New business opportunities for Orange County, CA commercial real estate

The Southern California commercial real estate market is doing well in the first quarter of 2014. A recent article in the LA Times interviews a local real estate professional who stated that Southern California's market is "robust" even though it is not experiencing the same job growth as New York. According to the report, the vacancy rate for office space in Orange County was 17.3 percent at the end of the first quarter in 2014. This is down from 17.9 percent during the same time period in 2013. The fluctuation is accompanied by an increase in rental rates, pointing towards a strong market for landlords.

These findings mean that although commercial leasing opportunities continue to present themselves in Southern California, those who wish to join the market should do so carefully.

Make sure the property is worth the price

An important step to finding the right business deal is getting the right property. It can be easy to rely on a building's classification to guide this decision, but the classification can be misleading. Real estate professionals clarify that there are no black and white rules when it comes to labeling a building; instead the difference between a Class A and Class B building can be subjective.

Although classification of property often falls in a grey area, these generalizations can help provide some guidance for those considering a commercial lease.

  • Location. The old adage of real estate "location, location, location" holds true. The location of a building plays a large role in its classification. Not surprisingly those in more desirable locations, perhaps waterfront, ocean view or downtown, get a premium.
  • Age. This is one of the few guidelines that are fairly straight forward. With few exceptions, newer buildings are given a higher ranking. These buildings can offer better amenities such as faster elevators and LEED certifications as well as less wear and tear.
  • Amenities. The building can counteract declined value due to age by updating amenities.

In addition to an awareness of the factors that can play a role in a building's classification, it is also important for those who are considering a lease in California's competitive commercial market to have a basic understanding of state law.

California state law and commercial leases

There are a variety of state laws in place to help protect both landlords and tenants who move forward with a commercial lease. These laws are often changing, as was recently discussed by the Commercial Real Estate Development Association. The group notes that in July of 2013, a new civil code went into effect in California. This civil code requires that landlords disclose whether or not the property was inspected by a Certified Access Specialist. If an inspection occurred, the bill also required disclosure on whether or not the property met applicable accessibility requirements.

In addition to reviewing whether this fairly new civil code was followed in a drafted lease agreement, it is also wise to review the agreement for other questionable provisions. Ideally, even a boilerplate lease agreement should be adjusted to tailor fit each business deal. As a result, those who are considering a commercial lease in California should contact an experienced California commercial leasing lawyer. This legal professional can review the document and provide suggestions to help better ensure the deal is structured to benefit your business interests.