This is it. My last column at the Business Journal.
I hate to leave the Business Journal right as the county’s real estate industry teeters at the edges of change.
Commercial and residential real estate face three potentially pernicious factors: mortgage industry contraction, rising interest rates and volatile job growth.
My educated guess is that the mortgage industry carries the most potential for harm to both the office and housing markets.
Mortgage companies, once booming, now are set to contract. Following them as a journalist has been like driving a car over uneven ground,anticipating that a pothole will jar you, surprised when it does.
Last month the parent company of Orange’s Ameriquest Mortgage Corp. said it would cut 10% of its staff, or about 1,500 workers nationwide.
I had previously written, more than once, that the mortgage industry faced consolidation with demand tapering off amid higher interest rates.
But it was still a surprise to learn of the depth of cuts from ACC Capital Holdings, which employed about 7,000 workers in the county before the layoffs were announced.
Job losses were concentrated in ACC Capital’s Ameriquest, AMC Mortgage Services and Town & Country Credit units, the company said.
Ameriquest is the biggest, and perhaps lowest-priced, of all subprime lenders in the country. Already at a competitive advantage, other lenders can’t allow Ameriquest to be alone in having cost savings from a leaner staff.
It shouldn’t surprise anyone if other big Irvine lenders, such as New Century Financial Corp. or H & R; Block Inc.’s Option One Mortgage Corp. unit, trim staff in coming months.
The guesswork really is what the ramifications will be. Will the office market be hit with sublease space? Will a mortgage industry correction lead to a housing market one? Are we set for a period of credit tightening?
The office market question I’ll tackle in my new job, which is to write about commercial real estate for the Orange County Register. I should already be working there when you read this.
I’ve covered all the big pieces of commercial and residential real estate while working at the Business Journal for more than three years during two stints.
In addition to mortgage companies, I’ve written about homebuilders, developers, brokers, construction companies, lawyers, architects and businesses that provide executive suites for other companies.
I’ve penned pieces on tunnels, office towers, condominium towers, airports, a great park, planned communities, industrial buildings, office campuses and houses.
Of all these, the mortgage industry has been just about the most interesting thing to write about because of how it’s funded.
In the old days, people gave banks and thrifts their money, which the institutions lent to others to buy a home. Nowadays, deposits don’t fund mortgages.
Instead, mortgage companies borrow money or use cash from stock sales to fund loans. Or they compile the loans in $1 billion pools and sell the loans to investors as bonds.
Mortgage companies borrow at short-term rates and lend to homebuyers at long-term rates. Lately the companies have seen profits squeezed by rising short-term rates amid flat or more slowly rising long-term rates.
The mortgage industry makes for interesting coverage. But my biggest single story wasn’t about mortgages, at least not directly. It was about Lennar Corp. of Miami and the city of Anaheim.
A combination of timing, luck and good relationships with sources led to myself and the Business Journal being the first to report that the Aliso Viejo office of Lennar planned to remake an entire section of Anaheim.
Lennar quietly had bought property next to Angel Stadium of Anaheim. One of its acquisitions was submitted to this paper for a list of largest deals and an editor passed it on to me as interesting.
I checked the address, and found Lennar had acquired two office parks in Anaheim’s Platinum Triangle. Red flag.
I called the company’s broker, Louis Tomaselli of Voit Commercial Brokerage LP, who said he didn’t have the authorization (at that time) to discuss Lennar’s buying.
I then called Lennar’s head of California operations, Emile Haddad, whom I had interviewed for stories dating back a couple of years. He said Lennar eventually would bring to the city plans for some 3,000 homes, including high-rises.
I later checked with Sheri Vander Dussen, the city’s planning director. She said Lennar recently had filed its plans with the city for one main parcel, what has become the core of Lennar’s A-Town. She shared the details, which included condominium high-rises of more than 30 stories.
It was a dramatic scoop for us, and one of my favorite articles.
What I’ll miss about the Business Journal is the opportunity to do detailed coverage of anything related, however remotely, to real estate in OC. The editors here are flexible, as well as knowledgeable and supportive.
Which is not to say I won’t write some longer stories at my new job, but I will be primarily focused on commercial real estate. It’s apples and oranges, if you will allow a cliche.
