For many businesses, owning your industrial facility is the smartest long-term real estate decision you'll make. Instead of paying rent that increases every year, you build equity, control your occupancy costs, and gain the flexibility to modify your space as needed. This guide covers everything you need to know about purchasing industrial property in Contra Costa and Solano Counties as an owner-user.
Why Buy Instead of Lease?
Owner-occupancy offers compelling advantages that rental never can:
Fixed Occupancy Costs: With a fixed-rate mortgage, your monthly payment stays constant while market rents typically increase 3-5% annually. Over a 10-year period, this creates substantial savings.
Equity Building: Every mortgage payment builds ownership stake. Unlike rent, which provides no return, your monthly payments accumulate value that you can access later through refinancing or sale.
Tax Advantages: Property owners can depreciate the building value over 39 years, deduct mortgage interest, and potentially benefit from 1031 exchanges when selling. Consult your CPA for specifics.
Operational Control: Own your facility and you control modifications, hours of operation, and tenant mix if you have excess space. No landlord approval required.
| Factor | Leasing | Owning |
|---|---|---|
| Monthly Payment | Increases with market | Fixed (with fixed-rate loan) |
| Equity Building | None | Builds over time |
| Upfront Cost | Low (deposit + first month) | Higher (10-25% down) |
| Flexibility to Relocate | Higher (lease term) | Lower (must sell) |
| Maintenance Responsibility | Often landlord | Owner |
| Modification Freedom | Requires approval | Full control |
Financing Options for Owner-Users
Owner-occupants have access to favorable financing unavailable to pure investors:
SBA 504 Loan
- Down Payment: 10-15%
- Rate: Fixed (below market)
- Term: 20-25 years
- Occupancy: 51%+ required
- Best For: Businesses wanting lowest down payment
SBA 7(a) Loan
- Down Payment: 10-20%
- Rate: Variable or fixed
- Term: Up to 25 years
- Occupancy: 51%+ required
- Best For: Flexibility, working capital needs
Conventional Commercial
- Down Payment: 20-25%
- Rate: Fixed or variable
- Term: 5-10 year reset
- Occupancy: No requirement
- Best For: Strong financials, speed
SBA 504: The Owner-User Advantage
The SBA 504 program is specifically designed for owner-occupied commercial real estate. With only 10% down (versus 25% conventional) and below-market fixed rates, it's often the best option for businesses with at least two years of operating history and strong cash flow. The tradeoff: more paperwork and a longer closing timeline (60-90 days typical).
Building Requirements: What to Look For
Industrial buildings vary dramatically in their functionality. Before touring properties, understand what your operations actually require:
Space Planning Basics
Production/Warehouse Area: Calculate your current footprint plus 20-30% for growth. Consider ceiling height needs—manufacturing often requires only 16-20 feet, while distribution may need 24-32 feet for racking.
Office Space: Most industrial buildings include 10-20% office finish. If your ratio differs significantly, you may need to budget for buildout.
Exterior Yards: Need trailer parking, outdoor storage, or room for future expansion? Not all industrial properties include usable yard areas.
Critical Infrastructure
Building Feature Checklist
- Clear Height: Minimum ceiling height for your racking/equipment
- Loading: Grade-level doors, dock-high positions, drive-in access
- Power: Amperage and phase (three-phase for most equipment)
- HVAC: Warehouse climate control, office air conditioning
- Fire Suppression: Sprinkler system type and coverage
- Floor Load: Capacity for heavy equipment or racking
- Parking: Employee cars, visitor spaces, truck maneuvering
- Zoning: Permitted uses match your operations
The Purchase Process: Step by Step
1. Get Pre-Qualified: Before touring properties, connect with an SBA-preferred lender or commercial mortgage broker. Understand your budget, required down payment, and documentation needs. Pre-qualification strengthens your offers.
2. Define Your Requirements: Size range, location priorities, building features, and timeline. Be realistic about must-haves versus nice-to-haves—the perfect building rarely exists.
3. Property Search: Your broker will identify on-market listings and proactively contact owners of off-market properties matching your criteria. Many industrial sales happen without public marketing.
4. Tour & Evaluate: Visit shortlisted properties with your broker. Bring key decision-makers and, if helpful, your operations team or architect to assess fit.
5. Make an Offer: Submit a Letter of Intent (LOI) outlining price, terms, contingencies, and timeline. Expect negotiation on price, due diligence period, and closing date.
6. Execute Purchase Agreement: Once LOI terms are agreed, formalize with a Purchase and Sale Agreement. This typically includes a due diligence period (30-45 days), financing contingency, and earnest money deposit.
7. Due Diligence: Conduct inspections, review title, assess environmental condition (Phase I required for SBA loans), verify zoning, and finalize financing. This is your opportunity to uncover issues before closing.
8. Close & Take Ownership: Sign final documents, transfer funds through escrow, and receive keys. Plan your move-in timeline to minimize operational disruption.
Environmental Due Diligence
All SBA loans require a Phase I Environmental Site Assessment. Even without SBA financing, environmental review protects you from inheriting contamination liability. Budget $2,500-4,000 and 3-4 weeks for this critical step.
Location Considerations: East Bay Submarkets
The East Bay industrial market spans diverse submarkets with different characteristics:
Central Contra Costa (Concord, Pleasant Hill, Walnut Creek): Higher price points, excellent access to I-680 and Highway 4, limited new construction. Best for businesses serving local clientele or employees from central county.
East Contra Costa (Pittsburg, Antioch, Oakley): Lower land costs, larger lots available, growing infrastructure. Attractive for operations needing more space per dollar or outdoor storage.
Solano County (Fairfield, Vacaville, Suisun): Most affordable East Bay option, excellent I-80/I-680 access, proximity to Bay Area and Sacramento markets. Strong manufacturing and logistics presence.
Richmond/West Contra Costa: Port proximity, heavier industrial zoning, varied building quality. Suited for import/export, manufacturing, or businesses needing port access.
Common Mistakes to Avoid
Underestimating Total Costs: Beyond purchase price, budget for closing costs (2-4%), potential tenant improvements, moving expenses, and equipment installation. SBA loans have specific fee structures—understand them upfront.
Ignoring Future Needs: The building that fits today may not work in three years. Factor in realistic growth projections and consider whether the property can accommodate expansion.
Skipping Professional Inspections: Commercial building inspections cost $1,000-3,000 but can identify roof issues, HVAC problems, or structural concerns that could cost tens of thousands to address.
Rushing the Timeline: SBA loans take 60-90 days to close. Build realistic timelines into your offers—rushed deals create problems for everyone.
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