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Commercial Brokers Reap Benefits of Investor Interest

Commercial Brokers Reap Benefits of Investor Interest

Firms Tout Advantages of Outsourcing, Staff Experience

BY LISA KOVACH

Commercial real estate brokerages increased their sales during 2003, thanks to the help of experienced employees and the interest shown by investors in the local market.

Of the 22 companies on the San Diego Business Journal’s list, more than half increased their sales from the previous year , with the No. 1 company on The List, CB Richard Ellis, breaking the $1.9 billion mark.

This year’s List of San Diego’s Commercial Real Estate Brokerages features a variety of brokerages from the smallest company with four employees to the largest with 197. Many said the success of their business was dependent on the success of their employees combined with low industry rates.

Jim Renner, broker and president of Inland Pacific Commercial Properties, No. 20 on The List, is one of the smaller companies with only four employees, who combined have a total of 50 years of experience in the real estate industry.

That experience has led Inland Pacific Commercial Properties to a 57 percent increase in the total dollar value of local transactions from 2002 to 2003.

Based out of Santee, Inland Pacific experienced the most growth on The List, increasing its number of local closed transactions in 2003 by 15 percent.

“The experience of the people in our office really helps. Being in the market for so long (shows) the benefits of that,” Renner said.

Renner acknowledges that high sale prices have also resulted in high performance numbers for the year.

“Sales prices are at an all-time high. There also is the low interest rate which people seem to want to take advantage of,” he said.

Award Commercial Properties, a subsidiary of San Diego-based Mesa Gold Inc., No. 16 on The List, also attributes its success to employee performance.

Company president Vince Provenzano said, in addition to an experienced staff, hiring the right people and training them appropriately has led to a successful year.

“It was the maturation of the agents hired in the past couple of years. In addition to (the new) staff, the existing staff matured and became more solidified with their clients.

“I personally train each and every agent because an agent’s career is very crucial in the first six months,” he said.

San Diego-based Irving Hughes, No. 5 on The List, had the third highest increase in the total dollar value of local transactions for 2003, jumping from $467 million in 2002 to $619 million in 2003, a 33 percent increase.

“We recently streamlined and have only very senior brokers that produce a tremendous amount of business,” said Jason Hughes, principal of Irving Hughes. “We are all tenured with over 15 years’ experience.”

Hughes attributes his company’s success to his 10 employees and the niche it has created in the real estate industry.

Irving Hughes, unlike many other brokerage firms represented on The List, strictly represents tenants and buyers.

Hughes sees this type of representation as indicative of a trend many clients are beginning to follow.

“Tenants are becoming more educated and understand the need to have a broker who only represents the tenant,” Hughes said. “This is all we do , represent tenants. We are a very niche boutique company. We are not trying to be a jack-of-all-trades.”

The commercial real estate industry is also changing as it is grows in sales numbers.

Mark Read, the San Diego branch senior managing director of CB Richard Ellis, No. 1 on The List for the last two consecutive years, said that consolidation and outsourcing by companies have become a significant trend in the industry in the past year.

Headquartered in Los Angeles, CB Richard Ellis along with its typical leasing and sale services also provides property management.

As a service provider in the property management field, Read said big corporations are using companies like CB Richard Ellis to manage their properties, what he refers to as outsourcing, in order to focus more clearly on the needs of their own clients and services. “We have noticed a trend where more and more corporate users are outsourcing, to get experts to do things that aren’t their core business, which results in better service (for the management of their buildings) and reduces their overhead.” Read said. He said companies are looking to CB Richard Ellis to not only manage their properties, but also to advise them on acquisitions, when one company acquires another company.

Read said the trend toward acquisitions have resulted in greater sales for many brokerage firms in the county.

“San Diego has emerged as a top five market for acquisition by investors. The lack of available land , combined with positive job creation in San Diego , those factors make San Diego very attractive,” he said.

Joe Balla, president of La Jolla-based Retail Properties Group, Inc., No. 16 on The List, agrees with Read and said acquisitions in San Diego have become a factor in the real estate industry.

“The most significant thing affecting our business today is certainly the incredible amount of capital looking to acquire San Diego commercial real estate over the past several years,” Balla said. “This has led to a lack of quality product being available as capital from other markets focus on our area. As the economy strengthens, and capital moves back into the stock market, we may see stabilization and (a) return to equilibrium.”

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