It was business as usual in 2012 for Orange County’s largest commercial property managers, who made it through the year without too many notable changes in portfolio assignments, new developments coming online or employment changes.
Total OC commercial space—office, industrial and retail—managed by the largest 25 property managers fell by about 2.3 million square feet in the past 12 months, or about 1.3%, to 180.3 million square feet, according to this week’s Business Journal list.
It’s the second year running that property managers saw a modest dip in their local portfolios; last year’s list reported a 5-million-square-foot decline.
Local companies more than counteracted local losses by adding accounts outside of OC, as was the case last year.
Companies on this week’s list reported that their OC offices now manage about 242 million square feet of commercial space—including properties outside the county—for a 3.8% increase over levels a year ago, when companies on the list posted a 1.5% increase in business outside OC.
The list ranks property managers by the total square footage of commercial space they manage in Orange County.
The companies that made the list reported managing 2,552 properties here as of February, an increase of about 150 buildings over last year.
Nine companies on this year’s list saw year-to-year increases in local property management business, while eight others experienced declines in the square footage of local space managed. Eight companies reported flat figures.
The mixed results are no surprise, given the lack of new development in the region. Industry watchers note that property management is essentially a zero-sum game; if one company grabs a new office or retail client, it means another company lost that business.
Less than 1 million square feet of new office, industrial and retail space has opened in each of the past three years in OC.
Companies on the list with notable gains included Irvine-based LBA Realty, which saw its local property management portfolio grow to 7.7 million square feet by the end of February, a 52% increase.
That jump lifted LBA five spots on this week’s list to the No. 5 position.
LBA’s gains are believed to come in large part from its late-2012 acquisition of a portfolio of area industrial properties totaling close to 1.7 million square feet and last owned by Los Angeles-based Kilroy Realty Corp.
Kilroy’s sale of its industrial portfolio was among the larger portfolios of area buildings changing hands last year.
LBA also manages buildings for other institutional investors, such as Metropolitan Life Insurance Co., along with properties it owns.
Outside of LBA’s gains, there were few changes among the largest companies on the list.
Last year’s top 10 property managers stayed in those positions, with the local offices of Los Angeles-based CBRE Group Inc. and Newport Beach-based Irvine Company again taking sizable shares of the region’s available business.
The two top property managers’ combined portfolio totals about 79 million square feet in OC, nearly 44% of the local space represented in this week’s list.
Irvine Co., believed to have added only one building to its local portfolio last year, took its property management operations in-house in 2003.
A good number of the area’s other top landlords outsource property management duties to other parties, like CBRE, provided those companies also can perform a number of related services, said Robert Peddicord, senior managing director for CBRE’s institutional services division, which retained the No. 1 spot on the list, with nearly 46 million square feet of space under management.
“In today’s world, ownership is interested in creating value” in their properties by employing property managers who can reduce operating expenses, have good communication with tenants and report on the status of the buildings in real time, Peddicord said.
Having the ability to be a one-stop shop with asset services, project management and other offerings under one banner also helps property managers gain business, Peddicord said. “That’s where the growth is.”
Technology advances have played a large part in the evolution of the property management sector, although that hasn’t led to much shrinking of staffs among management companies, according to Peddicord.
The in-person contacts needed to interact with tenants still translate to a good number of on-site personnel, he said.
“Technology is helping us more on the expense side and not reducing bodies,” said Peddicord, whose OC property management operations employ 165 people.
The companies on this week’s list employ about 1,800 people locally in a variety of building management roles, flat from a year ago.
Download the 2013 OC’s LARGEST COMMERCIAL PROPERTY MANAGERS list (pdf)
