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Property Managers Offset Office Losses; See 2% Boost

As Orange County building owners and local employers look to lure people back to the office in person, the region’s roster of property managers hasn’t slowed their efforts to help that cause.

Irvine Co., which maintained its No. 1 spot on this year’s Business Journal list of the top Commercial Property Managers in Orange County, has found success in drawing employees to its new office projects in Irvine at Spectrum Terrace and Innovation Office Park throughout the pandemic, with occupancy hovering around 80% for both projects.

Flight at Tustin Legacy, which delivered its first phase in 2019, has also maintained steady leasing trajectory the past few years, with just two vacancies remaining, leaving the project 96% occupied.

“We wanted to create an employee-first working environment at a best-in-class, heavily-amenitized project,” said Parke Miller, executive vice president at Lincoln Property Co., the developer of Flight.

The Newport Beach office of the Dallas-based Lincoln Property is once again No. 10 on this year’s list, with area assets shrinking 2% after the firm sold Oakbrook Plaza, a 120,354-square-foot office property in Laguna Hills, to Newport Beach’s Buchanan Street Partners, which has plans to convert it into a medical office facility.

OC Growth

Local property managers are growing their portfolios in and outside of the county, despite ongoing interest rate hikes and other economic uncertainties.

The area’s 21 largest property managers increased their local office, industrial and retail space by 2% to 186 million square feet in the year ending last month.

Including properties outside of OC, local offices managed nearly 415 million square feet across 3,571 properties, up 10% and 7%, respectively.

Portfolio Gains

The slowdown of the office sector has been partially offset by growth in the industrial, retail and multifamily markets, brokers note.

Transaction volume for the office sector fell nearly 20% last year, according to El Warner, vice chair of retail capital markets at Colliers.

“Office really was the only asset class with a notable decline in transaction volume last year,” Warner said. “The next thing to fall is pricing, but that hasn’t really happened because of the lack of sellers in the market today.”

Irvine-based real estate investor Greenlaw Partners was among the largest landlords on a local acquisition push in the past year. The firm added about 1 million square feet to its portfolio, moving it up a slot to No. 8 on the list.

It was behind the largest industrial purchase of the first quarter when it spent $58 million for two industrial buildings in Anaheim totaling nearly 200,000 square feet.

The Irvine office of Seattle-based Kidder Mathews grew its holdings more than four times to nearly 2.3 million square feet, the largest increase on the list.

The company, which calls itself the largest independent commercial real estate firm on the West Coast, has been adding brokers and offices in Southern California over the past year, reports indicate.

The second largest OC portfolio increase was from the Irvine office of Avison Young, which grew 71% to 2.1 million square feet as a result of the company’s acquisition of Madison Marquette’s office and industrial property management, agency leasing and project management service lines.

The acquisition included more than 20 million square feet and 235 team members companywide, according to an Avison Young spokesperson.

Sublease Deals

The slowed office market is evidenced by the growing amount of sublease space on the market, with availability reaching a new high of 4.2 million square feet during the fourth quarter.

Sublease availability makes up nearly 19% of the total available office space in Orange County, according to a CBRE Group report.

CBRE maintained its No. 3 position on this year’s list.

Two of the top five office leases that occurred in OC during the first quarter of 2023 were subleases, CoStar Group Inc. data shows.

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