In fact, many sectors took off in the wake of the coronavirus, with a robust e-commerce industry offsetting uncertainty in other sectors.
“When we entered into pandemic last March, no one knew how deep the damage would run,” said Matt Mousavi, managing principal of SRS Real Estate Partners’ National Net Lease Group. “It ended up being a much faster rebound than some anticipated.”
Brokers specializing in industrial and essential retail product types emerged as winners last year, while those in the office and hospitality sectors saw declines in leasing and sales volume.
As vaccines continue to rollout, cases drop and state officials take strides to fully reopen the economy, “there’s a light at the end of the tunnel,” notes Bob Caudill, executive vice president of Colliers.
“We’ve seen an uptick in activity, specifically within the last 30 days,” he added.
Modest Decline
This year’s Business Journal ranking of commercial brokerage firms, data for which considers 2020 transactions, shows that sales and leasing activity in the county experienced its first year of losses after about a decade of consecutive gains.
The area’s top 17 commercial brokerage firms handled about $30 billion in deals last year, a 6.3% decrease year-over-year.
Growth had already been slowing in recent years, with deals up just 3% in 2019, and 5% in 2018.
The annual list ranks area brokerages by the dollar values of their commercial property and land deals done in OC last year, as well as those done elsewhere that were handled by the local office.
OC Dealmaking
The overall number of reported lease transactions fell 10% as stay-at-home orders kept OC firms largely remote throughout the bulk of 2020.
“I brokered more short-term leases last year than I’ve ever done as companies were unsure about the future of the office market,” said Caudill, whose firm maintained its No. 2 spot despite deals being down 22% to nearly $3.5 billion.
“There were windows of opportunity within the market for tenants to find deals as landlords made major concessions, but that window of opportunity is closing as we return to a more normal market.”
Sales volume, meanwhile, was down 7.5%.
“This downturn was unlike most recessions because of the amount of capital and liquidity available in the markets,” said Mousavi, adding that lenders have also been offering “very attractive returns.”
There were 825 OC brokers as of March, up 3.5% from the prior year, and 1,591 OC employees, down 4.4%.
Mixed Bag
Commercial dealmaking continues to be a mixed bag, notes John Hall of Lee & Associates, one of four companies to see an increase in deals last year.
“All things considered, the market fared pretty well,” said Hall, who leads the company’s Irvine office. “Industrial is having a heyday, but the same can’t be said for some of the other sectors.”
The firm’s lease and sales transactions rose 1.6% to $1.2 billion last year, led by a 22% jump in business out of the company’s Orange office.
SRS Growth
SRS, a retail real estate brokerage, enjoyed the strongest gains on this year’s list, with deals doubling to $2.1 billion, moving it up three slots to No. 5.
The company attributes this activity bump to an increase in demand from the essential retail sector, which is handled by the firm’s National Net Lease Group based in Orange County.
“We were in the right place at the right time, with many tenants thriving in the wake of the pandemic,” Mousavi said.
The Dallas-based firm has also seen noticeable gains in all three of its services: leasing, sales and tenant representation.
The latter service is aiding the company’s expansion into industrial deals, with many retailers looking to up their logistics and e-commerce departments.
Automotive, Life Sciences
Orange County’s tenant mix is benefitting from fast growth within two industries, Caudill said, including the automotive and life sciences sectors.
Though OC has long been a hub for aerospace companies—notable firms here include Safran Passenger Innovations, Panasonic Avionics and Thales InFlyt Experience—it’s become a growing base for automobile firms, such as Hyundai, Kia, Karma Automotive and fast-growing newcomer, Rivian.
As for the latter sector, Caudill is among those who believe OC to become the next life sciences capital of the world.
“If you combine all of the industrial, office and R&D space taken up by life sciences companies within OC, it’s nearing 20 million square feet,” Caudill said. “That’s more than the next three largest industries combined.”
