Being in the property management business wasn’t for the faint of heart this past year. Consolidation,real and rumored,dominated the playing field. And, at least going by the numbers, consolidation proved a useful maneuver in moving past the competition.
Last year, CB Richard Ellis held the No. 1 spot among OC property managers, in terms of square feet under management. Not any longer. Insignia/ESG switched places with CB Richard Ellis this year, growing its managed properties 36%, increasing from 16.3 million square feet to 22.2 million square feet.
Overall, the 25 property managers on the list held 135.3 million square feet as of this month, 1% more than they held a year ago. The 25 companies trimmed employment 4%, to 1,381 total.
Insignia/ESG got a big boost in August from The Irvine Company, which switched about 3 million square feet from PM Realty Group to the firm. That gave Insignia a total of about 15 million square feet of Irvine Co. space at the time. And Insignia added more square feet under management as a result of The Irvine Co.’s construction since then.
“Our goal as a company is to grow with our top 20 clients,” said Insignia/ESG’s Michael Bennett, managing director for property services in Orange and San Diego counties. “The growth of The Irvine Company is a good example of that.”
The company plans to continue its focus on managing Class A office, flex-tech and industrial properties, according to Bennett.
Insignia/ESG’s market share is impressive. But not all property management firms have similar goals.
Although impressed with the firm’s growth pattern, Elizabeth Schriber, vice president of Donahue Schriber, suggested comparing the two companies is akin to equating apples to oranges.
“We don’t compete against them,” Schriber said. “Insignia doesn’t do retail. Donahue Schriber does.”
Insignia/ESG’s success is more category-specific than the Business Journal list implies, according to Schriber.
For now, though, Insignia/ESG maintains the top spot in the market. How long it holds that spot depends largely upon the volatility of the market.
Glancing at the top 25 firms reveals quite a bit of volatility, while the news of Equity Office Properties Trust and Spieker Properties Inc. joining forces indicates that consolidation will continue to dominate the landscape in 2001.
Once completed, the deal will thrust the Chicago company into the top tier of property managers in Orange County. Combined, the company will have a portfolio of 37 buildings totaling more than 6 million square feet, which would be good for No. 7 on the list as it stands today.
“The addition of Spieker’s assets to our portfolio increases our presence across our key West Coast markets,” said Timothy H. Callahan, Equity’s president and chief executive officer. “We believe this merger will accelerate our growth rate due to below-market rents in the combined portfolio.”
Equity already counts as part of its local stable Orange’s 500 Orange Tower and 1100 Executive Tower, Irvine’s 1920 and 2010 Main Plaza and 18301 Von Karman Ave. near John Wayne Airport. From Spieker’s portfolio, Equity will add key buildings including the Citicorp tower at 2600 Michelson Drive in Irvine, Griffin Towers at South Coast Metro, City Tower and City Plaza in Orange, and Stadium Towers Plaza in Anaheim.
For now, though, Insignia/ESG remains the market touchstone. It’s 22.2 million square feet under management puts it well ahead of CB, which checks in at 18.8 million square feet. The No. 2 property manager in Orange County grew 2% last year.
Besides Insignia/ESG, other big gainers on the list include No. 6 Essex Realty Management Inc., Costa Mesa, which grew 30% to 7 million square feet of space. Charles Dunn Real Estate Services Inc. edged up three spots to No. 13. With holdings including the Von Karman Corporate Center and Centerpoint La Palma, Charles Dunn added 7% to its portfolio, which totaled 3 million square feet.
Santa Monica-based Warland Investments, which didn’t have enough in OC to make last year’s list, debuts in the No. 14 spot. The firm grew its square footage under management by 21% in OC, where it now manages 2.9 million square feet.
Pacific West Asset Management Corp. moved from No. 19 to No. 15 on the list by adding 25% to its holdings. The Costa Mesa-based company manages 2.65 million square feet, including The Center of Rancho Niguel, Stonecreek Plaza and Sycamore Commons.
Equity made the biggest percentage jump among the top 25 firms. The company nailed down the No. 19 spot after failing to make the list the previous year. Equity increased its portfolio 57%, with 1.91 million square feet under its care.
Rounding out the growth firms are No. 23 Optima Asset Management Services Inc. (up 8%) and CIP Real Estate, also at No. 23. With notable buildings including the Fullerton Business Center and The Esplanade in Costa Mesa. CIP is another new entry.
Dropping off this year’s list are Grubb & Ellis Management Services (No. 21 last year) and John Burnham & Co. (No. 18 last year).
Other firms losing ground are Transwestern Commercial Services, which saw its portfolio shrink 22% to 8.1 million square feet; No. 9 Davis Partners LLC, dropping 16% to 4.52 million square feet; No. 11 Spieker Properties, whose portfolio dipped 16% to 4.27 million square feet; No. 16 PM Realty, which experienced a 45% free fall to 2.6 million square feet; No. 17 Legacy Partners, whose portfolio shrank 27% to 2.26 million square feet; No. 18 Cushman & Wakefield Inc., which experienced a 22% drop to 1.92 million square feet; and No. 20 Jones Lang LaSalle Inc., whose holdings plummeted 44% to 1.9 million square feet.
Although rentable space managed by the top 25 firms grew 8%, employment in those firms dropped 6%, to 1,381. Insignia/ESG topped the list with 180 total employees. The company added 10 people to its payroll. Other big gainers were Transwestern Commercial Services with a 30% employment increase (15 new hires), Equity Office (up 45%, with nine new employees) and Madison Marquette Retail Services (up 12% after 12 new hires).
Among the losers were Donahue Schriber, which trimmed its roster by 28% (35 employees), Trammell Crow Co. (down 7%, or 13 employees), Arden Realty Inc. (down 15%, or 7 employees), Charles Dunn (off 48%, or 13 employees), PM Realty (down 32%, of 40 employees) and Legacy Partners (down 28%, or 25 employees). n
