“Clarity” and growing “stability” are forthcoming for commercial real estate in 2010 following a turbulent year often marked by “frozen’ activity and continued downward trends in lease and sale rates.

This was the message echoed by a blue ribbon panel of leading brokers headlining last week’s 17th Annual “Market Review and Forecast” event presented by the AIR in downtown Los Angeles.

Signaling a heightened thirst for insights into the new year, a capacity of nearly 250 people turned out for the event whose signature submarket-by-submarket format underlines that each area affects the other, moderator Bart Reinhard said in opening the event.

Though reporting that overall vacancy in Orange County is at its highest level since 2003 and asking rates are down 17.7% from a year ago, Rick Ellison, executive director, industrial properties, Cushman & Wakefield in Irvine,  said industrial vacancy is healthy in the 5-6.5% range, compared to double digits in 1991.

“The good news is that things are not getting worse.  The gap between asking lease rates and tenant expectations is narrowing, and there’s already an increase in user/buyer activity in 2010 which we think will continue,” Ellison said.

Scott Caswell, senior vice president, Delphi Business Properties, Inc., said that while vacancy will increase and prices will continue to lower in the San Fernando Valley/Valencia market, they will do so less drastically in 2010.  “We will experience more tenant movement as companies have passed the 9/11 wait and see mode and will get in motion to make moves that best place them for the future.  There’s already a big turn as companies are making herd decisions,” Caswell said.

Citing the San Gabriel Valley submarket’s demographic strength and solid manufacturing base, Dennis Sandoval, executive vice president/principal of DAUM Commercial Real Estate Services, emphasized that “everyone is looking much closer at the cost of occupancy and sizing”.  He added that looming environmental regulations are a concern in that market, while the proposed football stadium will create a positive economic impact.  He noted many area leases are expiring and people will be making decisions this year.

Commenting that there are “lots of deals out there that will be hard to turn down” in Ventura County during 2010, Paul Farry, senior vice president CB Richard Ellis, said virtually no land sales and new construction took place in 2009, and building availability continues high.  “We’re telling landlords to roll over tenants, yet  we see activity picking up, particularly laterally in 2010 following a 10-15% drop in lease rates and  a 5-10% drop in sales rates.”

Forecasting lease rates that will decrease or remain flat in the Mid-Counties submarket with increased concessions, Cliff Fincher, SIOR, of Lee & Associates said this area will see fewer transactions in 2010.  He added that building sale prices are down 20%-$45%, and vacancies and availability are up, though industrial vacancies hover around 5%.

David Drummond, SIOR, senior vice president, Colliers International, said vacancy rates in the South Bay have steadily increased over the past year in concert with big decreases in port activity.   “Though 2010 is expected to be another rough year for our submarket, we look for a turnaround as port volume levels and rents decrease,” Drummond said.

As for the West Side’s office market, Keith Fielding, also of The Klabin Company, declared that lease rates are down 17% and sales prices 25%.  “Landlords are aggressively pursuing renewals with term flexibility.   There will be continued price compression and thawing in capital markets.  However, there’s a lot of money on the sidelines waiting to buy, but prices are not yet where buyers want them.  An improved economy is needed to spark significant activity,” Fielding concluded.

Chuck Noble, principal of Lee & Associates – Orange, Inc. and a 30 –year veteran of commercial real estate, was elected 2010 president of the AIR Commercial Real Estate Association (AIR) with a mission to “uncover new opportunities for broker services”.   Noble succeeds Douglas C. Earnhart of Lee & Associates – Ontario Inc.

Joining Noble as new officers of AIR and comprising its executive committee are Joseph M. Vargas, SIOR, Cushman & Wakefield, Long Beach, president elect/long range planning; David M. Harding, CB Richard Ellis, Universal City, vice president/MULTIPLE director; Corey Spound, Jones Lang LaSalle Americas, Los Angeles, vice president/education chair, and Jason K. Jamison, SIOR, GM Properties, Inc., Whittier.

Commenting on his goals as AIR President, Noble said:  “While we will be prudent in monitoring costs as an association during these challenging economic times, we are also committed to uncovering new opportunities for our members’ services.  One important means of achieving this is expanding exposure for our brokers’ listings by sharing AIR’s data and services with respected outside entities.  I emphasize that we are pursuing this course cautiously to protect our members’ position.  At the same time we recognize that because of a fundamental shift in our industry, data sharing is an idea with which AIR can comfortably take a leadership position.”

Noble’s experience in commercial real estate spans over 30 years and includes sales and leasing, tenant representation investments, project development, and real estate consulting.  He is one of the founding principals of Lee & Associates – Orange, Inc.

A graduate of California State University, Long Beach, with a Bachelor  of Arts degree in Social Science, Noble is a member of AIR’s Board of Directors.  His community involvement includes being Real Property/Facilities Chairperson for the Presbyterian Church/Southern California.

