City of Orange Commercial Real Estate for Sale & Lease

City of Orange Commercial Real Estate
The city of Orange is part of California’s Orange County. It is just to the north of Santa Ana, which is also the county seat. It is an unusual location, because its main residential area is in the Old Town District, and the properties there are all nearly 100 years old. The majority of those types of properties in Orange County were demolished in the 1960s. Some 139,812 people live in Orange, and it is classed as an affluent city.

A lot of people in Orange commute to Santa Ana for their work. That said, there are a number of top employers within Orange itself, including the University of California’s Irvine Medical Center, the Sisters of St. Joseph Hospital, the Children’s Hospital of Orange County, the Orange County Transportation Authority, the Chapman University, the National Oilwell Varco, the City of Orange, Kerr Dental, the Sisters of St. Joseph’s Health System, AECOM, CaliforniaChoice, and Santiago Canyon College.

Orange is not a city with an economy based on industry. Rather, it is home to a wildlife sanctuary, a small zoo, lakes, and parks. There is also a large entertainment and outdoor shopping center known as The Outlets at Orange, where various designer stores can be found. In terms of shopping, however, Orange is mainly known for its antique stores, which are found mainly in the plaza.

There has recently been an increase in the number of restaurants and in clothing boutiques, and there is also some income from tourism. This is particularly true during the Labor Day Weekend, when the Orange International Street Fair takes place, which first started in 1973. All profits during this event, however, are sent to nonprofit community charities.

City of Orange Commercial Buildings for Sale & Lease

Orange is a very unique city in terms of its economy. For a long time, there was little demand for commercial real estate (CRE) or commercial buildings for sale & lease because most shops were antique stores who operated out of old residential properties. This is changing to some degree now, however, with the increase in restaurants and boutique stores. As a result, more investors have become interested in purchasing CRE in Orange to become landlords.

If you own a store yourself, or you are thinking of setting up a business in Orange, you will have to choose between purchasing CRE or leasing it. While some properties are available for purchase, the vast majority of startups and small businesses choose to lease instead. There are pros and cons to both leasing and buying, however, which go above and beyond what you pay each month on either rent or mortgage. This is because both have very different associated costs and benefits, such as tax advantages, maintenance and repair costs, insurance costs, and more.

While financial advisors tend to recommend that businesses opt to purchase their CRE if they intend to stay there for longer than seven years, this is not always possible. This is firstly due to there not being a lot of property available to purchase and, secondly, because purchasing a CRE requires a down payment of at least 30%. This is often more than people can afford, particularly if they are a small business or a startup.

City of Orange Commercial Property for Sale

If you are considering investing in a CRE, be that to run your own business or to rent out as a landlord, it is important that you have as much understanding as possible of the financial implications of this. In Orange:

  • Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% rise compared to the last three months, and a year on year 10.5% rise.
  • Office properties in Orange usually cost around $276.62 per square foot. This has been unchanged over both the past quarter and the past year. The price is somewhat lower than the county and metro average, but higher than the state average. If you own office space, you can usually charge a yearly rent of $25.20 per square foot in Orange, which is a 4.3% increase over the past three months, and a 4.6% increase over the past year. Those prices are higher than in the county and state areas, but lower than in the metro area.
  • 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, this is a 14.5% rise. If you own retail property in Orange, you can usually charge $20.14 per year per square foot. This is a 2.1% increase over the past three months, and a 2.1% increase over the past year. It is also less than the county, metro, and state average.

City of Orange Commercial Property for Lease

If you are like most small businesses or startups, it is likely that you will look mainly towards a commercial property for lease. You will quickly notice, however, that finding such a property is a complex and lengthy process. With a residential property, you often identify a property, pay the security deposit, and move in. With commercial properties, however, this is quite different.

You should start by getting a team of professionals around you that will help you identify the best property, and get the best possible deal for it as well. At the heart of this team should lie your tenant broker. Try to avoid leasing agents, as their goal is to negotiate a contract as favorable as possible for the landlord, rather than for you. Other professionals you will need on board include an accountant and a lawyer.

With this team, you should be able to identify a property that is both suitable and affordable, at which point a long period of negotiation on the contract will begin. This can often take several months, something you must take into consideration if you want to open up a business.

Some of the things that are included in the contract and that must be negotiated in your favor include:

  • The type of personal guarantee you have to give and how long it should be in place for
  • The price of your monthly lease, and how this is calculated (usually per usable square foot)
  • Which type of lease is most suitable for you, with options being the percentage lease, the net lease, the triple net lease, and the gross lease
  • How long your lease will last (this can be anything from three to 175 years), and what happens once your term is up.
  • How often your landlord can increase the rent, by how much, and based on what
  • Who will be responsible for maintenance and repairs
  • How much you can renovate the inside of the property, and who will pay for this
  • How much you can renovate the outside of the property to signpost potential customers to your business
  • Whether or not you can sublease the property at any point, and, if so, which conditions are attached to that
  • The exit clauses, penalties, and fees should you wish to terminate your lease early
  • Whether you can transfer your lease to a new owner should you decide to sell your business
  • Whether any co-tenancy or exclusive use clauses are or should be in place
  • How much your security deposit has to be

As you can see, there are many different things to take into consideration when you decide to lease a property. Unless you are highly experienced in the world of CRE and leasing, it is unlikely that this is a negotiation you are able to complete without any professional help. This is also why your team is so important, and why this period can last so long.

When Purchasing a CRE

If, on the other hand, you are looking at purchasing a CRE, things are slightly different. While you still need an accountant and a lawyer on board, you need a different type of real estate agent, as well as mortgage broker on your side. CRE properties provide excellent investments, particularly in Orange where the economy is growing and changing. Once you own a property, you will become a landlord, and you will have to contend with people who are looking at leasing your property, effectively going through the reverse scenario as what was described above. For instance, you should try to get a leasing agent on board, rather than a tenant broker.

Owning a CRE property outright requires a considerable investment. You will have to put at least 30% of the value of the property down in order to be considered for a mortgage. Additionally, there will be many associated costs to pay for as well. This is not affordable for many, and most people also don’t have the time or the knowledge to become a landlord for a commercial property. Hence, you may want to consider investing in a commercial real estate investment trust instead, which gives you the investment benefits, but not the difficulties.