Connect Orange County Panelists Navigate the Challenges, Spot the Opportunities 

“There are a lot of things affecting us,” said moderator Kurt Strasmann during the Industry Leaders panel at the recent Connect Orange County in-person event. He cited inflation, a pending interest rate cut, the upcoming election and two ongoing wars. “I think the result of that has been that decisions are slowing, in some cases being paused,” said Strassmann, executive managing director with CBRE. 

Strassman and his four panelists took a high-level view and also delved into specific product types, the investment climate and the outlook 2025. First to address the area of product types was Jason Rich, CEO of general contractor Snyder Langston.  

“The main thing for us is we’re in a number of different product types,” he said. “That’s been really helpful for us because all of the product types have some sort of volatility and challenges to them. Office, everybody knows, is really tough, but we’re actually building an office. We’ve started one in downtown Los Angeles, surprisingly enough, with a developer.” 

Aaron Hill, CEO of Bixby Capital Management, offered a mixed view of the fundraising and investment outlook. “We have managed to raise some discretionary capital in 2024,” he said. “So I would say it’s better than 2023, but that’s really just incremental. It’s still very challenging to raise capital in this environment.” 

Describing the institutional investors that Bixby works with, Hill said, “They’re very specific about what they’re targeting. There’s very little core capital in the market today. It’s all value-add or better for the most part, seeking higher returns. And then in that it’s very specific in the product type. So it’s not across the board.” 

SVP John Santry of Ledcor Development, LP assessed the currently spotty state of investment sales. “A lot of people have been holding assets, waiting for cap rates to find some compression or find some settling,” he said, adding that there have been “not a lot of data points out there for the past couple of years. So when product comes to market, is it a five cap, is it a four and a half? Is it something significantly higher than that? They’re not directly correlated.” 

That being said, Santry saw a more hopeful outlook going into next year. “It’s all trending in the right direction for disposition,” he said. “Two rate cuts through the rest of this year, we move into 2025 and the capital markets remove some of their constraints.” 

Regional president of brokerage at Kidder Mathews and president of the NAIOP SoCal executive committee, Eric Paulsen, provided both a legislative outlook and a broker’s view of the transaction market. Looking at office, he said that instead of the short-term extensions the sector has seen all too often for the past couple of years, “we’re now seeing a lot longer leases being signed.” A couple of the tenant reps on his team recently negotiated eight-year terms. “So that to me shows that people are ready to make a commitment. They understand what they’re doing and where they’re headed.” 

Held at the Hyatt Regency Irvine, the well-attended Sept. 10 event also included discussions of AI and commercial real estate, the industrial market and the financing outlook. Check back for additional coverage this week.