Is the clock ticking on Orange County’s real estate market?
The area’s residential and commercial real estate sectors are approaching, and in some cases exceeding, pricing reached at the peaks of other market cycles.
That doesn’t mean a downturn is in the cards next year, but it could prompt cautious property owners, developers, homebuilders and other companies to get their ducks in a row before any cracks start to appear in the area’s fundamentals, whether that’s next year, 2018, or even later.
There’s still plenty of speculative development expected to break ground in 2017, so the cautious route may not be for everyone.
Office market rents generally remain below peak levels, even after a strong year.
And a large amount of new and refurbished high-end space will be brought to the market over the course of the next year that could have a dampening effect on vacancy rates and rental growth, notes Kurt Strasmann, senior managing director of the Newport Beach office of CBRE Group Inc.
“It will be interesting to see if product will be absorbed at the same rates that we’re seeing now,” he said. “There’s a lot coming online.”
Person to Watch:
Bill Witte
Witte pulled off the near impossible in 2016: He got city approval for a controversial high-rise housing project in Newport Beach during a year when several other notable developments there were thwarted.
His Related California last month got city council approval for Museum House, a 25-story tower to be built next to Fashion Island, over the objections of many antigrowth residents, competing developers, and the area’s dominant real estate company, Newport Beach-based Irvine Company.
The hard work isn’t done, though, which is why we’ll keep an eye on Witte and Related California over the next year.
The project still faces challenges likely to come into play, including the threat of a potential referendum on the plan, as well as unresolved issues with Irvine Co. over the fate of excess land at the development site, which is the current home of the Orange County Museum of Art. Irvine Co. gave the land to the museum years ago with the idea that it would continue to have an arts use.
A final go-ahead for the luxury residential project will allow the museum to begin preparing for a move to the arts district in Costa Mesa.
Company to Watch:
LT Global INVESTMENT
If Anaheim’s Platinum Triangle is going to become more than a center of mid-rise apartment development in the next few years, it will be because of LT Global, a Hong Kong-based developer with U.S. operations based in Los Angeles.
The company got city approval this fall for the $450 million LT Platinum Center, a mixed-use development planned for a 14.8-acre site next to Angel Stadium. It also got the OK from the Angels to move ahead on the project, despite early objections raised by the team’s ownership.
LT Global is planning a 2017 ground-breaking for the first phase of the project, which in its entirety would feature a 30-story condo tower, a hotel, a 255-unit apartment complex, an office and about 433,000 square feet of retail.
Moving ahead on the project next year will require some faith by the developer in the near-term health of the local real estate market and on continued investment in OC’s real estate market by overseas investors in China.
