Orange County property managers have been wearing different hats of late.
It’s not just renovations, maintenance and leasing efforts that’s top of mind for office owners and management firms.
In the past several weeks, they’ve added daily duties to respond to tenants’ coronavirus concerns that span from sanitation efforts to rent payments to clarity on financial relief programs.
“Our role has become much more complicated,” said John Combs, principal of RiverRock Real Estate Group.
The company has yet to see a drop in occupancy levels at buildings they manage as a result of business disruption, with tenants “naturally doing what they can to maintain their space, and landlords showing flexibility, because they understand there isn’t another entity waiting to come in and take their spot,” he said.
While these operators could see an increase in vacancies in the future, the market was undoubtedly well-heeled in the year leading up to the market’s recent movement.
This is evidenced by this year’s Business Journal Property Manager’s ranking, which is now in its eighth consecutive year of industry gains.
“The market had never been stronger,” Combs said.
210M SF
OC offices saw portfolio increases both inside and outside of the county, with the area’s 22 largest property managers increasing their local office, industrial and retail space by 4% to 210 million square feet.
Thank a continued level of development for the boost; with several large industrial and office projects coming online over the course of the year.
Including properties outside of OC, local offices managed 377 million square feet across 3,166 properties, up 7.4% and 17% respectively.
Ranked property managers had 5,774 OC employees in the past year, up 2.3% from the year prior.
Amenities
Though any lasting financial impacts on the real estate market remains to be seen, a change that’s likely to come is how managers will choose to market and maintain their properties.
Placing an emphasis on cleaning services could represent the next in-demand tenant amenity, while private spaces may be more popular than common gathering areas.
Area landlord Lincoln Property Co., which increased its area office portfolio by 2.7% to 6.2 million square feet, said indoor-outdoor offices, such as those at the company’s Tustin Flight office project, would be a strong grab for tenants on the move, according to Executive Vice President Parke Miller.
“I think this could affect how property owners invest in their projects,” Miller said.
Managing Costs
The role of the property manager has also never been more important, Combs argues.
His Newport Beach firm, No. 10 on the list, upped its local portfolio by about 6% to 6.7 million square feet.
“In a downturn, managing operating expenses and occupancy is of the most importance,” Combs said. “We focus on trimming expenses and maintaining tenancy. Our industry often grows during a down economy.”
As for current changes, managers are busy educating and communicating with tenants on the information coming from the Centers for Disease Control and Prevention, as well as the government regarding financial relief programs.
“Everyone is trying to get their arms around the financial aid that’s available, and we are trying to stay up to date so we can help our tenants understand programs like the paycheck protection program,” said Jim Neiger, president of Essex Realty Management.
Spectrum Development
Many landlords, including one of the top area companies, Irvine Co., have changed their policies regarding rent (for more on this, see page 16).
The company’s rank stayed the same on this year’s list at No. 2. It added two notable office projects to its portfolio last year, including the first 350,000-square-foot phase of Spectrum Terrace; and three new buildings totaling 290,000 square feet at its Discovery Park office complex.
This brought the company’s OC portfolio to about 35 million square feet, up 1.9% from the year prior, according to Business Journal research.
Top Five
Rounding out the top five are:
• Perennial No. 1 CBRE Group Inc., which reported a 6.4% jump in its local portfolio to 53.3 million square feet. The Los Angeles-based firm’s Newport Beach office manages 269 properties, up 6% from year-ago levels.
• JLL, up one spot to No. 3 with a 13% increase out of the Chicago firm’s Irvine office, which manages 12 million square feet.
• Houston-based Transwestern, down one notch to No. 4 after seeing a 27% drop in its local portfolio to 11.6 million square feet. It was one of only four companies on the list to see a decrease in OC holdings.
• No. 5 Cushman & Wakefield, up 11% to 11 million square feet.
