Development-friendly processes and availability of discounted office space are key reasons Orange County continues to outpace Los Angeles when it comes to converting underutilized office buildings, despite being a smaller market.

In the second quarter of last year, Orange County had more than triple the office conversions and redevelopments planned or under construction than L.A. County, according to CBRE. Orange County had 4.2 million square feet, compared to 1.2 million in L.A. This put Orange County in the No. 7 spot out of 58 national markets, and it was the only California market to crack the top 10.

Flash forward to the fourth quarter of last year, when L.A. came in hot with 3.3 million square feet of office space being converted or planned, up 171 percent from two quarters prior, according to CBRE. Still, Orange County kept the upper hand with 3.8 million square feet. While L.A.’s jump in activity is significant, the margin between the two markets weighs heavier considering L.A.’s population of nearly 10 million is more than three times its neighboring county.

Orange County’s lead appears to reflect an ability by local governments — there are 34 separate cities in the market — to connect the dots on adaptive reuse at a time of high vacancy in the office sector and a regional housing shortage.

Michael Bohn, partner at Long Beach-based Studio One Eleven, has worked on adaptive reuse projects in L.A. and Orange counties. He found the data surprising, given the difference in size between the two counties, though he chalked up the divide in part to Orange County’s business environment. 

“Orange County is definitely more development-friendly than L.A. County,” he said. “It’s easier to navigate the bureaucratic channels of approvals.”

Bohn worked on the first adaptive reuse project in Santa Ana after the city passed an ordinance incentivizing these types of projects. The project, which was completed in 2020, converted an underperforming office building constructed in 1965 into a mixed-use affordable housing development dubbed the Santa Ana Arts Collective. During the planning process, Bohn found that the existing parking at the site fell slightly short of the city’s stall size requirements for new buildings but city officials made an exception.

“If a city doesn’t provide some flexibility, that can be the difference between a deal working or not working,” Bohn said, noting the high costs of parking in developments. 

Kurt Strasmann, executive managing director of CBRE’s Orange County and Inland Empire operations, said Los Angeles “doesn’t do themselves any favors with some of their regulations.” In Orange County, on the other hand, the math on these deals “makes sense economically,” he said.

When investors can purchase office buildings at a discount — with many sales in the $100-$200 per square foot range in Orange County — multifamily redevelopment is a good move, considering the high value of residential real estate and the “instatiable” demand for more housing, Strasmann said. 

Building age is another reason adaptive reuse can be easier in Orange County, said Jon Curtis, managing partner at Cedar Street Partners. Orange County generally has newer buildings than L.A. County, and because of that, adaptive reuse can be more straightforward when it comes to working with building systems such as air conditioning and staying up to date with newer codes. 

In one project, Studio One Eleven is planning to convert a 1986-built office in Orange County into student housing. The seismic upgrades on this building will cost between $500,000 and $1 million, Bohn said, compared to the $5 million to $10 million it would cost for an older building. 

For both counties, the statewide rollback of CEQA requirements did create a tailwind in getting adaptive reuse projects up and running, Curtis notes. 

A more recent aspect of the strategy to increase housing production in the city of L.A. came with a recently passed ordinance expanding its previous incentive program for adaptive reuse projects, making newer buildings eligible. Previously, only buildings completed before July 1974 were a part of the program but now, as of February, the ordinance established a rolling 15-year rule, which means structures built in 2011 and prior are eligible now. 

The new ordinance also expanded the geographic footprint of the incentive program citywide after years of being restricted to downtown and nearby neighborhoods and Hollywood. It will likely take time before the expansion of the ordinance shows up in the pipeline of projects.

Another law that’s specific to the City of Los Angeles also appears to be having an effect on housing production in the region. Measure ULA, which voters passed in November 2022, applies a 4 percent tax on all real estate transactions within the City of Los Angeles starting at $5.3 million and increases to 5.5 percent on deals of $10.6 million or more.

Between the second and fourth quarters of 2025, CBRE data shows the increase in adaptive reuse projects in L.A. County largely came from projects in Long Beach, Culver City and Pasadena — areas not bound by ULA — as well as Koreatown and Hollywood, which were included in the city’s prior adaptive reuse incentive program. Sherman Oaks and Encino each added a project in that time, too.

Bohn thinks the city’s new adaptive reuse ordinance is a step in the right direction and that more projects will be explored. Still, he considers the impacts of ULA – combined with high costs of construction and a labor shortage – a deterrent for actually driving construction on these projects, as opposed to planning. Currently, Orange County and L.A. areas not under ULA, such as Long Beach, are much more active, Bohn said.

