A year ago, property managers seemed to be in trouble. Real estate investment trusts were taking a huge bite out of their business as they bought up prime properties and brought in their own in-house management teams.
The impact on the industry, however, might be temporary. REITs are no longer buying property at the pace of last year; most of the major buyers are currently institutional investors and banks, which traditionally use property management firms. Furthermore, there is a surge of new development in L.A. County, and many of these new properties will need property managers.
Dallas-based Trammell Crow recently acquired Tooley & Co., last year's No. 1 firm in L.A. County. Even with the acquisition, however, Trammell Crow reports only 11.3 million square feet under management, compared with a year ago when the two firms managed a combined 19.6 million square feet in office and retail space in L.A. County.
International real estate giant CB Richard Ellis has become the largest property management firm in L.A. County. Headquartered in Los Angeles, CB Commercial, as it was formerly known, acquired Newport Beach-based Koll Management Services in 1997 for $160 million, thereby tripling its firm-wide management portfolio and becoming one of the largest management firms worldwide.
Last year, the company took the lead in the current globalization trend by merging with London-based REI Ltd., a holding company for real estate services subsidiaries that operate under the Richard Ellis banner outside the United Kingdom.
Recently, CB Richard Ellis further extended its international scope by purchasing a minority share in a Japanese real estate services company, Ikoma Corp. The deal was prompted in part by the growing interest of U.S. investors in the Japanese real estate market.
The globalization of the real estate services industry largely follows that of its corporate clients. These companies are outsourcing their real estate operations, thereby creating a demand for consistent and uniform real estate services on a global scale.
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