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June 2, 2014
OC Job Boom
Job growth, that magic elixir for real estate growth in Orange County, is back. Not quite to pre-recession levels, Altus Group senior EVP Rick Kalvoda tells us. But close enough.
There's enough job growth in Orange County to sustain commercial real estate growth in the coming 12 months (so if your friend is crashing on your couch, tell him to get his lazy self out there), says Rick, who's with the company's research, valuation, and advisory practice in Irvine. Orange County's unemployment rate of 5% (down from 5.9% a year ago) is now the lowest in SoCal, and below the national average. Snapped at the Counselors of Real Estate conference last month in Austin: Rick on the far right, with Wilson, Cribbs & Goren's Reid Wilson, KLM Realty Advisors Glenn Silva, and NewTower Trust Co's Brent Palmer. Rick was responsible for program content development for the conference.
A lot of the new jobs are quality gigs—the kind that spur office leasing. The state Employment Development Dept reported for the 12 months ending in April, the county added 26,900 jobs. Of those, professional and business services posted the largest annual increase of any category, with an overall gain of 8,700 jobs. Even better, Rick predicts that this kind of job growth will continue. “This wave of job creation appears sustainable, and should be enough for commercial real estate to continue its growth,” Rick says.
Refi Accelerates
MetroGroup Realty Finance founder Pat Ward sums up the (near) future of real estate lending in OC in a word: refi. (If you're willing to summarize things that easily, Pat, could you tell us what Anna Karenina was about?) There's an upcoming spike in 2015 commercial loan maturities, he explains, and borrowers are already looking to get ahead of the curve, since interest rates are still fairly low. It's part of a national trend, he adds, with the MBA predicting a 72% increase from '14 to '15 in commercial and multifamily loan maturities by non-bank lenders.
Recently Newport Beach-based MetroGroup arranged more than $30M in financing for the acquisition and refi of three SoCal properties totaling more than 194k SF. One of the properties was a 29k SF MOB in at 25500 Rancho Niguel Rd in Laguna Niguel owned by the Buie Stoddard Group. The deal was a $10M refi of a loan taken out in 2004, Pat says.
Sold! Auctions Still Popular
Congrats to Auction.com CEO Jeff Frieden, who's a finalist for EY Entrepreneur of the Year 2014 in the Orange County Region. It's been a good few years for his company, which has sold about $20B in real estate assets since 2010. A recent $50M investment by Google Capital is expected to further solidify the company's position in online real estate sales. Real estate auctions get a lot of traction during downturns, when owners want to get out fast, but Jeff tells us that he's now seeing a lot of non-distressed property owners who see the method of sales as a workable alternative to more conventional sales. (It's also great for germaphobes.)
CLINK!
Snapped at CLINK! at the Samueli Theatre in Costa Mesa last week: Building Block board members Brian Airth and Kate Brennan (IOS/Haworth); Sal Provenza (WD Land); Kristina Lewison (Colony Realty Partners, who was event chair); and Bob O'Neill (Alliance Commercial Partners). Bisnow was a proud sponsor of 10th annual Clink! Celebration Event to support the Building Block Foundation, which offers the commercial real estate industry a way to invest in the future of at-risk youth in OC.
YOU TELL US: A Microunit Revolution?
Tiny apartment units are popping up all over the US, already making waves in cities like San Francisco, Seattle, Vancouver, New York City, Boston, and DC. Developers say they're the perfect abode for Millennials and people who land in cities with a suitcase, laptop, iPhone, and not much else (your dreams don't need much space), and projects being built are getting gobbled up fast. But naysayers foresee a backlash against the small units, arguing the cost to custom-build a livable unit makes it not-such affordable proposition. We'd love to hear what you think: Are microunits the future of multifamily? Click our survey above to tell us your thoughts, and we'll publish results in a future issue. Also, check out our feature on microunits in our National Real Estate issue.
To termites, a group of dead trees is an arbor eat'um. Send ideas and suggestions to dees.stribling@bisnow.com
