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Insider Strader Has Prop. 13 and Terrorism on His Mind

Transportation, terrorism and Proposition 13 are key issues for real estate insider Tim Strader Jr.

Strader has been named to head the local chapter of the National Association of Industrial and Office Properties this year.

His day job is president of Irvine-based Starpointe Ventures, a family-owned consultant and developer.

Starpointe has worked on entitlement and planning for some big redevelopment projects in Irvine along Jamboree Road, including Lennar Corp.’s plans for the former Parker Hannifin Corp. campus. Lennar plans 1,300 condos on the site.

The National Association of Industrial and Office Properties is a national trade group for property owners and people who work with them.

Strader’s been active for years with the trade group. He said he hopes to further its roles as a networking tool, source of training and lobbying group.

During lunch with Strader and Dirk Geiger, a vice chair on the association’s legislative committee, we discussed Orange County’s office market and the trade group’s activities.

I asked Strader if developers still were paying top dollar for steel and concrete. China has been gobbling up unprecedented tons of steel and concrete to build skyscrapers and for manufacturing. That’s pushed up prices here.

Strader said it costs about 40% more to build a five-story office building than it did two or three years ago when materials were cheaper. Today it costs about $90 to $95 per square foot to build an empty office building, compared to $65 to $70 per square foot two or three years ago, he said.

Geiger, meanwhile, outlined the group’s lobbying priorities this year. The group plans to lobby for:

More transportation dollars for OC

Repopulating animals on the endangered species list

Extending the government’s backing of terrorism insurance on buildings

Fighting efforts to remove commercial buildings from the protections of Proposition 13

Other players serving on the local executive committee of the National Association of Industrial and Office Properties this year: Kirk Johnson, the trade group’s president-elect, and senior vice president for Watson Land Co.; Rick Wandrocke, vice president, and vice president of leasing for The Irvine Company’s commercial arm; Tracy Coombe, secretary, and vice president of Stirling Enterprises; Terry Thompson, treasurer, and senior vice president for PM Realty Group; and Michael Alvarado, programs and educational liaison, and partner with Allen Matkins.


Property Pile-on


John Combs’ property management startup RiverRock Real Estate Group in Santa Ana has racked up three new properties totaling 399,619 square feet.

Two assignments are in OC: Buzz Oates Management Services tapped RiverRock to manage a 108,000-square-foot industrial building in Cypress Corporate Park in Cypress. Shin Yen Management Inc. hired RiverRock for its 106,619-square-foot, four-story office building in Anaheim dubbed Stadium Crossings.

Combs was a former executive at Insignia/ESG. He left the company when it was bought by CB Richard Ellis Group Inc.

Interest rates took a scary dip earlier this month, sending chills through the county’s subprime lending industry.

On Feb. 9, the yield on a 10-year Treasury bond dipped below the important psychological benchmark of 4%. It was back up the next day.

Long-term rates have been very low for the past few years, which has been a good thing for the lending industry. But lately short-term rates have been rising, which isn’t such a good thing.

Subprime lenders, who make loans to people with imperfect credit, fear a narrowing gap between the two types of rates.

In fact, the closing gap lately has squeezed the profits of Irvine-based New Century Financial Corp., Calabasas-based Countrywide Financial Corp. and Kansas City, Mo.-based NovaStar Financial Inc., among others.

OC also is home to Orange-based subprime lender Ameriquest Mortgage Co., but the company is privately held and keeps financial details close to the vest.

Subprime lenders sell their loans to investors as mortgage-backed securities. If investors can receive a comparable yield from a short-term bond, they’ll take it, since those investments are seen as less risky.

Short-term rates have been rising as the Federal Reserve Bank jacked up a key short-term rate six times since summer to 2.5%.

Meanwhile, long-term rates took a hit earlier this month after a Fed bank president in Atlanta suggested it may be time to stop referring to future rate increases as occurring at a “measured” pace.

Traders used to speculate the Fed would crank up rates faster if it ever dropped the “measured” reference. Now they’re guessing it could mean the opposite, with the Fed easing up on rate increases since inflation appears to be in check.

Investors bought long-term bonds in bulk after the Fed president’s statement. The buying pushed down yields, which move in the opposite direction of bond prices.

Subprime lenders are paying higher returns to investors as result of rising short-term rates. Their bonds’ yields are tied to a global short-term rate known as the London Inter Bank Offering Rate, which is on the rise.

Three-month Libor is at 2.79%, up from 1.13% a year ago.

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