Download the 2011 OC’s TOP COMMERCIAL REAL ESTATE BROKERS list (pdf)
Orange County’s top brokers reversed a four-year streak of declines in business in 2010, thanks to gradually improving market conditions and a flurry of big-dollar deals that closed late in the year.
The number of sales and leases at the 21 largest brokerage offices in the county rose to $13.1 billion in 2010, versus $11.1 billion a year earlier, according to the Business Journal’s latest ranking of top commercial real estate brokerages.
That’s an 18% increase—the first year-over-year gain the sector’s seen since 2005, when the local market peaked with $20.7 billion in transactions.
Business “started building last year in a continuous path,” said Jeff Moore, senior managing director for CB Richard Ellis Group Inc.’s operations here. “There were a lot more transactions, especially user deals, because of pricing. People saw the market was at the bottom, and that things weren’t going to be much worse.”
CB Richard Ellis retained the top spot on this year’s list, with its Newport Beach and Anaheim offices doing a combined $2.3 billion in business, a 2% decline from 2009 levels.
CB Richard Ellis was one of three brokerages to post more than $1 billion worth of deals in 2010. In the peak year of 2005, six offices here broke the billion-dollar mark.
The other two brokerages with more than $1 billion in deals last year were No. 2 Voit Real Estate Services of Newport Beach, with $1.8 billion of work, and No. 3 Santa Ana-based Grubb & Ellis Co., whose Newport Beach and Anaheim offices reported $1.4 billion in deals.
The list ranks brokerages operating here by the dollar value of transactions by their local offices.
The figures include deals done in 2010 in OC, as well as those done elsewhere that are handled by local offices.
Five companies on this year’s list reported year-over-year drops in business, while 13 posted increases. Three totals are Business Journal estimates.
Last-Minute Deals
More companies on this year’s list looked likely to see another decline last year right up to the fourth quarter.
Then came a wave of leases and sales that accounted for close to half of all business for the year.
All told, the number of sales reported by companies on this year’s list was up more than 50% from 2009 levels, while lease activity was up about 25%.
“The first quarter was bad, the second quarter was OK, the third quarter was good, but the fourth quarter was unbelievable,” said Martin Pupil, regional managing director for Colliers International, the No. 9 company on this year’s list.
Colliers made one of the larger jumps on this year’s list, posting a 69% increase in business in 2010, to about $440 million in deals. Pupil chalked up the increase to an improving market and a move to staff up Colliers’ Irvine office.
Colliers added a new office agency practice last year, and recently brought on one of CB Richard Ellis’ top industrial brokerage teams. The company now has 34 brokers here, up from 22 a year ago.
“We’ve used the downturn to grow—it’s absolutely the right time to add (brokers),” Pupil said.
Another brokerage showing a sizeable jump in business last year was the Irvine office of Cushman & Wakefield Inc. The office placed No. 4 with $911 million in lease and sales business, a 70% year-over-year jump.
“It was a phenomenal year for us—it exceeded all our goals,” said Eric Hinkelman, senior managing director for the Irvine office of Cushman. “2009 didn’t see a lot of transactions, but last year things started to click.”
Large Sales
Locally, Cushman worked on a number of the larger office sales in the county, including the Quintana campus in Irvine, which is reported to have traded hands at about $69 million. Cushman also worked on the $41 million sale of Irvine’s 18301 Von Karman Ave. office building.
Outside OC, local Cushman brokers worked on one of the biggest industrial sales seen in the state last year, an $85 million deal for a 1.6 million-square-foot complex in Mira Loma.
Voit reported working on the most sales of any company on this year’s list—318—while the three area offices of Lee & Associates Realty Group, No. 5 on this year’s list, reported working on the most leases, with a total of 1,600.
Despite the recent gains, brokers representing tenants think the market’s still favorable for companies seeking out new space or looking to renew leases at existing offices.
“I think we’re comfortably set in a tenant’s market for all of 2011, and further,” said Royce Sharf, executive vice president for the Irvine office of Studley Inc., No. 15 on this year’s list.
Studley represented Lake Forest’s Panasonic Avionics Corp. in the largest office lease here in 2010, a 354,727-square-foot renewal and expansion of space in six area buildings.
Falling lease rates brought plenty of tenant interest last year, Sharf said.
“If you wanted to get a deal done (last year), you thought you would want to get to the table pretty soon,” said Sharf.
Cautious Optimism
With the first quarter of the year typically the slowest in terms of sales and leasing activity, and this year proving no exception, the heads of the area’s largest brokerages are keeping an open mind about what the remainder of 2011 holds.
Cushman’s Hinkelman said he’s “cautiously optimistic” for 2011. He and his colleagues are keeping close tabs on the number of local deals.
First quarter activity was “good, but it hasn’t blown our socks off,” said Greg May, co-managing director for the Orange County brokerage operations for Grubb & Ellis.
Grubb & Ellis more than doubled the number of its sales last year and notched an increase of about 18% on leases. Overall, the value of its deals was up about 18% from 2009 levels.
For the start of 2011, brokers “here are really busy, but they’re not closing (deals) yet,” said May.
“We’re still on shaky footing—I don’t think it’s a full-blown recovery yet,” Colliers’ Pupil said.
CB Richard Ellis’ Moore expects larger sales to remain strong the rest of the year.
“There’s a lot of capital that needs to be placed,” he said
Office and retail leasing are showing good activity, but sales of industrial buildings in the 30,000-square-foot to 100,000-square-foot range remain sluggish, due largely to a lack of properties on the market, said Grubb & Ellis’ May.
“We need more supply,” May said.
Download the 2011 OC’s TOP COMMERCIAL REAL ESTATE BROKERS list (pdf)
