Hearle

SAN FRANCISCO-Jones Lang LaSalle is one of the companies that have been able to expand during the downturn, adjusting to changing market conditions and positioning itself to be ready when the recovery arrives. The executive in charge of that expansion in the Northwest Region, which JLL runs out of its San Francisco office, is Elizabeth Hearle, who is both Northwest market director and an international director with JLL. Hearle spoke with GlobeSt.com reporter Bob Howard recently about the Northern California and Northwest regions, the drivers for those markets and the outlook for 2011.

Howard: How many offices are you responsible for as the Northwest and Northern California market director for JLL?

Hearle: We have five offices―in San Francisco, Seattle, Sacramento, Palo Alto and Walnut Creek―and 15 services lines.

Howard: How has Jones Lang LaSalle been able to expand during the downturn?

Hearle: The economy has created a lot of pain for a lot of our clients, so we have been listening very carefully to them and paying attention to what is going on in the market, which has helped us anticipate where the trends would be and the demand for services. This has allowed us to anticipate our clients’ needs and expand to meet them.

Howard: One of the areas where you have expanded is in the multifamily sector. Can you talk about that?

Hearle: Based on our research, it was clear that multifamily was a leader out of recessions or bad economies, and we saw our clients ramping up for that, so we continued to build our multifamily group here in the Northwest. For example, we hired David Young in Seattle, which has enabled us to expand both in Seattle and here in Northern California.

Howard: How about other sectors besides multifamily?

Hearle: We are involved with all of the sectors, which are growing at different rates, so we’re active in whatever is active in the specific market. Our core office markets in San Francisco and the Silicon Valley are strong in terms of demand, but there is not a lot trading going on right now. Industrial is an emerging product line for us in San Francisco and Seattle.

Hearle With Staff

Howard: What have you done to address the need for services related to distressed assets?

Hearle:  Our capital markets teams work closely with our debt and property management teams across the US at different phases in the cycle. We have people already on board in our capital markets team, but across the platform throughout the US we have added debt and receivership services.

Howard: What are some of the differences among the various markets within your region in terms of how investors view them?

Hearle: San Francisco is a very desirable and resilient market, and investors see that. Foreign capital has come in, which we see in every cycle, because for long-term investors this is viewed as a market of quality. The investors view San Francisco differently from Seattle and the Silicon Valley. San Francisco is very well-known by international, local and national investors; Seattle is viewed more as an emerging market, but not yet fully developed, although there is strong institutional interest there. Silicon Valley has a whole different flavor because it has a different type of product and occupier. It has more campus-style properties than San Francisco.

Howard: What are some of the property sectors and geographic markets where you anticipate growth?

Hearle: Industrial is an area where we are going to see a lot of growth. We have a strong port environment in the Northwest, and we serve a lot of large industrial occupiers. Retail will grow too.

Howard: Downturns typically produce a greater emphasis on services like property management and asset management. Has that been the case with your offices?

Hearle: The main message that we are all hearing in property management is that consistency is important. Many of the real estate services providers have become big national firms, meaning that clients look for consistency so that if they are buying services in Chicago and hire a management company, it will look the same as the product they get in San Francisco or Los Angeles. Really strong owners are prudent about managing costs effectively, so that is always important in terms of making buildings perform well; certainly as the market turned down, property management came more to the fore, but the owners that we work with are very sophisticated institutions that do a good job of that all the time. A big emphasis among property owners during the downturn has been tenant retention.

Howard: Are there any local factors in your markets that are causes for optimism or causes for concern?

Hearle: Venture capital is a very important driver for this area, so I think that will continue to be a driver here as well as in Seattle and the Northwest, especially in the biotech industry. Venture capital is important to our industry because it builds companies that are ultimately are users of real estate. On the concern side, we have a property transfer tax hike in San Francisco that goes into effect next month, which could impact the market to some extent, although we don't believe the impact will be enormous.

Howard: It’s time for the crystal ball question. What do you foresee in 2011?

Hearle: I think 2011 will look a lot like this year. I think we will see about the same level of leasing activity, and people will need to be patient for another year, but there will be a sense of optimism that we are moving forward. I think that 2012 will be more like the year when we can see the light at the end of the tunnel.