Real estate market gets bittersweet news

Paul Clinton

Salespeople and executives in the local real estate world

Wednesday turned out by the hundreds to the exclusive Pacific Club to

hear a briefing from luminaries with their fingers on that industry’s

pulse.

The assembled guests, a standing-room crowd of about 320 in the

club’s main ballroom, clapped as speakers at the evening event put a

brave face on largely glum news about the economic recovery.

Commercial real estate markets locally, the experts said, are bobbing

above broader trends, but are still fairly sluggish.

“As I go around the country, it’s getting harder and harder to

find a sense of optimism,” said Stan Ross, a former vice chairman at

Ernst & Young. “There certainly is a lot of negativism out there.”

The USC Lusk Center for Real Estate sponsored the event, which

also featured Bill Halford, the vice president of office properties

at the Irvine Co., and Newport Beach residents Robert Best and

Stephen Duffy. Best owns Costa Mesa shopping center developer Westar

Associates, and Duffy heads up real estate advisory services out of

Ernst & Young’s Irvine offices.

In his remarks, Duffy warned about the “soft commercial real

estate markets.”

Best was somewhat more optimistic, especially about Fashion Island

and South Coast Plaza, but said the mid- and lower-tier centers are

undergoing major changes.

“The strong will survive,” Best said. “There is a lot of dead

retail out there, and a lot of it is functionally obsolete.”

During an interview after his public remarks, Best said

Newport-Mesa’s premier centers are “going to be fine” because they

offer specialty shops and benefit from a wealthy surrounding

community. The community is also largely built out, without much more

room for new retail centers, he said.

“In Newport Beach, the demographics are very unique,” Best said.

“There’s not a lot of land where you can build malls.”

Stuart Gabriel, the Lusk Center’s real estate director and a

trained economist, also spoke. Gabriel bemoaned the economy’s

“jobless recovery” and said the county’s gross domestic product would

grow no more than 3% this year.