do not have. The alternative would be to invest in a commercial real estate investment trust instead. While this means that you will not have use of the building, as you won’t own it outright, it does make owning property more affordable and you don’t have any of the stresses of being a landlord either.