Orange County Pricing Holds Strong
Save the date: RealShare Orange County comes to the Hyatt Regency Irvine on August 22.
(RealShare Orange County convenes at the Hyatt Regency, Irvine, August 16.)
ORANGE COUNTY, CA-““While the effects of the recession have been felt more in the secondary industrial markets, Orange County is a primary market and hence pricing has been very strong.” So says Rick Putnam, managing director of the western region of Colliers International’s capital markets group based in Irvine, CA. Putnam will serve as a panelist in a session titled; “Local Leaders: Who is Buying, Selling and Financing Orange County” at RealShare Orange County, which will convene at the Hyatt Regency, Irvine on August 16.
According to Putnam, “Even here, though, there is a bifurcation in pricing between the ‘A’ and ‘B’ assets, with the larger investors focused on newer product with high credit tenancies.” Properties with smaller suite sizes, less occupancy, and lesser credit, he says, see higher cap rates and tougher financing terms. “Even so, Orange County remains a favored institutional investment market due to its diverse economy.”
He will speak alongside Kurt Strasmann, senior managing director of CBRE Inc., who will serve as moderator of the panel, nearly 600 expected attendees.
You can expect Putnam to provide comments during the panel on Orange County’s investment market, with some of the following themes:
*The effect of both the lingering recession and search for yield on different industrial investment product types
*Why cap rate spreads are historically high when yields are historically so low;
*Who is buying in the OC industrial market and why;
*Where the market is headed volume-wise;
*What underwriting assumptions those investors are using to close deals.
Fellow panelist Jeffrey Cole, executive director of capital markets at Cushman & Wakefield, who will speak on the topic of the local office market, explains that “cap rates for Southern California and Orange County office properties continue to trend lower for stabilized assets, approximately a 20 bps decline in the second quarter versus a year earlier.”
Cole points out that “The second quarter of 2012 showed a decline in office property sales volume from the first quarter. This may be due to renewed pessimism in the macro economy including Europe and a slight slowdown in the local office fundamentals.”
Other panelists will include Brandy Birtcher, president of Goodman Birtcher North America, who will touch on development, more specifically on industrial product; Eric Paulsen, co-CEO of Auction.com; and Chris Bennett, director of development at Costa Mesa, CA-based LAB Holding LLC, who will focus on retail.
As GlobeSt.com previously reported, according to one office and industrial report for the region, after a disappointing first quarter, the local market seems to be back on track. As of May, the county has recorded positive job growth in each of the past three months netting 28,100 jobs in that span. Orange County’s unemployment rate stands at 7.5%, remaining below the state’s 10.4% rate and the national rate of 8.2%, says Jones Lang LaSalle.
Some landlords have already demonstrated confidence in the future recovery by being firmer on negotiations and, in some cases, pushing asking rents for the more desirable availabilities, says the JLL office report. “From a landlord’s perspective, the market is on an encouraging pace of recovery even though the first quarter threatened the hope that the progress made in 2011 would be sustained in 2012,” says Ingham. “From a tenant’s perspective, the window of opportunity to lock in market low rates is still open, but quickly closing as vacancies tighten.”
Hear more on where Orange County is headed, and more importantly, where the industry leaders above are seeing opportunities at the upcoming event.
Be sure to visit GlobeSt.com's NEW Sectors-to-Watch page for in-depth looks on the Hotels, Industrial, Multifamily, Office, Retail, Student Housing, Net Lease and Healthcare Real Estate markets.
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