A dearth of office and industrial properties completing construction kept Orange County’s top commercial property managers scrambling to find business during the past year.
The total commercial space managed by the top 25 property managers in OC rose a modest 4% to 188 million square feet in the past year, according to this week’s Business Journal list.
Only four property management companies on the list boosted business by more than 10% in OC.
Local property managers had slightly better luck growing business outside of the county. The total square footage managed by these companies’ OC offices, including space outside OC, grew by 5% to 276 million square feet.
With little construction wrapping up last year, growth came from self-managed office, industrial and retail properties that were sold. New owners often bring on management and leasing teams to run the properties.
The lack of new space on the market, particularly for the industrial and office sector, is affecting property managers.
“It’s a zero-sum game. There’s not a lot of new business out there,” said Barry Katz, managing director for the Newport Beach-based office of CB Richard Ellis Group Inc., which took the No. 1 spot again this year.
About 3 million square feet of office space was under construction in OC at the end of 2005, according to Cushman & Wakefield Inc. But most of the space won’t be finished for at least a year.
Development of large industrial projects also is largely at a standstill in OC. About 1.3 million square feet of industrial space was under construction at the end of the year. Developers have turned away from larger projects to focus on smaller, for-sale industrial condo units.
Conversions of previously large, for-rent office and industrial properties into smaller units for sale also cut the amount of available space for property managers. The number of properties managed by the companies on the list decreased 8% this year to 2,057.
OC employment grew 17% to 3,528. The gain largely came from No. 2 The Irvine Company, which took over management of The Island Hotel Newport Beach from Four Seasons Hotels and Resorts last year.
List leader CB Richard Ellis was one of the few companies to show big growth last year, increasing its local presence 16% to 37 million square feet.
CB’s gains came from taking management contracts from competitors and getting more business from existing clients, Katz said.
More Biz Stays In-House
The property management list is made up of two types of companies.
There are traditional property managers like CB, No. 3 Trammell Crow Co. and No. 8 Jones Lang LaSalle Inc. They provide a combination of leasing and management services to properties owned by other investors.
There also are large landlords such as the Irvine Co., No. 9 Equity Office Properties Trust and No. 12 Arden Realty Inc. They typically manage the properties they own.
The Irvine Co. has brought management of its shopping centers and office buildings in-house during the past couple of years. That’s taken more than 20 million square feet of space off the market.
Newport Beach-based Irvine Co., the county’s largest landlord, boosted its local management by 7% to 27.5 million square feet last year.
Earlier this year the Irvine Co. bought the 572,000-square-foot Newport Gateway Center and the 900,000-square-foot Irvine Center Towers.
The acquisitions impacted the former property managers for those two office complexes: Jones Lang LaSalle, which fell an estimated 7% to 6.5 million square feet under management, and No. 18 Transwestern Commercial Services, which fell 34% to 4 million square feet.
Other companies on the list that are in flux include Arden Realty, which is in the process of selling its OC office portfolio to the real estate arm of General Electric Co., and No. 21 Maguire Properties Inc., which is awaiting final approval on a 550,000-square-foot office tower at Park Place before construction starts. Maguire has several other projects in the planning stage.
RREEF Buys Local
No. 5 RREEF, the San Francisco-based pension fund investment unit of Germany’s Deutsche Bank AG, made a splash in 2005 with high-profile deals in OC.
The biggest was its $261 million acquisition of MetroCenter at South Coast, a four-building office campus totaling about 800,000 square feet. It was OC’s biggest deal of 2005. RREEF also sold Anaheim Corporate Plaza last year for $68 million.
Overall, RREEF saw its OC property under management grow 3% to 9.6 million square feet. It operates locally out of Costa Mesa.
A big mover on the list was the Irvine office of PM Realty Group, up 10 spots to No. 14, with 4.5 million square feet in its local portfolio. PM Realty handles several big office towers in Irvine, including Von Karman Towers.
Michael Harrah’s Caribou Asset Management Inc. grabbed the final spot on the list. Harrah counts 3 million square feet of space, primarily in Santa Ana.
