IRVINE, CA—NAI Capital Orange County recently expanded its ground-floor offices at Main Plaza at 1920 Main St. here. The expansion was due to the addition of Chris Arvizu and the multifamily- services group, as well as the firm’s dramatic growth of its property-management services operation.
Arvizu will become a VP of multifamily services, focusing on expanding the firm’s multifamily investment services in the greater Orange County marketplace, with an emphasis on medium to larger multifamily assets. He has been active in the sale of multifamily investments for more than 10 years.
GlobeSt.com spoke with Brian Childs, EVP and branch manager for NAI Capital’s Orange County office, about the addition of the new group and the firm’s growth in property-management services.
GlobeSt.com: To what do you attribute the dramatic growth of your firm’s property-management services operation?
Childs: In just over one year, NAI Capital Property Management Services has amassed over 1.5 million square feet of property management contracts. We are very active with owners that have third-party and special-asset property-management needs. Some owners want somebody to do it all—asset management, property management and leasing. We’ve significantly increased our management of REO properties. There is still a lot of real estate in some form of distress. Being aligned with NAI Global, which is owned by CIII Capital Partners, one of the largest servicers of commercial loans in the nation, has opened up some opportunities on a property management and brokerage basis.
We have a unique international, full-service brokerage platform with over 6,700 brokers in 55 countries. We operate a broker-friendly environment where our brokers are our clients. This platform includes commission splits that are typically higher than a traditional brokerage, so you get the benefits of a full-service platform with higher financial opportunity as a broker. We end up hiring brokers that have a good book of brokerage business and want a little more autonomy—that’s been our niche and it has worked well.
GlobeSt.com: What led to the addition of the multifamily-services group to your offices?
Childs: We brought multifamily expert Chris Arvizu aboard to expand our investment-services group. Commercial investments should continue to be strong for the next few years, and we want to be a part of that growth.
GlobeSt.com: It seems that Orange County is starting to see some larger transactions take place once again, and your firm has completed three of the largest so far this year. What do you think is the reason for this trend?
Childs: The investment and user markets are very strong. There is a lot of institutional money and foreign money (mainly Asia) in Orange County right now—that would be the main reason behind it. Most of the sales that have happened in the last six months are based on future rents, not existing rents. These long-vision buyers are counting on rental rates going up, so they’re buying as it they’re already up. As a broker, you shake your head because current lease rates aren’t justifying the prices but the pendulum is swinging toward the owners, and lease rates will start to go up.
GlobeSt.com: Any trends you’re noticing in the region?
Childs: Historically, lease rate increases are the tail of the dog in Orange County. We’re starting to see things change. I don’t think we’ll be there for another year or two. But it’s starting to happen and the lease market is starting to rebound. The pendulum is starting to swing back toward the landlord. This office-market recovery is different than those of the past. The Great Recession resulted in a large amount of empty desks in leased space. As the job market has improved, many of these jobs went into the empty desks vs. new leased space. In addition, creative space has proven to be a creative way for tenants to increase their occupancy without leasing additional space. This all adds up to an improving office market that might be stronger than currently advertised.