OC’s Commercial Brokerages Posted a Banner 2000, but That Was Then
Orange County’s top commercial brokerage firms concluded a sizzling three-year run in 2000 and, for the second consecutive year, the top producers increased their aggregate revenue by 18%, according to figures compiled by the Business Journal.
Total revenue at the 25 largest local brokerage offices grew from $9.259 billion in 1999 to $10.883 billion in 2000.
The question is whether those record-breaking numbers will continue in 2001, as a downturn in the national economy coupled with California’s energy crisis has the potential to create a huge sucking sound as companies flee to cheaper climes.
“We’ve been noticing a bit of a slowdown,” said Steve Jehorek, president of Lee & Associates’ Newport Beach office. “There have been bonuses offered to brokers that were not being offered a short time ago.”
Also, the number of brokers employed by the 25 largest brokerages dipped on this year’s list, indicating the beginning of a downturn. (While the revenue figures are for calendar 2000, the employment numbers are for this month.) The number of employed commercial brokers among the top 25 firms dipped 2% overall, dropping from 628 to 614.
However, overall employment for the top firms grew 2% to 1,071 employees. And, for the most part, commercial brokers remain quietly optimistic about 2001.
Tim Joyce, senior vice president for Colliers Seeley’s Irvine office, which was ranked No. 13 on the list with $323 million in revenue, a 4% increase from 1999, remains optimistic about the future, predicting a recovery during the second half of the year.
“We are on the heels of arguably the best year we’ve ever seen,” Joyce said. “Orange County experienced a record year for net absorption and had a spike in rents of 15% in some areas.”
Last year, it was CB Richard Ellis’ Anaheim office leading the way. The group nearly doubled its revenue in 2000, growing an astonishing 90%, from $831 million in 1999 to $1.58 billion last year. In doing so, it leapfrogged CB’s Newport Beach office for the top spot.
CB Richard Ellis’ ability to integrate various services played a major role in the companies’ continued growth, according to Steve Case, senior managing director of the Anaheim office.
Case cited the Stadium Crossings project as a prime example of how CB Richard Ellis applies its integrated services. The company leased, managed, sold, appraised and financed the property. Other large deals for the Anaheim office included the 608,220-square-foot transaction for DSL Transportation and the 486,772-square-foot deal with Lend Lease.
Other brokerage firms also grew rapidly amid low interest rates and a healthy job market. Voit Commercial Brokerage’s Irvine office experienced the largest percentage revenue jump,135%, from $259.35 million in 2000 to $608.73 million last year. The revenue growth bumped Voit from the No. 14 spot last year to No. 6.
Only the Irvine office of Marcus & Millichap Real Estate Investment Brokerage moved up more notches on the list, going from No. 19 to No. 10. The firm grew its revenue 88%, from $212 million in 1999 to $398 million in 2000.
Other big gainers included No. 9 Sperry Van Ness of Irvine (up 54%), No. 11 Lee & Associates’ Newport Beach office (up 34%), No. 14 The Saywitz Co. of Newport Beach (up 24%), No. 17 Laguna Niguel-based Providence Realty Group Inc. (up 44%), No. 21 Orange-based Ashwill Associates Inc. (up 53%) and No. 24 Medical Realty Advisors in Newport Beach (up 25%).
Decliners included No. 2 CB Richard Ellis’s Newport Beach office (down 13%), No. 8 Staubach Co.-West, Inc. (down 22%), No. 15 Professional Real Estate Services’ Newport Beach office (down 3%), No. 19 Lee & Associates’ Irvine office (down 8%), No. 20 Julien J. Studley Inc. (down 18%) and No. 25 Costa Mesa-based Prudential RB Allen Commercial Real Estate Services (down 22%).
This broker job dip does not surprise most executives who were interviewed. With hefty growth in 1998, 1999 and 2000, it was only natural that a lag eventually would occur.
“We’re suffering from a little bit of a hangover,” said Collier Seeley’s Joyce.
He pointed to a specific market indicator for proof of the industry’s potential decline.
“The real estate market typically lags behind the stock market by about nine or 10 months. And we’ve already seen dot-coms go away, giving space back to the market,” Joyce said.
In the first quarter, Orange County will see negative absorption that might continue or remain flat through the second quarter, according to Joyce.
Not all is doom and gloom. Lee & Associates’ Jehorek mentioned that in certain categories, demand still outstrips supply.
“Leasing is down, but there’s a demand to buy buildings. There’s just not much property available for sale,” he said.
Both Jehorek and Joyce expect the market to return by the third or fourth quarter.
“I’m bullish about the future,” Jehorek said. “I just wish the bulls would get here quicker.” n