While other California metros need to do more work to make adaptive reuse projects financially feasible, Strasmann said he expects Orange County to remain a frontrunner.

“I see this trend continuing. It’s like the ocean tide – it’s coming in and that doesn’t go out overnight,” he said. “… It’s a combination of the resi demand, the value of the property, and we’re the easier choice to do business in than some of our adjacent counties.”

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It’s almost painfully quiet this year in L.A.’s high end.

That’s all relative, of course. While brokerages are seeing price reductions and fewer head- turning, megadeals in the vein of recent years, some have also said they’re making up for that with bigger numbers of smaller transactions.

Rayni Williams, CEO and co-founder of the Beverly Hills Estates, said her brokerage’s first quarter was more “robust” than the last four comparable periods, despite recent macroeconomic headwinds.

“It does seem like people are figuring out and taking a little bit of a beat after the [Iran] war started and they’re proceeding a little bit more cautiously,” she said.

But, overall, brokerage co-founder and President Branden Williams said business has been busy so far this year.

Newport Coast sitting pretty

Newport Coast isn’t immune from what Southern California’s broader high end is seeing on price slashing.

Redfin data shows home prices in February were down nearly 21 percent compared to the year-ago period to hit a $3.1 million median.

Still, the tony enclave in Newport Beach remains Orange County’s top dog for the priciest deals so far this year.

Late last week Newport Coast saw the $30 million closing of 36 Pelican Crest Drive, located behind the gates of the Pelican Crest community. It’s notable considering the original asking price when the home hit the market in June was nearly $50 million, or $3,786 per square foot. The purchase price equated to $2,272 per square foot.

That’s a big difference, but also interesting is that the sale was Orange County’s third-priciest deal of the year. Within the top five deals for the County in 2026, all were for homes located in Newport Coast, according to Redfin data. Three of the five sold last month.

Going abroad while staying local

Among LA’s high end, being hyper local can have its pluses and minuses when clients have global real estate portfolios.

Looks like Beverly Hills Estates wants to address its own growth both here and abroad.

This week, the West Hollywood-based brokerage said it’s launching a new division called Malibu Estates that will be focused on transactions in the coastal community. It’s a market that’s seen its fair share of mega deals in more recent years, including the reported $210 million sale of Oakley and Red Digital Cinema Camera Co. founder Jim Jannard’s Malibu compound in 2024. Last year saw the $80 million, off-market trade of a multiparcel property at 28719 Grayfox that was the city’s priciest deal of 2025.

With Malibu Estates and last year’s launch of the Palisades Estates, the brokerage has plans to launch its next divisions focused on Eastside markets such as Los Feliz and Silver Lake and parts of the San Fernando Valley as soon as next year.

Even as the Beverly Hills Estates wants to continue to expand its footprint locally, it’s also keeping an eye on growing the brand overseas.

That’s why this past week, the brokerage and Savills said they’ve struck a deal to have the Beverly Hills Estates be the London company’s exclusive residential brokerage partner on the West Coast.

Carolwood Estates made a similar move back in January, when it struck an arrangement with Knight Frank. That, too, gave the Beverly Hills-based brokerage access to a global client base without the overhead costs of standing up its own office overseas.

Maybourne moves

The original owner of a unit at the Maybourne Beverly Hills is asking $23.5 million in what marks the first time the property has been on the market since the building was completed, initially as the Montage Beverly Hills. 

The property was later renamed to Maybourne following the property’s sale to Maybourne Hotel Group in a 2019 deal, which also includes the attached hotel, valued at more than $400 million.

Ohana Real Estate Investors holds the listing for the nearly 4,700-square-foot unit 7C, although representatives declined to discuss buyer details. 

Last October, a trust linked to Gustavo Marquez, owner of food products maker and distributor Marquez Brothers International, sold unit 8E for $27 million, or $4,762 per square foot, in what marked the priciest known deal at the Maybourne.

It unseated the 2021 record set for the building when Los Angeles Rams owner Stan Kroenke plunked $23.8 million for a unit at the building.

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“I don’t think a lot of people realize how global our industry has become.” That’s Gunnar Branson, CEO of Afire, on the interconnected nature of commercial real estate in 2026. In the inaugural episode of CREative Insights, a new podcast series from Connect CRE and NAIOP SoCal, Hanson shared insights on cross-border investment and the priorities and concerns of institutional investors generally.

