Santa Ana is Orange County, CA’s second most populous city, as well as its county seat. Around 329,427 people live there. It was founded in 1869 and quickly became one of the most densely populated cities in the country. The city is a strong economic power, with headquarters of companies, such as Wahoo’s Fish Taco, Kern’s, TTM Technologies, STEC, SchoolsFirst Federal Credit Union, the Orange County Register, Ingram Micro, Greenwood & Hall, the First American Corporation, Corinthian Colleges, CoreLogic, and Behr Paint. Additionally, it is home to a number of regional headquarters, including T-Mobile, Ultimate Software, and the Xerox Corporation.
The Rickenbacker musical instrument company is perhaps the most notable business in Santa Ana. They create bass guitars and electric guitars that many rock ‘n roll legends have used. Additionally, Lockheed Martin’s precursor, the Glenn L. Martin Company, was founded in the city in 1912. In in 1916, it merged with the Wright Company.
However, while Santa Ana is an economic superpower, it is now being outpaced by Irvine, which is nearby. In the attempt to retain its position, various commercial projects and developments have been approved and started, making it a very interesting place for business development. Additionally, there are many small businesses and older retail stores in the downtown area of the city.
Santa Ana Commercial Buildings for Sale & Lease
Anyone interested in commercial buildings for sale & lease in Santa Ana has a number of options available. For property investors, there are many opportunities with the commercial real estate (CRE) sector. These opportunities also exist for those who want to run a business, but they can also choose to lease a property instead. It can be very difficult to choose between those two options, because there are so many pros and cons to either. While financial experts agree that businesses with plans for seven years or more should consider purchase, this is not always within everybody’s reach.
One of the reasons for this is because comparing the financial obligation between a lease and a purchase goes above and beyond simply putting the monthly rent or monthly mortgage payment side by side. Both have tax advantages, both have associated costs, both have down payments to include, both have limitations in terms of contract, and so on. This means that you do need to learn what the pros and cons of both options are before you come to a decision.
Commercial Property for Sale in Santa Ana
One place to start with comparing your options, whether you want to run a business or make an investment, is in CRE trends. For Santa Ana:
- Multifamily properties 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 usually cost around $311.66 per square foot. This is a quarterly decline of 0.2%, although an 11.3% year on year rise. If you own office space, you can usually charge a yearly rent of $19.89 per square foot, which is a 1.4% increase over the past three months, and a 2.6% increase over the past year. Those prices are slightly lower than in the county, metro, and state areas.
- Industrial properties 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 industrial property, you can usually charge rent of $11.29 per square foot per year, which is a 0.2% increase over the past three months and an 8.7% increase over the past year. That price is slightly lower than in the county and metro areas (although growth has stagnated more there), but higher than the state average.
- 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% decrease over the past three months, but a 4.7% increase over the past year. It is also slightly less than in the county and metro area, but slightly more than the state average.
Santa Ana Commercial Property for Lease
For many people, leasing is the only viable option. CRE, due to its size, is usually very expensive and small businesses or startups simply do not have that type of capital behind them. This doesn’t mean, however, you can dive into a commercial property for lease without considering all your options first. The first thing you should do is use the services of a broker to help you out. There are two types of brokers:
- The leasing agent, who works on the side of the landlord
- The tenant broker, who works on the side of the tenant
Usually, the property owner pays for the broker fees, regardless of the type of agent you choose. Hence, if you want to go for a lease, you should find a tenant broker who will be able to not just find properties that are relevant to you, but who can negotiate on your behalf as well. It is very important that you have someone knowledgeable on your side when it comes to negotiating a favorable lease with the property owner.
Negotiating is not something that comes natural to most people, which is something property owners count on in order to get a deal that is profitable for them. This is another reason why you should have a broker on your side, who is likely to ask you to sign a representation agreement, meaning you will not go someone else. Overall, signing such an agreement is a good idea. The things that they can negotiate for you include:
- The length and extent of your personal guarantee
- How much you have to pay each month for the lease itself, and what that is based on
- The type of lease contract 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 linked to, and how much is the cap
- Where the responsibility for maintenance will lie
- To what extent you are able to change the inside of the building and who will pay for 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 in place 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
- Your security deposit
The above list demonstrates just how important it is to have someone working on your side, and also how complex a lease can be. When you make a CRE purchase, you won’t have to ask any of those questions. You can do with the property as you see fit and alter it in whatever way you want (although this is limited by local ordinances and building codes, etc). You can also sell it when you want to, lease it out to others, and more. But buying is not an option for everybody.
Do You Plan to Rent Out the Property?
CRE properties are known to be excellent investments. This is because shopping is something that people always do, even in times of recession. In fact, shopping in particular drives the economy as a whole and, while it can be hit by an economic downturn, it is the most likely sector to ride that out as well. Looking at it from that perspective, and the fact that, if your own business goes down, you have the opportunity of becoming a landlord yourself and earning an income that way, but it is not always the best option.
You are limited to a degree with your purchase, because CRE properties are subject to zoning, which means they can only be used for certain types of industry. The biggest issue, however, is that you often have to put a 30% deposit down in order to get a mortgage, which are the types of funds most people simply do not have access to. However, you could decide to invest in a real estate investment trust (REIT), which essentially means you own a part of a commercial property, but without the hassle and difficulty of having to manage it as a landlord.
There are many considerations to make when you are considering leasing or buying a commercial property. You need to take the time to actually consider all the options that are out there and what their individual pros and cons are. In so doing, you will be able to decide on a course of action that is most likely to be financially beneficial to you, also in the long term. What is certain is that Santa Ana is an excellent place to buy or lease commercial real estate.