Aliso Viejo-based Shea Properties, part of family-owned J.F. Shea Co. in Walnut, went outside to find a successor to the retiring William Gaboury, chief executive of the commercial developer for the past 21 years.
A search to replace Gaboury, who long had planned to step down at the age of 60, was in the works for about six months.
With the hiring of Colm Macken from Cleveland-based Forest City Enterprises Inc., Shea Properties got an executive savvy in the way of doing big deals.
Peter Shea Jr., chief executive of J.F. Shea, wants the company’s commercial arm to double its development pipeline,now valued at about $2.5 billion,in the next five years.
That’s an attainable goal, according to Macken. And it won’t require the company to move beyond its core markets, Southern California, Northern California, Arizona and Colorado.
“Our strategy of growth is going to remain largely the same,” he said.
Macken’s hiring is the latest in a year of changes for the family of Shea companies. Peter Shea Jr., 38, became chief executive of J.F. Shea last year.
He co-manages the family business with Chairman John Shea and is being groomed to head the company on his own. Meanwhile, Shea Properties has added four vice presidents to its team in the past year.
Macken, 47, takes over the reins at Shea in mid-January. He’s still finishing up work at Forest City, where he’s worked the past 11 years.
Most recently, he served as chief executive of the company’s West Coast Commercial Group. Major Southern California projects he’s led include the recently completed $149 million, 700,000-square-foot Simi Valley Town Center and Victoria Gardens, a 1.5 million-square-foot lifestyle center in Rancho Cucamonga.
There are some similarities between Forest City, with yearly revenue of more than $1 billion, and Shea, which had sales of $174 million in 2005. Both are strong in mixed-use development and are family owned.
The well-connected Ratner family leads Forest City. Bruce Ratner, who heads up the company’s Forest City Ratner arm, owns the New Jersey Nets. He’s looking to do a mixed-use project in Brooklyn, which would include an arena for the basketball team.
Forest City and Shea haven’t worked together. But the possibility is there down the road, Macken said.
Industrial Update
Sometimes lost in all the news about housing and the office market: the industrial sector. It’s also in the midst of big changes.
As I noted in the Dec. 19 issue’s 2006 real estate preview, the local industrial market has become a landlord’s market.
An impressive 5 million square feet of industrial space was absorbed in 2005, led by demand in North County, according to economists at the University of Southern California.
Brokers now predict rent increases in the 4% to 7% range for Orange County this year. The highest rents paid now are in South County, at about 83 cents a square foot, USC reports.
Vacancy rates are dropping below 5% for the county. That’s an “unbelievably low” figure, said James Camp, senior vice president of Voit Development Co. Landlords in Atlanta and Chicago are ecstatic when vacancy figures fall below 20%.
If you’re looking for large space, good luck.
There is talk that the Irvine office of Phoenix-based Opus West Corp. is considering a series of larger distribution buildings in the area. But developers on the whole are going small. Small industrial buildings for sale, typically in the 8,000- to 25,000-square-foot range, are more common.
“Industrial supply is tight, and it’s going to get tighter,” said Jeff Cannon, corporate managing director for the Irvine office of Studley Inc. “I don’t see developers building industrial parks of more than 100,000 square feet.”
The lack of large amounts of industrial space is “becoming a major concern,” Cannon said.
Voit, part of Woodland Hills-based Voit Cos., plans a 488,000-square-foot business park in San Bernardino. But in OC, the developer is sticking with smaller, more profitable, industrial condominiums, which are selling quickly, according to Camp.
Land costs are part of the problem. Developers can’t afford to buy land for big industrial buildings, especially in South County, Camp said.
“They’ll continue to go north, to Anaheim,” and then out of the county altogether, he said.
For those looking for industrial space, Cannon said he advises you start planning as far as 18 months ahead of schedule, as it can take that long to find space in the county.
Three years ago, only nine months preparation was needed to find adequate space, he said.
