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Real Estate Brokers Continue Gains

An increase in property sales, especially for apartments, helped Orange County’s top commercial real estate brokerages post a third straight year of gains in 2012.

Sales and leases at the 21 largest commercial brokerage offices in the county rose to nearly $16.3 billion in 2012 from $15.5 billion a year earlier, according to the Business Journal’s latest ranking of top commercial brokerages.

That’s a little more than a 5% gain over year-ago levels, when our list included 20 companies, and follows an 18% increase in the prior year. This week’s list would show about a 3% year-to-year gain if it included only the top 20 companies.

The latest annual ranking includes commercial property and land deals in 2012 in OC, as well as those done elsewhere by local offices.

The current streak of three consecutive yearly upticks follow four years of declines as the local brokerage industry felt the brunt of the commercial real estate downturn.

Deal activity bottomed out in 2009, when about $11.1 billion in transactions here were reported. Since then, deal-making has stepped up every year for Los Angeles-based CBRE Group Inc., whose local offices have maintained the No. 1 position on the Business Journal’s annual list over that time.

CBRE’s Newport Beach and Orange offices, which have about 100 brokers, combined to do a little more than $3 billion in lease and sales transactions last year. That’s about 50% higher than 2009 levels.

“People are feeling more confident,” said Kurt Strasmann, senior managing director for the OC operations of CBRE, whose Newport Beach office serves as the company’s West Coast operations. “Big business has done well (the past few years), but now small businesses are starting to make moves, too.”

“Deal flow has increased, and there’s more larger-sized transactions,” said Strasmann. He said office and industrial are beginning to ink longer-term leases than in prior years—another good sign for the local economy’s health.

Still Not Out of the Woods?

Improved tenant confidence hasn’t necessarily lead to an increase in leasing volumes so far, though, based on this week’s list.

Companies on the list reported working on a combined 7,025 leases last year, only about 100 more leases than the prior year.

There’s in fact potential for OC to see a decline in leasing volume, according to Jeff Ingham, senior managing director for the Irvine office of Chicago-based Jones Lang LaSalle.

The past few years saw a good share of tenants complete blend-and-extend deals—effectively early lease renewals at lower rates.

With market conditions improving, the willingness of landlords to complete those types of leases could decline, resulting in slower leasing velocity, according to Ingham, whose company took the No. 5 spot on this week’s list, with $1.1 billion in deals reported last year.

The acquisition of Irvine-based boutique brokerage 360 Commercial Partners last summer—combined with an overall boost in broker productivity and the addition of a brokerage team that works on big-dollar apartment sales—helped improve JLL’s rank by four spots on this week’s list.

“We did nine (apartment) sales last year and have another dozen or so listings in the pipeline right now,” Ingham said.

Apartments, which continue to trade at capitalization rates approaching 4%, were still the best-performing product type for area sales in OC and across the country.

Almost $84.6 billion in apartment-sale deals closed nationwide in 2012, a 47% increase over the prior year, according to Real Capital Analytics Inc., a New York-based commercial property data firm.

The companies on this week’s list worked on more than 1,600 sales last year, a 17% increase in volume over 2011 levels.

Small Offices, Big Deals

Companies with few brokers were among the standout performers last year.

The Irvine office of Moran & Co., which specializes in apartment transactions, reported working on close to $1.7 billion in transactions last year—a nearly 66% year-over-year increase—good for the No. 2 spot on the list.

Officials at Moran & Co.’s OC office, which counts just four brokers, worked on a nearly $174 million deal in Northern California believed to be the largest sale of an individual apartment complex in the state so far this year.

For Orion Property Partners Inc., 2012 represented “our best year by more than (a factor of) two,” said Jay Carnahan, president of the Irvine-based company, which counts seven brokers and took the No. 8 spot on the list.

Orion worked on more than $600 million in deals last year, including major leases for fast-growing companies like Anaheim-based lender CashCall Inc., fitness center operator LA Fitness and lender Greenlight Financial Inc., both in Irvine.

The company also helped in the sale of The Michelson office tower in Irvine, which set local marks with its $277 million sale last year to Toronto-based Manulife Financial Corp.

Early returns for 2013 suggest Orion is on track to beat last year’s break-out year, said Carnahan, whose company was one of three brokerages on the list to report year-over-year growth in excess of 100%. The others are Jones Lang LaSalle and Colliers International, which took the No. 3 spot on the list with $1.1 billion in deals reported here last year.


Download the 2013 OC’s LARGEST COMMERCIAL REAL ESTATE BROKERS list (pdf)

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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