Young Asians Modernize Real Estate Planning

IRVINE, CA—Second- or third-generation Asian immigrants are utilizing their American education to introduce more-modern concepts of design, architecture and business planning, Marcus & Millichap's VP investments and director, national retail group Ron Duong tells GlobeSt.com exclusively. We spoke with Duong, who has a breadth of experience working with the Asian demographic in Orange County real estate transactions, about how this group differs from others in the region, how development differs for them and other trends he's noticing.

GlobeSt.com: How is the Asian demographic different from others in the region, and what should the real estate industry know about it?

Duong: It's commonly mentioned that the Asian demographic tend to be higher educated and higher earning. These factors heavily impact the group's spending power as well as reinvestment back into the community, which translates to business success and, by extension, rent growth. Asians will often place greater emphasis on the physical characteristics of real estate as well as price per square foot more so than metrics such as internal rate of return or even cap rate. Asians also have a very strong bias toward real estate in the niche Asian markets. Landlords in these submarkets rarely sell, and when they do, the pricing expectations can be significantly higher than comparable nearby centers.

GlobeSt.com: How does development for this demographic differ from other types of development?

Duong: Development in this demographic moves fairly slowly. With shopping centers, the center is more commonly built out on spec, and then the leasing is handled near or upon completion. Pre-leasing does not happen as often in these markets. Also, many Asian markets are located in dense infill regions, so there are constraints on land for new construction.

GlobeSt.com: What leasing trends are you noticing for this group?

Duong: In the Asian marketplace, you don't experience the same volume (or interest) from landlords to secure national-credit tenants. Landlords in this market will often handle their leasing in-house and are fine with leasing to smaller “mom-and-pop” businesses. They rely more on existing business and community relationships. This creates a community feel and synergy for respective properties. One of the more-recent trends is that the second or third generation of Asian immigrants is utilizing its American education to introduce more-modern concepts of design, architecture and business planning. This is most evident in some of the trendy Asian restaurants that have popped up recently.

GlobeSt.com: What else should our readers know about the Asian markets in Orange County?

Duong: I've found that Asian investors plan across generations quite often when investing. This explains why you might find them paying very aggressive prices, since they see that they will realize the value in the long run even if they may be paying above market today. There has been growing talk of more foreign Asian-investor money coming into the county. What I've seen more up to this point is that the money is invested with partnerships from the US with a sizable portion of the equity based locally.