Orange County’s largest commercial property managers’ local portfolios grew modestly over the past year as they made larger gains outside the area.
Local office, industrial and retail space managed by the largest 28 property managers increased by about 2.8% to 192 million square feet, based on the Business Journal’s annual ranking.
Those same property managers’ OC offices—which employ close to 5,300 in a variety of building management roles—handle a total of about 285 million square feet of commercial space inside and outside OC, up 6.4% over year-ago levels. They manage a little more than 2,900 properties, a roughly 6% increase.
The 2.8% increase in local commercial space managed marks the fourth straight year companies represented on the list have made year-over-year gains. The local total square footage over that time has hovered around 200 million square feet, depending on the number of entries on the list, because new construction since the last recession has been limited up until the past year or two.
Industry experts note that property management is essentially a zero-sum game for the sector; if one company grabs a new office, industrial or retail client, it means another company lost that business.
New commercial projects can change the equation; more than 3 million square feet of larger properties opened across the county last year, following 2 million square feet that opened in 2014.
New Projects
• Newport Beach-based Irvine Company, which retained the No. 2 spot on the list with a nearly 33 million-square-foot local portfolio, has been behind a big chunk of recent local development.
The developer and investor’s glitzy, 326,000-square-foot 520 Newport Center office tower in Newport Beach opened early last year, and its 200 Spectrum Center tower in Irvine opened about a month ago.
Irvine Co. has a second office tower in the works in the Spectrum, along with several midrise buildings, which when completed will add about another 1 million square feet to the portfolio of California’s largest office owner.
Irvine Co. once again trails only the local office of CBRE Group Inc., which manages a 49 million-square-foot portfolio of OC buildings for a variety of commercial property owners.
The two companies combined manage about 42% of the 192 million square feet of local properties represented on the list, which is ranked by the amount of local rentable square feet managed from here.
Nearly half of the 28 companies reported year-to-year increases in local property management business. Nine others’ local square footage declined. Figures for three companies were reported as flat, and three are Business Journal estimates.
Changing Hands
A few notable transactions altered rankings for some local property owners and managers.
• A division of New York-based private equity group Blackstone Group last summer began taking ownership of a number of Southern California office properties that had been operating under the banner of Los Angeles-based Arden Realty Inc.
The acquisition included 1.7 million square feet spread over 24 buildings in Orange County, according to reports. It pushed Blackstone, which runs local office properties under the Equity Office Management LLC name, to the No. 14 spot on the list, up 11 spots.
Equity Office is now believed to be OC’s second largest office owner, with a portfolio of close to 4 million square feet.
• Newport Beach-based RiverRock Real Estate Group Inc. moved up two spots to No. 11, thanks in part to picking up a 1.5 million-square-foot portfolio of Southern California buildings owned by Newport Beach-based Voit Development.
RiverRock now has a companywide portfolio of about 26 million square feet, about 4.1 million square feet of that based in OC.
Voit Real Estate Services, the commercial brokerage affiliated with the development company, announced in October that RiverRock will serve as Voit’s preferred provider of property management services in Southern California.
Voit, meanwhile, will serve as preferred provider of brokerage services to RiverRock under the agreement.
• JLL’s Irvine property management office moved up three spots to No. 5 after a 17% increase in its OC portfolio.
The company’s growth was “due to an increase in assignments in the office and industrial sectors,” said Mike Ruppert, senior managing director of property management for JLL’s Southwest division.
The firm also “retained several new retail property management assignments following the acquisition of Shelter Bay Retail Management and Wilson Retail Group” last year.
