A sharp increase in leasing activity, continued strength in the for-sale market, and the effects of industry consolidations propelled Orange County’s largest commercial brokerages to a banner year in 2014.
Sales and leases at the 21 largest brokerage offices rose from $18 billion to $21.8 billion, according to the Business Journal’s latest ranking of brokerages.
That’s a nearly 22% gain and the fifth year in a row area brokerages reported year-over-year business jumps.
Fifteen of the brokerages reported increases in business, including nine of the 10 largest. Only five posted declines, and one was flat based on a Business Journal estimate.
The streak of annual upticks follows 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. Business for the area’s largest brokerages has nearly doubled since.
The ranking includes local offices’ commercial-property and land deals in OC and elsewhere.
Managing directors of the area’s largest brokerages said last year’s increases were largely across the board, unlike prior years in which big property sales; deals involving large corporate users; and apartment sales were standout performers.
“The recovery is in full swing, and we’re hitting on all cylinders,” said Kurt Strasmann, senior managing director for the OC operations of CBRE Group Inc. “All the sectors were exceptionally strong.”
Leasing activity, in particular, jumped big. Companies reported nearly 8,354 deals, up almost 22%. A year ago, leasing activity had increased only about 1% over year-ago levels.
Sales activity also continued to rise, moving up 17%, the second year in a row that volume increased by double digits.
• The combined operations of CBRE’s local offices, in Newport Beach and Orange, retained the No. 1 spot on the list, with about $3.4 billion in deals, a 5.6% increase.
Strasmann said CBRE and its clients are expecting similar growth this year and beyond.
“We don’t see much in the way of change for the next 18 to 24 months.”
Jeff Ingham, senior managing director for the Irvine office of Chicago-based JLL, expressed similar sentiments.
“In 2014, we exceeded our plan by 10 to 20%,” said Ingham, whose office ranked No. 4 on the list with nearly $2 billion in sales and lease activity.
“Leasing activity really began to pick up for our clients,” said Ingham, whose office—like many on the list—reported strong growth without the addition of many brokers.
Companies reported employing 736 brokers in OC as of last month, a 1% increase.
Big-Dollar Drivers
Land activity and apartment transactions helped boost several local offices last year.
• Land brokerage Land Advisors Organization in Irvine nabbed the No. 8 spot on the list with a little more than $1 billion in transactions, including the estimated $205 million sale of the Marblehead site in San Clemente to homebuilder Taylor Morrison Inc.
The company recently expanded to a larger office in the Irvine Spectrum and added a capital markets team to help builders and developers fund deals, according to President Tom Reimers.
• Apartment brokerage Moran & Co. took the No. 14 spot with $552 million worth of deals originated in its Irvine office.
The company, which marketed land at the Park Place campus that is being turned into an apartment project by Irvine-based Sares-Regis Group, also got a boost from its capital market efforts. It said it helped source equity for apartment development deals valued at nearly $327 million.
Capital market positions and other nonbrokerage positions outpaced brokerage job growth last year in OC. Companies reported having 1,133 workers in their local offices as of February, up 12% over year-ago levels.
Mergers helped boost the bottom lines of several companies.
• Business jumped fourfold at Savills Studley’s Irvine office as a result of last year’s combination between brokerages Savills PLC and Studley Inc., the latter of which was long one of the area’s larger tenant rep brokerages. The combined company’s operations, with a total of $1.6 billion in deals, took the No. 5 spot on the list.
Savills’ local capital markets team handled a number of big-dollar transactions, including the sale of land in Beverly Hills to a Chinese developer planning a mixed-use project. The deal was valued at more than $400 million, according to local news reports.
Newmark
• Also moving up on the list was the Newport Beach office of Newmark Grubb Knight Frank, which took the No. 3 spot with nearly $2 billion worth of deal activity, a nearly 101% increase.
It is the highest volume Newmark has reported since forming in 2012 through the acquisition of the assets of Santa Ana-based Grubb & Ellis Co. by New York-based BGC Partners Inc., which bought fellow brokerage Newmark Knight Frank in 2011.
