There weren’t any gleaming office towers built during the past year, but Orange County’s top commercial property managers still found less glamorous routes to growth.
The total commercial space managed by the top 26 property managers in OC rose 10% to 178 million square feet in the past year, according to this week’s Business Journal list.
While attention has focused on hot sales of office, industrial and retail buildings,not to mention housing,which has filled the coffers of sellers and brokers, some property managers also have benefited.
“Any time a property changes hands, it creates opportunity for service providers,” said Eric Johnson, senior vice president in the Irvine office of No. 3 Trammel Crow Co., which reported 16% growth in its portfolio to 11.9 million square feet in the past year.
Sales of office and industrial buildings often lead to one property manager taking over for another. But sometimes a building is managed by the owner and, after it’s sold, a property manager may be hired.
One of the hottest areas in commercial sales has been small buildings for sale. Developers are putting up small buildings and larger buildings with smaller units inside,dubbed office condos,in Irvine and other cities.
As in the housing market, low interest rates have spurred owners of small companies to switch from renting space to owning it.
Property managers have benefited from the trend, according to Jim Neiger, president of No. 5 Costa Mesa-based Essex Realty Management Inc. Essex’s portfolio has grown 15% to 7.1 million square feet in the past year.
Neiger said small buildings or tiny units inside larger buildings typically share common areas.
Developers hire companies such as Essex to manage common areas. After all the units are sold, the same property manager usually is retained, he said.
Essex also grew business last year by starting a division that manages storage facilities, Neiger said. His company now manages several storage sites in different cities, he said.
OC’s top property managers grew across the board last year. The total square footage managed by their OC offices, including space outside the county, shot up 12% to 260 million square feet, versus a year ago.
The top managers expanded their staffs by 7% to 2,921 workers.
CB, Irvine Co. Tops
CB Richard Ellis Group Inc. again dominated the list. Its 32 million square feet represents a 23% rise from a year ago and places it firmly in the No. 1 slot.
CB’s top property management official in OC was unavailable for comment last week. A source close to the company said CB was hired to manage some large industrial parks here. Two years ago, CB picked up 4 million square feet in OC when it bought Insignia/ESG Inc.
The Irvine Company ranked No. 2 on the strength of managing its own office and retail buildings. The county’s largest real estate owner took over management of its shopping centers and office buildings in the past couple of years.
The moves cut loose Madison Marquette Retail Services Inc. of Cincinnati and Donahue Schriber Realty Group Inc. of Costa Mesa.
After the shift, both companies fell short of the 2.5 million-square-foot cutoff to make this year’s list.
Last year Madison was No. 10 with 5.1 million square feet and Donahue was No. 11 with 5 million square feet. Madison didn’t respond to a request for its current total; Donahue manages 1.8 million square feet.
Irvine’s Sares-Regis Group dropped one spot to No. 3, despite no change in its total of 11.9 million square feet here. Adding the Irvine Co. to the list caused several other companies to move down a notch.
Trammel Crow tied Sares-Regis for the No. 3 spot.
Two companies also tied at No. 5: Anaheim Hills-based The Remm Group, whose total remained unchanged at 7.1 million square feet, and Essex Realty.
Another newcomer to the list was No. 21 Los Angeles-based Maguire Properties Inc. The real estate investment trust manages its own properties, which total 3.3 million square feet in OC.
Within the past 12 months or so, Maguire has bought three large, class A office complexes in Irvine, including Washington Mutual’s campus and Park Place.
Just three of the 26 property managers saw their totals drop from a year ago.
The Irvine office of Jones Lang LaSalle Inc. dropped three slots to No. 7 on a decline of 7% to 7 million square feet. The Irvine office of Kilroy Realty Corp. rose one slot to No. 12, despite a 6% decline to 4.3 million square feet. And the Newport Beach office of Arden Realty Inc. dropped two slots to No. 15 on a 9% decline to 4.2 million square feet.
Officials with Jones Lang and Kilroy were unavailable for comment last week.
Marc Jones of Arden Realty said his company sold some buildings last year, accounting for the decline. Arden is a real estate investment trust that manages its own buildings. It does not manage buildings for other companies.
In addition to Madison and Donahue, one other company dropped off the list this year: Westminster-based Interpacific Asset Management.
