Increased property sales volume, particularly for larger buildings and land sites, in addition to gains in leasing activity, resulted in another strong year for Orange County’s largest commercial brokerages.
The combined value of the sales and leases at the 16 largest brokerage offices here rose from $19.7 billion to $22.8 billion over the past year, based on the Business Journal’s latest brokerages ranking.
That’s a nearly 16% year-over-year gain and the sixth annual increase in a row.
Ten of the brokerages on the list reported increases in business, including seven of the 10 largest. Six posted declines.
The six-year streak follows four years of declines as the local industry felt the brunt of the commercial real estate downturn.
Deal activity bottomed out in 2009, when about $11.1 billion in transactions here were reported. Business for the area’s largest brokerages has nearly doubled since then.
The latest annual ranking includes commercial property and land deals in OC, plus deals done elsewhere but brokered by those companies’ OC offices.
It was a good year for a lease-focused broker but an even better time to be involved in investment sales, based on a reading of respondents’ surveys.
The number of sales transactions reported by the companies increased by about 20% over 2014 levels, and the number of lease transactions here increased a little more than 11%.
The promise of higher rents at OC’s high-end buildings over the next few years has attracted more interest from national investors, particularly those backed by insurance companies, who see OC as undervalued compared to other West Coast markets.
OC office rents have increased about 27% since 2012 but are still about 17% below those paid in Los Angeles and about 30% below rents in Silicon Valley, according to data from JLL, whose Irvine office took the No. 2 spot on the list.
CBRE Tops
The Newport Beach and Orange offices of CBRE Group Inc. retained the No. 1 spot with about $4.5 billion in transaction volume, a nearly 29% increase over year-ago levels.
Rounding out the top five were JLL, Cushman & Wakefield Inc., Voit Real Estate Services and Colliers International.
Chicago-based Cushman’s local and national operations are getting a business boost from its merger with fellow brokerage DTZ that was completed in September, the country’s biggest brokerage merger last year.
The combined firm, which will operate under the Cushman & Wakefield name, was responsible for $191 billion in annual transaction value companywide at the time of the merger, with about $2.5 billion of that coming from its OC offices.
Newport Beach-based Voit was the largest locally based brokerage on the list. Its reported transaction volume more than doubled to $2.3 billion.
The increase in Voit’s local activity took place alongside changes in the 45-year-old brokerage’s management structure.
Last fall Voit became a broker-owned organization, and company founder Bob Voit stepped back from day-to-day management.
“This allows Bob to get back to his roots” and to turn his attention to the company’s development and investment arms, said Eric Hinkelman, chief executive of Voit’s newly reorganized brokerage business.
Some 40% of Voit’s brokers, which now total about 45, are now part owners of the company, Hinkelman said.
Voit in recent years has been rumored as a potential acquisition candidate by other brokerages looking for a place in Southern California’s lucrative commercial real estate market.
That’s not the case now, Hinkelman said. “We’re really focused on our core (market) areas now. We’re not looking to create a situation to sell ourselves.”
The changes at Voit, as well as the merger of Cushman & Wakefield and DTZ, represent the current two-tracked approach of commercial brokerages, said Greg May, executive managing director of the Orange County operations of Newmark Grubb Knight Frank.
“There’s two distinct brokerage types now: boutiques or national/international,” he said. “There’s not many mid-tier (brokerages) now, there’s been a lot of consolidation.”
May’s company took the No. 7 spot with $1.2 billion in local deals reported.
Newmark Grubb has seen its share of changes in recent years. It was formed in 2012 through the acquisition of the assets of Santa Ana-based Grubb & Ellis Co. by New York-based BGC Partners Inc., which had bought fellow brokerage Newmark Knight Frank in 2011.
New Hires
The company’s Newport Beach office, which now has about 58 brokers, has been on an active hiring push in recent months, adding an office-investment sales brokerage team from CBRE and a shopping center investment team from Cushman.
Newmark Grubb is still looking to add brokers for its tenant and landlord representation business lines, among other areas, May said.
“We’re not looking to be the biggest, but we want the best of each (type).”
Other brokerages also have been hiring. The 16 companies on the list employ about 674 brokers, up about 6% from a year earlier.