The current landscape of overseas investment into U.S. markets is not as different when compared to two years ago as one might think, Branson observed. Although European players may be concerned and even angry about tariffs and other geopolitical tensions that have arisen over the past year, they’re still investing here, he pointed out. The U.S. continues to be seen as the safest market for deploying capital.

“The reality is, we are in that sweet spot right now in the cycle where valuations have been accepted at a lower level, where people are seeing opportunity, where a lot of capital is moving in a way that it wasn’t six months ago,” Branson told Connect CRE founder and CEO Daniel Ceniceros and EVP and co-founder Sarah Quinn at the recent NAIOP I.CON West conference. 

In the video below, you’ll hear further insights from Branson on investor preferences and concerns and the continued bottom-line importance of sustainability.

CoStar continued playing defense against a pair of activist investors who issued scathing public letters calling on the company to drop its incursion into the residential real estate market via the Homes.com portal it purchased five years ago.

New York City-based hedge fund D. E. Shaw & Co. released a public letter on Wednesday to CoStar’s board of directors regarding its “refusal to address the Company’s reckless spending of shareholder capital and significant and longstanding underperformance.” This was the second shareholder in recent weeks to call for the replacement of a majority of members on the CoStar Board of Directors; investor Third Point made similar criticisms late last month.

And, for the second time in as many weeks, CoStar issued a public response defending its stance as a competitor within the residential portal market.

“Abandoning Homes.com, as D.E. Shaw and Third Point suggest, would cause irreparable harm to our entire business and lead to certain and significant value destruction,” CoStar wrote in its Thursday response. “D.E. Shaw and Third Point’s attempt to prescribe a break-up, sale or amputation remedy misdiagnoses an imagined patient and smacks of activism malpractice.”

CoStar is drastically scaling back spending on Homes.com, starting with over $300 million in cuts this year and over $100 million each year until 2030. It has characterized the spending cuts as the end of the “investment phase,” during which the company spent billions on Homes.com. 

The company said it had made its changes after engaging with top stockholders who own more than three-quarters of the company’s shares.

“The reality is that CoStar Group’s management team and Board have tried to help D.E. Shaw understand the value creation potential for Homes.com and the fact that the Company is on a responsible plan to realize it,” CoStar wrote. The letter was first reported on by Real Estate News.

Third Point and D.E. Shaw both generally criticized CoStar’s insistence on investing in the “money-losing” Homes.com, on which, by the end of 2026, CoStar will have spent more than $3 billion, all while diverting resources away from its core commercial business.

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From BLS: Both total nonfarm payroll employment (+50,000) and the unemployment rate (4.4 percent) changed little in December, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in food services and drinking places, health care, and social assistance. Retail trade lost jobs.

Below is the breakdown of the jobs data.

The unemployment rate ticked down in this report, but the bond market didn’t think much of it, as the jobs report missed estimates and we had negative revisions.

Residential construction jobs: Big negative revisions

I am always mindful of revisions to the labor data, and the jobs report showed that this key sector of my economic work, residential construction jobs, which had recovered to new cycle highs in labor, now has a clear downward trend. As you can see in the chart below, this is a labor trigger that happens before a recession. We shall see if this trend sticks because mortgage rates are lower now and the builders’ confidence has improved.

Below is the most recent homebuilder confidence data, which shows a modest pick-up before the last move lower in rates. It will be interesting to see where this is in two months when we’ll have lower rates in the system and we might have more demand stimulus for the builders.

We got the recent housing starts data on Friday, too, and it showed a pick-up in housing permits from the recent lows. This can be attributed to the lower mortgage rates that we saw in the second half of 2025.

Jobless claims data still low

Since late 2022, I have cautioned people not to talk about a recession until jobless claims data on the four-week moving average heads toward 323,000. On this week’s unemployment claims report, the headline number is still low — we don’t see a lot of hiring or firing.

Conclusion

This jobs report didn’t rattle the bond market, as we didn’t see much movement with the 10-year yield. Also, every jobs report in 2026 is closer and closer to the day Jerome Powell leaves his position as Fed Chairman. In fact, we should get a lot of news about the Fed and housing policy soon, so the market will be adjusting to that news.

