Christopher Wood, the new managing director of Voit Real Estate Services' San Diego office, says he has enough confidence in the economy to start expanding his staff again.
Wood, who formerly worked as a vice president of real estate development for Opus West Corp., said he currently has an office of 31 brokers and eight support staff.
"We're looking to grow the office back to 40 to 45 brokers. We want to get some real producers," Wood said.
Wood said Newport Beach-based Voit has approximately 102 brokers companywide. The firm, which also has offices in Irvine, Anaheim and Las Vegas, is in the process of opening a Sacramento office, and is looking at the Los Angeles basin and Phoenix as well.
Wood is responsible for overseeing Voit's San Diego operations and directs a team comprising landlord and tenant leasing and sales professionals, investment sales professionals, portfolio managers, asset managers, project managers, property managers, financial analysts and commercial brokers.
The San Diego office has had to tighten its belt during the past 18 months. The office, which had $430 million in sales and leasing volume in 2008 and $440 million in such volume in 2008, saw the total here drop to just $230 million in 2009.
The story was a similar one for Voit as a whole. The firm that had a $2.4 billion volume in 2007 saw this climb to $2.6 billion in 2008 before the volume dropped sharply to $1.5 billion in 2009.
"We were nominally profitable in 2009, which is a tremendous testament to the quality of our people," Wood said.
As for his assessment of the economy, Wood believes the commercial real estate market has bottomed out.
"We're going to bounce along the bottom for a year or a year and a half," Wood said. "We're starting to see larger leases now. Bigger companies are trying to lock in longer terms."
One such case (handled by CB Richard Ellis and Cresa Partners) was the recent $3.55 million five-year lease renewal ofBAE Systems Ship Repair Inc for 86,254 square feet at 655 Gateway Center Way in San Diego.
Wood noted that American Specialty Healthplans will be departing 777 Front St. (formerly known as the Paladion) to go into 189,000 square feet in Wateridge Plaza in Sorrento Mesa next fall, but believes the Front Street property can get refilled fairly quickly.
"I love that building. I'll bet you'll be able to find someone to take that space," Wood said.
Other tenants are vacating some space to go into another. Nokia is vacating 323,275 square feet to go into the smaller 196,742-square-foot Summit at Rancho Bernardo space. Wood said Bridgepoint Education (NYSE: BPI) or another big-name tenant will likely step up soon to fill that space.
Wood said Hitachi, TB Penick & Sons, ID Analytics and Enxco Development Corp. have each signed major leases in the area in recent weeks.
"This shows a lot of good activity," Wood said.
That said, Wood said that if sublease space is included, San Diego still has a roughly 20 percent vacancy rate, which translates to millions of square feet of empty space.
The good news, Wood said, is office properties from Rio Vista and 1450 Frazee Road in Mission Valley to Hacienda del Mar in Del Mar are starting to sell again.
"The gap between buyer and seller has closed significantly," he said. "We had something like 20-plus offers on the 1450 Frazee Building.
A Menlo Equities partnership paid $18.l4 million for the roughly 140,000-square-foot Frazee building in February.
"We're starting to see that despite what has happened, loans are going to get paid off, and I think we're going to see a lot more investment sales from now until the end of the year," Wood said.
Wood added that while the estimated $1.7 trillion worth of maturing commercial mortgage-backed securities debt is a problem he doesn't expects a tidal wave of defaults.
On the retail side, Wood said consumers are starting to spend again, but with Linens N' Things, Circuit City and Mervyn's having departed, Saks (NYSE: SKS) leaving and Blockbuster and Hollywood Video stores going dark at an ever-increasing clip, keeping spaces filled remains a challenge.
"I'm wondering what's going to replace the Circuit Citys," Wood said.
In Carmel Mountain Ranch the answer became a Sprouts market, but refilling an old Mervyn's space nearby has proven to be much more problematic.
As for industrial, with submarkets like Otay Mesa, which has about 3.5 million square feet of see-through space, Wood said he expects it will be six to 12 months before there is an appreciable turnaround.
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