A year that saw plenty of portfolio sales and office buildings open their doors had little effect on Orange County’s top commercial property managers.
Total OC commercial space,office, industrial and retail,managed by the top 25 property managers grew by slightly more than 1 million square feet in the past year, to 192 million square feet, according to this week’s Business Journal list.
The modest growth stands in comparison to the prior year’s list, when the total space increased some 17%. That figure was a bit of an anomaly, thanks to numerous OC properties being bought and sold in 2006, along with combinations of some of the larger property managers in the country.
The change in growth seen in 2007 extended beyond OC. The total square footage managed by local property managers’ OC offices, including space outside OC, dropped to 250 million square feet from 255 million square feet.
The prior year, the companies on our list saw an 11% increase in year-over-year totals.
More than half of the companies on this year’s list either reported or are estimated to have posted no growth or a loss in total square footage from a year ago.
That wasn’t the case at the top of the list. The area’s two dominant property managers, CB Richard Ellis Group Inc. and The Irvine Company, retained their top two spots again this year, with a 6% and an estimated 3% increase in square feet under management, respectively.
CB Richard Ellis and the Irvine Co.’s combined portfolio, an estimated 92 million square feet, makes up nearly half of space represented in this year’s list. Newport Beach’s Irvine Co. totals were boosted by close to 1 million square feet of office tower and low-rise space coming on line in 2007.
Much of the turnover elsewhere on the list was a result of sales taking place in the first half of 2007, before turmoil in the credit markets stopped deal-makers in their tracks.
The sale and resale of larger local office buildings, for example, increased more than fourfold in the first half of 2007, compared to the same period in 2006.
An estimated $3.6 billion in major OC office sales took place in the first half of 2007, compared to $877 million in the same period of 2006, according to industry trade publication Real Estate Alert.
A total of 43 properties in excess of $25 million traded hands in the first half of 2007. Only 12 offices topping $25 million sold in the first half of 2006. Orange County was estimated to be the country’s seventh busiest market in terms of office sales in the first half of 2007.
Maguire’s Moves
Moves by Maguire Properties Inc., No. 3 on this year’s list, were behind a lot of those sales.
Last April, the real estate investment trust finalized the $2.9 billion acquisition of office buildings previously owned by Equity Office Properties Trust. That deal added more than 2 million square feet of space to its OC portfolio, putting the company’s total local holdings at close to 10 million square feet.
Maguire since has shed nine local buildings, in three separate transactions, as it has worked to lower its debt levels.
Factoring in those sales, plus the opening of the company’s new 530,000-square-foot 3161 Michelson building in Irvine, and Maguire’s total OC portfolio is now about 7.8 million square feet.
In the largest of Maguire’s 2007 sales, Irvine-based Bixby Land Co. paid $345 million for five of its local properties, in a deal completed in late May. In July, Bixby awarded Cushman & Wakefield the property management contract for those buildings, along with about 32 other industrial, office and retail properties it owns in OC, San Diego, Los Angeles and the Inland Empire.
That deal pushed Cushman up to the No. 18 spot on this year’s list. Bixby’s Southern California portfolio totals about 3.5 million square feet.
Big Contracts
Other recipients of big office sales in 2007 include the Irvine office of PM Realty Group, No. 8 on this year’s list. PM Realty took over the property management duties for Union Bank Square, nearly 400,000 square feet of office buildings in Orange.
Newport Beach-based real estate investor WCB Properties LP and a real estate investment unit of UBS AG bought Union Bank Square in July for $92 million.
Other movers on the list include Newport Beach-based Davis Partners LLC, up five spots to No. 6 this year. In November, Davis was given a big local property management contract from Boston-based TA Associates Realty, totaling about 750,000 square feet of office space in Newport Beach, Santa Ana, Irvine and Laguna Hills.
