The city of Westminster is a part of Orange County. Founded in 1870, it was incorporated in 1957. As of 2013, it had a population of 91,739. It was originally called Tri-City, as an amalgamation of Midway City, Barber City, and Westminster. However, when Midway City refused to be incorporated, Barber City became part of Westminster, which kept its name. The city is home to many Vietnamese refugees, who arrived during the 1970s. As a result, Westminster is also home to “Little Saigon” with about 40.2% of the population being of Vietnamese descent. The city’s biggest employers are the Westminster School District, Souther California Edison, Ito Farms, Kindred Hospital Westminster, City of Westminster, BE Aerospace, Wal-Mart, Sears, Westminster High School, and the LBS Financial Credit Union.
Westminster Commercial Buildings for Sale & Lease
If you are considering setting up a business in Westminster, or if you want to invest in property, you can consider commercial buildings for sale & lease. There are advantages and disadvantages to buying or leasing, and since you will be making a significant financial investment, you need to consider both. The rule of thumb is that those who expect to remain in one building for seven years or more should consider purchase rather than lease, as this will work out cheaper. However, you also have to consider the fact that you would have to put a large down payment down, tying your money up if you do this. That money could also have driven growth in your business. Additionally, seven years is a long time and you have to be very sure that you will actually be able to stay in the property for that long. Additionally, owning a commercial property means that you are responsible for all the associated maintenance costs.
The cost is also not as simple as what you pay in rent or mortgage every month. You can have some tax savings if you lease, for instance, which you can’t do as much on a mortgage. With a mortgage, you can only write off interest, cost of maintenance, and any depreciation of the building. The down payment when you buy could be as much as 30% of the price, which is a substantial amount of money. On the other hand, this may mean that your monthly mortgage payment is much lower than your lease payments.
Westminster Commercial Property for Sale
If you do decide to purchase a commercial property, working out whether or not that will be a good investment is very important as well. Hence, the following trends may be of interest to you:
- 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 a 11.3% year on year rise.
- 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 $9.38 per square foot per year, which has been unchanged over all from the past year.
- 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.
Westminster Commercial Property for Lease
If you have decided to lease rather than purchase, you have to know exactly what you are doing. Most of us think that the process is pretty much the same as with residential properties, but this is completely untrue. In fact, you may struggle to find a commercial property for lease at all unless you know where to look. This is why working with a broker is always a good idea. An added benefit is that the building owner will usually pay for their fees, so there should be nothing stopping you from working with them.
When choosing a broker, make sure it is not a leasing agent, but rather a tenant broker. That is because the latter specializes specifically in people who are in your situation. The goal of such a broker is to get the best deal for you, and not for the landlord. It is common for such a broker to ask you to sign a representation agreement, usually in return for some sort of discount. It is not recommended that you sign that if you are looking for a particularly large property.
Once you have your broker, and you have spotted a property that you are interested in, it will be time to negotiate. Landlords will usually provide you with an initial contract that will be highly favorable for them, but not for you. They hope that you will simply sign on the dotted line, instead of trying to find a deal that works better for you. Make sure you negotiate, therefore, something that your tenant broker should be able to help you with.
Some of the things you can negotiate include:
- Your personal guarantee. While it is common to have to provide one, meaning you have to have a credit check performed on your name, the personal guarantee should not be endless. This guarantee means that you will personally pay for the lease if your business is unable to do so.
- The fees you have to pay for your lease, which is generally based on total square footage. There is a big difference between total square footage and usable square footage, however. The price you get is generally broken down as an amount per square foot, which means you should be able to get it reduced if you measure the usable square footage.
- The type of lease that works best for you. The percentage lease is most common for retail properties, whereby you pay rent as well as a percentage of your earning. You can negotiate on that percentage. Alternative, you could have the net lease, whereby you pay a range of expenses as well, or the Triple Net Lease, whereby you pay the CAM (Common Area Maintenance) fees. Lastly, you could opt for the gross lease, which is a single monthly payment that includes a range of different fees.
- The length of your lease. You need to make it as short as possible so that, if your business isn’t successful, you won’t end up being tied to a property for many years regardless. On the other hand, you need to make sure that when the end date of your lease arrives, you can simply extend it for a further period, rather than having to move your business elsewhere. A common time period for a lease is between five and ten years.
- How and by how much the rent can increase every year. Most landlords will base this on a consumer index, and you need to know which one. You should also agree on a cap for rent increases.
- Who will be responsible for maintenance. In residential properties, this is always the duty of the property owner, but this is not always the case with a lease. If you are responsible for the maintenance, you also need to get a discount on your lease.
- Whether or not you can alter the building to suit your needs. You can usually do this, the real negotiation is about who pays for it. Commonly, in leases of over 10 years, the owner pays for it, and you will receive a discount on your monthly lease amount while the renovations happen, if you are unable to use the property during that time.
- How you can signpost to your business. There are sometimes limitations about changes you can make to the face of a property, particularly if it is a historic building.
- Whether a sublease is allowed, which can be a lifeline if your business goes under but your lease isn’t up yet. There are usually stringent clauses included with this, such as not being able to profit from it, and only being able to do it if you go out of business.
- The exit clauses, penalties, and fees should you have to end your lease early
- Whether you can transfer the lease if you end up selling your business
- Co-tenancy or exclusive use clauses, which are necessary if you rely on the customers of another business to come to you (co-tenancy is then needed, which also means you can end your lease agreement if they do), or if you don’t want to have any direct competition near you (exclusive use clause).
A final important consideration is your security deposit. Just as with a residential property, a security deposit has to be made when you lease a commercial property. The difference is, however, that these deposits aren’t capped. You need to make sure that it isn’t more than what you would need to pay on the down payment of purchasing the property instead.