INLAND EMPIRE, CA-Rick John, EVP and branch manager of DAUM Commercial Real Estate Services, has just become the new President of SIOR Inland Empire/Orange County Chapter. Globest.com recently caught up with him to find out what he is seeing in the market and what will be the biggest trends in Orange County and the Inland Empire this coming year.
GlobeSt.com: As you step into 2014, what do you see as the true opportunity for brokers in Orange County and the Inland Empire?
Rick John: In 2014, a majority of the opportunities for transactions will be existing building renovations and value-add by entitlement. We are at the point where we will be seeing more antiquated buildings raised and rebuilt. Modification of buildings that create hip, fun work places for associates will be on the rise.
Based on the lack of traditional opportunities, brokers need to think like operators of real estate and track what operators are trying to accomplish. Once they have that goal determined, brokers need to see and convey that vision to developers and the marketplace.
GlobeSt.com: What will be the biggest trends for commercial real estate in Orange County and the Inland Empire?
John:With limited inventory, brokers are going to have to be extremely creative in order to have a good year. On the leasing side, nearly all industrial product in Orange County and the Inland Empire has single-digit vacancy. Even office space is now leasing at a smooth pace. In addition, in areas such as Costa Mesa, Irvine and others, land is being re-zoned from industrial to residential. This then further increases pressure for clients seeking industrial space, as product is removed from the inventory base altogether.
On the sales side for both office and industrial, very few buildings are on the market and space is predominately controlled by institutional owners who are focused on holding their investments and driving rents higher to maximize their assets' Net Operating Income.
In fact, the constriction of available product will cause the industrial buyers to become even more aggressive and acquire as much smaller size range buildings as possible from non-institutional owners in order to grow their portfolios.
The area of greatest activity in 2014 will likely be in the sale of entitled land sites to both developers and users. The emphasis will be “speed to market” for new product.
GlobeSt.com: Which skills will brokers need to utilize to be competitive this year?
John:Continue to have a keen nose for deals. Also, they will need to understand the environment of institutional owners who demand high-quality market information.
With that, there has been an emphasis on lots of data, and not much knowledge drawn from the data. In today's market, brokers need to obtain good data and then translate it into useable market knowledge and trends for their clients.
The competitive brokers will be those who are themselves the architects of the deal. They need to have the vision and knowledge to create the deal, and also the expertise to execute it.
GlobeSt.com: At this point in the real estate cycle, what challenge should brokers keep in mind?
John:The two most discussed topics will be inflation, and keeping an eye on interest rates, which we have all learned can be a game changer.
GlobeSt.com: Finally, as the new president of the Inland Empire/Orange County Chapter of SIOR, what is your first initiative for the organization?
John:The Inland Empire/Orange County chapter is comprised of a highly motivated group of 60 professionals who collectively transacted more than $3.5 Billion during 2013 alone.
My goal is to motivate them to do what they do—even better in 2014. Exceed your client's expectations and treat other brokers like clients. While I don't typically phrase things this way, my message to my chapter for the coming year is “Ride for the SIOR brand in 2014.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
