The Irvine Co. has bumped PM Realty Group from its list of property managers and is transferring the roughly 3 million square feet of space managed by that company to Insignia/ESG, which already handles the bulk of the Irvine Co.’s portfolio.
In a memo distributed to employees, Dick Sim, the group president of the Irvine Co.’s investment properties division, said the decision was made to “consolidate and streamline our property management efforts. Our objective was to have fewer companies with which to interface in order to be more efficient.”
The Irvine Co. declined further comment.
The move brings to an end a 20-year association between the Irvine Co. and PM Realty Group. During that time, the two companies have, presumably amicably, hired executives from each other. Among those switching were Mike Lutton, who moved from the Irvine Co. to head up PM Realty Group before departing that company, and Bill Halford, formerly of PM Realty Group, who today is one the highest-ranking young executives at the Irvine Co., overseeing its office and industrial portfolio. Jim Proehl, a senior vice president and director of the Western division for PM Realty Group, acknowledged that the loss is major.
“It’s unfortunate that they elected to go that way, but we’re a national company with a good presence, and we’ll continue to grow and pick up properties,” he said.
“This opens up opportunities in Orange County, because we were handcuffed before,” Proehl added. “We couldn’t take on competing properties.”
The Irvine Co. does not allow its property management providers to handle competitors’ properties in OC and some surrounding markets. Freed from that restriction, PM Realty Group is moving aggressively to replace some of the 3 million square feet of space it has lost, Proehl said. Already, PM Realty Group has won the management contracts for the 310,000-square-foot 100 Bayview Building in Newport Beach and a 235,000-square-foot building in La Jolla, contracts it could not have taken on before.
Indicative of how the fortunes of companies can swing on the decisions of the Irvine Co., the move makes Insignia/ESG the biggest property management firm in OC, in terms of square feet under management, up from No. 2, according to the Business Journal’s latest rankings. Additionally, the move drops PM Realty from its No. 10 ranking on the list to the No. 21 slot. The only other firm overseeing Irvine Co. property is the Trammell Crow Co., which manages 2.5 million square feet of Irvine Co. space and is ranked No. 3 on the Business Journal’s list.
Once a dominant player in the Orange County property management business, PM Realty Group has seen 66% of its local market presence disappear. PM Realty Group now oversees 1.5 million square feet.
For Insignia, the move adds the posh Newport Center office buildings,which fetch some of the highest rates in Orange County,to its dominant portfolio position. Insignia now oversees 15 million square feet of the Irvine Co.’s 17.5 million-square-foot statewide portfolio, a position Insignia officials expect to increase.
“Our whole strategy going forward has been to grow our target 20 clients in the country,” said John Combs, who oversees Insignia’s 230 million-square-foot national leasing and management portfolio. “The Irvine Co. is twice as large as our second-largest customers and we continue to grow with our target 20. This fits right in line with our strategic focus and our attention to detail for our clients.” n