For me, labor is still key for mortgage rates. This is why the jobless claims data and the unemployment rate will be two very key data lines in 2026 since we have already had a few rate cuts in the system and we’re getting closer to the end of the rate-cut cycle as long as the labor market doesn’t break. Mortgage rates got closer to the bottom end of the 2026 housing forecast range of 5.75% and we closed the week off at 6.06%.

Hanley Investment Group Real Estate Advisors arranged the sale of a multi‑tenant shop building adjacent to Smart & Final Extra! at Antelope Valley Plaza in Lancaster. The sale price was $3.9 million. This is the third property that Hanley Investment Group has sold at Antelope Valley Plaza, a 127,000‑square‑foot neighborhood grocery‑ and drug‑anchored shopping center.

VPs Ayda Kach and Sean Cox represented the seller, PacWest Management Inc., a privately held retail real estate investment firm and developer based in Los Angeles. The buyer, a private investor from Orange County, was represented by Samer Khalil of Newmark.

“We procured multiple qualified offers and closed escrow with a non-1031 exchange buyer who had experience in the High Desert market,” said Kach. “We executed our third property sale at Antelope Valley Plaza as part of a break‑up strategy to maximize value for the seller and achieved a record price per square foot in the Antelope Valley in the past 12 months, bringing total sales at the center to $15.28 million.”

Apple has added to its South Bay real estate footprint by acquiring two office properties on Stevens Creek Boulevard in Cupertino, the Mercury News reported. A group whose principal executives include Peter Pau, president of Sand Hill Property Co., sold the properties to Apple for $216 million.

The computer giant already occupies 19319 Stevens Creek Blvd. and 19339 Stevens Creek Blvd., having leased them from a Pau-led affiliate for several years. The acquisition continues a buying spree in Santa Clara County that has totaled more than $1.1 billion and 1.5 million square feet since this past June, with Apple previously acquiring properties it leased in Sunnyvale as well as Cupertino.

19319 Stevens Creek totals about 136,600 square feet, while the 19339 Stevens Creek building is about 129,900 square feet, reported the Mercury News. Cushman & Wakefield brokers Erik Hallgrimson and Brandon Bain are the leasing agents for the buildings.

Consumer confidence fell for the fourth consecutive month, registering below the threshold for recession indicators for the second straight month—reflecting many consumers’ continued apprehension toward the economy, according to the latest data from The Conference Board.

The Consumer Confidence Index® fell by 7.2 points in March to 92.9, similar to the seven-point decrease seen last month. 

Stephanie Guichard—senior economist of Global Indicators at The Conference Board—noted that this decrease falls “below the relatively narrow range that had prevailed since 2022.”

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased 3.6 points to 134.5. 

Consumers’ outlook of business conditions were down again in March: 17.7% of consumers said business conditions were “good” (down from 19.1% in February), and

16.6% said business conditions were “bad” (up from 14.8%). As for the current labor market sentiment, 33.6% of consumers said jobs were “plentiful” (unchanged from February), while 15.7% of consumers said jobs were “hard to get” (down from 16%).

The report noted that “comments on the current Administration and its policies, both positive and negative, dominated consumers’ write-in responses on what is affecting their views of the economy.”

The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—dropped 9.6 points to 65.2, the lowest level in 12 years. This metric once again falls below the threshold of 80 that usually signals a recession ahead, having first dipped under the mark in February.

Looking ahead at the next six months, consumer purchasing plans for homes were down in March. Further expectations for the next six months worsened as well. 

In terms of business conditions, 17.1% of consumers expected business conditions to improve (down from 20.8% in February), and 27.3% expected business conditions to worsen (up from 25.5%). For jobs, 16.7% of consumers expected more jobs to be available (down from 18.8%), while 28.5% anticipated fewer jobs (up from 26.6%). In terms of income prospects, 16.3% of consumers expected their incomes to increase (down from 18.8%), and 15.5% expected their income to decrease (up from 12.8%).

Consumers’ confidence about future employment prospects in the next six months also fell to a 12-year low in March.

Guichard also noted consumer negativity toward the stock market for the first time since 2023, which she stated was “likely in response to recent market volatility.” She reported that “only 37.4% expected stock prices to rise over the year ahead—down nearly 10 percentage points from February and 20 percentage points from the high reached in November 2024. On the flip side, 44.5% expected stock prices to decline (up 11 ppts from February and over 22 ppts more than November 2024).”

“Meanwhile, average 12-month inflation expectations rose again—from 5.8% in February to 6.2% in March—as consumers remained concerned about high prices for key household staples like eggs and the impact of tariffs,” concluded Guichard.