A dose of development helped Orange County’s largest commercial property managers grow their local portfolios for the fifth straight year.
Local office, industrial and retail space managed by OC’s 28 largest property managers increased by about 5% to 199 million square feet in the year ended Feb. 28, based on the Business Journal’s annual ranking.
It’s the largest percentage gain for companies on the list over the previous five years, with the past year’s gains powered by a slew of office, retail and industrial development that came on line last year.
Property management is essentially a zero-sum game for the sector: If one company grabs a new client, it means another firm lost that business.
New commercial projects can change the equation; roughly 4 million square feet of large commercial properties opened across the county last year, compared to some 3 million square feet in 2015 and 2 million square feet in 2014.
Irvine Company
Much of that new space was built by Newport Beach-based Irvine Company last year, which had its local portfolio grow by about 2.6% to 33.8 million square feet.
That kept Orange County’s dominant real estate owner, which manages its own properties, in the No. 2 spot.
Notable Irvine Co. projects include its 21-story 200 Spectrum Center office tower. It opened a little more than a year ago and its 425,000 square feet of space is nearly fully leased.
Construction on a sister office tower at 400 Spectrum Center is nearly done, as are a pair of midrise buildings at the Sand Canyon Business Center that total 212,000 square feet.
The developer also has a fair amount of work under way at its Spectrum shopping center, where land that once held a Macy’s department store is getting remade into a multitenant area.
Irvine Co. is the largest of seven companies on the list that provide property management services for buildings that they own; other notable area owners on the list include Newport Beach-based Olen Properties Corp. at No. 9; Santa Ana-based Caribou Industries at No. 11; and Irvine-based Greenlaw Management, a unit of real estate owner and developer Greenlaw Partners, at No. 12.
No. 1
No. 1 on the list again was the Newport Beach office of CBRE Group Inc., whose substantial property management operations here oversee nearly 50 million square feet. CBRE’s local portfolio was up about 1.2% for the year.
It and Irvine Co. combined to manage about 42% of the 199 million square feet of local properties represented on the list, which is ranked by the amount of local rentable square feet managed from here.
Those two firms were among the 13 companies on the list that reported year-to-year increases in local property management business. Six others’ local square footage declined. Figures for seven companies were reported as flat, and two are Business Journal estimates.
Buyers
A change in building ownership can also prompt swings in various property managers’ portfolio sizes.
The local office of JLL’s property management division had more than a 70% jump in square footage to 13.2 million square feet. That pushed it up to the No. 4 spot.
JLL has grabbed a number of assignments for local properties owned by out-of-town investors, particularly for industrial buildings, said Mike Ruppert, regional manager for the Southwest division of JLL’s property management group.
“Industrial property management has been the fastest-growing department for us,” Ruppert said.
JLL has also benefitted from a number of strategic acquisitions, in particular the late-2015 buy of Martin Potts & Associates, a Newport Beach-based firm that offers third-party project and construction management services for office, hospitality, retail and healthcare properties.
Rounding out the top five on the list are the Anaheim office of Transwestern, whose 13.5 million square feet of space managed was good for the No. 3 spot, and the Irvine office of Essex Realty Management Inc., which was No. 5 with 8.2 million square feet.
300M Mark Topped
Outside of OC, local property managers continued to see growth last year.
The 28 property managers’ OC offices—which employ close to 6,000 in a variety of building management roles—handle a total of about 302 million square feet of commercial space inside and outside OC, up about 7% over year-ago levels.
The local offices manage a little more than 2,800 properties, a figure that dropped by about 3% year-over-year, according to data provided by companies on the list.