In its ongoing mission to add value to its members’ brokerage activities while underlining its position as the premier Association of its kind, AIR is providing periodic real life articles aimed at furthering that goal.   Advancing this effort is the Arbitration Committee of AIR’s Board of Directors comprised of Dan Weil, Jim Sullivan and Cliff Reston.

To launch this effort, the Committee offers the first in a series of articles, this one in the form of a Case Study relating to AIR’s respected “Rules of Professional Ethics”.  The following event actually occurred.

You are working with a client who wanted to buy, and ONLY buy, a building in a narrowly focused area.  This is a challenging assignment in any market.  The client has been in the market with you and other brokers for some time.  You may or may not have an exclusive right to represent this client 

After months of work without turning up that elusive purchase opportunity, you uncover a lead that a well-known institutional owner with several properties in the target market might be open to selling some of its holdings.  One of the properties is just what the client has been looking for, but it’s only on the market for lease with an AIR member firm.  The client expresses  concern that if anyone finds out about the opportunity, he might lose the building.  He wants the information kept secret.  So he instructs you not to contact the listing broker and to present the offer directly to the institutional owner.

In the case study above, you are obligated to first contact the listing broker to find out if the listing agreement covers a sale.  If it does, you pursue the purchase of the building with the listing broker, just as if it were on the market for sale.  Article 5.1( b).

In a significant advance in AIR’s continuing commercial real estate industry alliances that greatly benefit its members, the Association reports that it has joined forces with the highly respected Crocker Symposium 2010 in what is described as a “win-win” for both organizations. 

Set for March 23 at the Los Angeles Convention, the Symposium will present “The Real Estate Maze:  Challenges and Opportunities.”  The event is co-sponsored by the Los Angeles County Bar Association Real Property Section and the UCLA Ziman Center for Real Estate.  The event runs from 7:30 a.m. (registration and continental breakfast) to 5 p.m., followed by a cocktail reception.  Lunch is included.  A host of industry leading speakers are headlined.  Click here for more info.

Tim Hayes, executive director of AIR, and Tracy Kwiker, executive producer of the Symposium, concur that the alliance gives both organizations an opportunity to promote their activities and services.   AIR gets the privilege to exhibit at the event to generate strong exposure for its services, notably WinAIR Forms and the new Forms User's Manual, while AIR is promoting the Symposium in its varied communications.

Additionally, as a key benefit, AIR members wishing to attend the Symposium will receive a $70 discount off the standard $325 rate to register.  AIR joins a host of other prominent industry organizations supporting the Symposium.  They include BOMA, CREW, IREM, CAR, LAEDC, and the Central City Association.   The Symposium affords 5.5 hours of MCLE credit, 6.5 hours of CE credit and up to 6.5 hours of DRE credit (approval pending?

You’re never too experienced to ignore the fundamentals of commercial brokerage.  It’s an axiom Jamie H. Kim adheres to steadfastly.  “I take on the client’s needs as if they were my own and work really hard to do the absolute best for my clients.  You’re never too experienced to ignore the foundations of brokerage,” said Jamie, who is Executive Director, Giga (as in “GigaByte”) Commercial of Cypress, a company she founded in 2009.  Jamie says Giga Commercial serves a five county area, with a particular focus on Mid-Counties, South Bay and San Gabriel Valley submarkets. 

She began her real estate career in 2004 with CB Richard Ellis, Inc., where she was recognized for her “exceptional achievements” in 2006.  She later served with Cushman & Wakefield.   Widely respected in commercial brokerage, Jamie chuckles when relating that she’s known affectionately as “Lady GIGA” by some of her friendly brokerage colleagues (esp. Rick McGeagh of CBRE).  To set the story straight, “Giga” is a prefix in the SI system of units denoting 109, or 1,000,000,000.

Jamie enhances her brokerage expertise for clients with strong grounding in finance and accounting principles.  Prior to her real estate career, she was Vice President of Operations and Investor Relations at a boutique hard-money lender in Santa Monica, and also served as Vice President of Finance and Controller for California’s 14th largest credit union.  Additionally, she has provided financial consulting services to specialty firms involved in integrated supply chain management, and was involved in specialized manufacturing environments such as bomb detection and security x-ray as well as public accounting as a Senior Auditor in Metro New York.

Jamie’s brokerage results speaks for themselves.  She recently represented Pioneer Electronics, along with Phil Lombardo and Ty Newland of Cushman & Wakefield in Pioneer’s sale of a 188,853 square foot industrial building in Pomona for $10.76 million.  Jeff Rincov of Lee & Associates represented buyer Torn & Glasser, Inc.

Jamie is bullish on the 2010 market.  “This is going to be a FUN year.  Business owners are gaining confidence and clients are more aggressive in getting deals done,” she said.  “The reticence in the marketplace is over.”

Jamie is a graduate of New York University’s Stern School of Business with a Bachelor of Science degree in accounting and international business.  Underlining her diverse talents, in her leisure Jamie enjoys screenwriting, film production/development, gourmet cooking, photography and yoga.  She is active in international charitable groups with a focus on children, humanitarian aid and other philanthropic pursuits.   She resides in Downtown Los Angeles.

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