With a low unemployment rate and a much higher median income rate per household than the national average, Orange County is a place where residents have considerable purchasing power. Depending on what type of business you offer, this may make it an ideal spot for your next commercial lease.
Three large universities in the area mean that businesses have access to an educated workforce. The location allows for a strong flow of immigrants, which can also prove positive for anyone starting a business in Orange County. Green start-ups have seen incentives to set up in the area over the past decade.
Find the Best Commercial Lease For Your Needs
If you’re in business for the first time or simply need a new commercial lease in Orange County, then it’s vital to get the best deal. How do you know you are getting the right deal for you? When it comes to comparing leases on different buildings, you may not be comparing like with like as many properties have different structures in place for leasing. That’s why a commercial leasing agent is a necessity to guide you through the lease rates and help you decide the best lease for your needs.
Types of Lease Options
If you are an entrepreneur, then you might think that signing a commercial lease is much like renting out an apartment. This is definitely not the case at. This is why it can seem overwhelming for people who are signing their first commercial lease.
Get some further understanding of lease types below so you can be more prepared when it comes to searching for a commercial lease. This will help to find a good location for the business at the right price.
- Full service gross lease – This includes all the costs required to operate a business. The base rent, utilities, cleaning and any structural repairs are all covered under this lease.
- Modified gross lease (also called modified net lease) – Here, the tenant and the landlord split structural repairs and property tax and insurance, common area maintenance (CAM), and utilities.
- Single net lease, net lease – This is where the tenant pays for the utilities and property tax. The landlord pays for any maintenance, repairs and insurance.
- A net-net, or double net lease – Here the tenant is responsible for the utilities, property tax and insurance premiums for the building, but the landlord takes care of maintenance and repairs.
- Triple net lease (also called an NNN lease)- The tenant must pay for everything in the building, including maintenance. The landlord is still responsible for any structural repairs.
- Hybrid lease – These are becoming more popular. This is when a triple net lease is available but may have additional services included, such as cleaning.
- Percentage rent lease – Here you pay the base rent, plus a percentage of your gross sales over a certain length of time. These leases are often found in multi-tenant retail locations, such as malls.
Which Commercial Lease Should You Get?
It depends where you are in your business journey. When choosing the first lease, if your business is starting small, then it’s wise to go with a short-term lease so that you aren’t putting yourself under pressure in the long-term. If you are further along and your business is growing and shows signs of prospect for the future, then invest for the long-term. Sometimes people change commercial lease because they want to move to a more suitable location or need more space.
Full service or modified gross lease can work well, as the rent doesn’t increase even the operating costs do. However, it also means that if the operating costs do go down, you don’t get any reduction. You need to examine what the “gross” bit of the lease means – there can be inclusions and exclusions. Entrepreneurs sign more modified gross leases than any other group, and there are reasons behind this.
Checklist for Getting a Commercial Lease
Whether this is your first commercial lease or you’ve had one before, it’s easy to miss out a step and find yourself with something that you didn’t bargain for. As the experts, we’ve put together a check-list so you can tick each item off and know that you’re approaching this with the knowledge. Remember that we will guide you through the commercial lease process from start to finish.
Determine What Your Business Needs
Before you think about getting a commercial lease in Orange County, CA, you should have a look at your own company in the long-term. What are the current needs for space? What will this look like in two years, in five years? What is your current budget? What is the cut-off? Where would you prefer to be located? Where is the best for your business?
If you’re at all unsure about your needs long-term, then always go for a shorter lease – one for around two or three years. It might mean paying a little more per square foot, but it means that you aren’t bound into a contract where you may be losing more money than you’re making.
Get a Good Commercial Lawyer
Don’t even think about negotiating a commercial lease without getting a lawyer. It may be tempting to cut costs, but a commercial lawyer understands leases and will spot something that you may not. Also, don’t just ask a general or family lawyer – this is not their specialty. Commercial leases are complex and it’s very easy to make mistakes, especially ones that can end up costing you money.
Get an Overall View of Cost
Ask about any and all incidentals that you need to pay for. Check if there are future increases in the base rate. Don’t be shy about asking for these costs. You don’t want to be caught out with your budget.
Check Market Rents
We’ll be happy to help you get a view of the market, especially for the neighborhood of Orange County where you are looking. This way you can compare your landlord’s asking price. We’ll be happy to help you negotiate the rent if you feel it’s too high.
Research the Types of Lease
You can refer to the types of lease further up this page for a basic understanding of what each lease type entails. Costs will vary depending on which kind of lease you choose.
Find out More about the Property
Get as much information as you can about the building that you are looking to rent.
- First, find out about the landlord. Is he/she reputable? Your commercial leasing agent can help you with a history. Have they cooperated with tenants in the past? Have they other tenants in the building? Ask them about their relationship with the landlord.
- Does the tenant mix suit your business? Do the neighboring businesses have the right vibe? Are there any competitors in the vicinity?
- What about the building’s traffic? Do you have enough parking for the needs of your business? Do other tenants need a lot of parking space because they have people in and out all the time? If you don’t need as much parking, you may be able to negotiate lower rent.
- Talk to the other building tenants and those in the neighborhood. Is business thriving? Is the neighborhood safe? If the prospects of the neighborhood are on the rise, it may be good to nail down that fair rent now before it rises!
Ask for Tenant Incentives
If the space has been vacant for a little while, the landlord may offer some incentives to encourage you to rent. Don’t be afraid to ask for an inducement. You may get two or three months free or they may offer to finance part of the renovations you’d like carried out on the place. Just ask, the most they can do is say no, but you might be surprised at what you get in return.
Review Conditions of Termination
What does the contract say about terminating the lease? Check the circumstances under which either party can terminate. It’s important to know if you may be kicked out for simply missing one payment. You also need to know what happens if the building is put up for sale.
Other tenets to review include if you’d like to break your lease early. Does this landlord require you to pay a remainder or all of the rent? If you think this could be a possibility, don’t be afraid to negotiate.
Is it possible to sub-lease the space you are renting? This could be important if you find yourself in a situation where your business is closing, or even if you need somewhere bigger but can’t break the lease.
Review Renewal Conditions
Commercial leases vary wildly. You could have a duration of one year or ten years. It’s important to know what happens when it comes up for renewal. Ensure that you have the option of renewal, as you may wish to stay put. Also, there may be other options, such as the first option on any adjoining units in the building, allowing for expansion.
Ask for a Competitor Clause
If there isn’t a clause in the contract already, you can request that your landlord ask for your consent if a competitor would like to rent space in the same building. This is important to retail businesses.
Dedicated Commercial Lease Agents in Orange County
Your commercial lease can be a vital component in the survival of your business. We ensure our clients are kept fully informed with market information, comparative analysis and risk reducing strategies to make their deal. We are committed to looking after our client’s interests and pride ourselves on being responsive, resourceful and fully focused on finding the best commercial lease for you.
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