OC Office-Building Rehabs on the Rise

IRVINE, CA-As GlobeSt.com recently reported, Jim Proehl, EVP and managing director for the western division of PM Realty Group, has been named president of NAIOP SoCal. GlobeSt.com caught up with Proehl to discuss trends in Southern California CRE, legislative hot buttons and CEQA reform, among other issues.

GlobeSt.com: What do you see as the biggest trends in Southern California commercial real estate this year?

Jim Proehl: Tenants are getting more efficient in how they utilize their space, resulting in less square feet required per person and increasing parking requirements. With limited mass transit in Southern California, there will be added pressure with determining how to park more cars than most projects can accommodate.

Adding onto the above, the way tenants utilize space in office buildings is continuing to change and evolve as companies reduced the number of private offices and increase the amount of collaborative areas. Major capital investment in tenant improvements and technology will require longer-term leases to amortize these greater capital expenditures.

Finally, we will see an increase in building rehabilitations this year. Many of the class-A office buildings that were built in the late 1980s and early 1900s are reaching the age where owners must invest in new major building systems like HVAC systems, elevators and fire and life-safety systems, which require a large capital investment.

GlobeSt.com: What legislative issues are the hot buttons for NAIOP SoCal this year, and what is the organization doing to address them?

Proehl: Water will be a major concern this year for the state and all the companies doing business here. NAIOP SoCal and the commercial real estate industry as a whole are continuing to find ways to reduce water consumption in buildings. Some of the water-conservation measures are low-flush or waterless toilets, drought-resistant landscaping and computer-controlled sprinkler systems … to name just a few.

NAIOP SoCal is also working with numerous organizations to help reduce emissions while balancing the much needed addition of jobs in Southern California. Also, we will be keeping a lookout for potential legislation relating to split roll taxes. Our goal is to educate people on the negative impacts split roll would have on businesses in California.

GlobeSt.com: One of NAIOP SoCal's initiatives is CEQA reform. Can you expand on the organization's role in this?

Proehl: The NAIOP SoCal Legislative Committee is working closely with our legislative advocate, California Business Properties Association to help lead meaningful CEQA reform. We hope to modernize CEQA to conform to California's comprehensive environmental laws and regulations to preserve the law's original intent—environmental protection—while preventing special-interest CEQA abuses that jeopardize community renewal, job creation and the environment.

GlobeSt.com: How important to the industry is developing the next generation of real estate leaders?

Proehl: A large percentage of the senior leadership at most commercial real estate companies is composed of Baby Boomers, many of whom will be retiring over the next 10 years. It is imperative that we take an aggressive approach to attracting the best and the brightest to commercial real estate. We started our Young Professional Group nine years ago and have a YPG Alumni Association of over 300. Many of the younger real estate professionals will be the future leaders of our industry. In addition to the YPG program, we have been funding an annual $7,500 Fellowship through the University of California at Irvine Center for Real Estate. Additionally, for more than 15 years we have sponsored the annual Real Estate Challenge, where real estate graduate students from USC and UCLA compete on evaluating potential development sites.

GlobeSt.com: Can you share the NAIOP SoCal mentoring program and its impact?

Proehl: The mentoring program was started two years ago to allow the senior real estate executives an opportunity to share their knowledge and insight with NAIOP's emerging leaders. Our YPG program allows our young real estate professionals to develop a network amongst their peers, but we also wanted to help the young professionals extend their network to senior real estate professionals who have been in the industry for many years. We hope the impact will be enhancing relationships between our emerging leaders and the current industry leaders.

GlobeSt.com: What does your organization have planned this year for professional development programs and events?

Proehl: We have numerous major programs, including our Kick-Off Program, our Spring Program, Fall Forum and USC vs. UCLA Real Estate Challenge. In addition, we sponsor approximately 10 smaller educational workshops for our members. Other events include numerous networking and mixer events throughout the year, including the largest commercial real estate event in Southern California, “Night at the Fights,” which attracts more than 1,000 attendees, and helps to raise money for our Political Action Committee and local charities such as Building Block Foundation Fund. NAIOP is also working with other local charities by committing both time and resources.