HFF's Wright sees high land value shaping market in San Diego

By TONY LOVITT, Special to The Daily Transcript

Wednesday, August 21, 2013

One could say that Tim Wright, senior managing director ofHFF in San Diego, has assimilated quite well since coming from the Midwest to Southern California in the late '70s and "feeling like a foreign exchange student" at the University of California, Santa Barbara.

"It was interesting. I've never returned to [live in] the Midwest," Wright said.

A business economics major at UCSB, Wright graduated with honors in 1982 and spent a year as a congressional intern in Washington, D.C., before initially coming to San Diego for a job in the trust department at Bank of America(NYSE: BAC).

"I was going to graduate school [majoring in finance at San Diego State University] at the time and decided I wanted to get into the real estate side of the business," Wright said. "I was able to get in with First Interstate Mortgage and stayed with them for a number of years."

Prior to joining HFF, Wright was vice president at CB Commercial Mortgage Banking, responsible for the origination of debt and equity transactions and the maintenance of correspondent relationships with institutional lenders.

 "So, I opened up the [San Diego] office, and I've run the office [since January 1997]," he said.

"Then, when Nick Psyllos [HFF senior managing director] came over about 18 months ago or so, I let him run the investment sales side of our business. I still oversee and do debt reduction and equity placement for clients, as well as oversee the administrative functions in the office," said Wright, who has completed more than $3.5 billion in real estate transactions during his tenure at HFF (NYSE: HFF), dealing with all product types.

Clearly, multifamily has been and continues to be the darling of real estate investors, but Wright said another product type has been gaining popularity.

"I think hotel [product], interestingly, is surprisingly strong. Hotel usually has the greatest variability of income. Hotel took the first hit when the market declined. And they've come back most quickly," Wright said.

"Then, when you throw in six or seven years of lack of supply, hotels are interestingly popular with investors. Cap rates are low and the lending community is starting to feel pretty comfortable with hotels again. San Diego is one of the top three hotel markets in the country."

Having spent more than 25 years in commercial real estate finance, Wright has other interesting perspectives on the local commercial real estate market.

"The strength of the market is that there's a lack of supply (of land to be developed) and high barriers to entry. Fundamentals are good," Wright said. "The other edge of that sword is that no one moves here. Companies like Qualcomm are grown here. It's not like Texas. Caterpillar doesn't just pick up and decide it's coming to San Diego. State Farm isn't going to move a big regional headquarters here."

 With that dynamic unlikely to change, Wright sees redevelopment as the trend in the foreseeable future.

"We're seeing 20-year-old buildings in the Del Mar Heights submarket getting torn down for new buildings. That tells you something about land value and so on. We'll just see more of what you might see in a CBD [central business district] occur in our marketplace. When you look at the transportation infrastructure, you look at the city, you look at where there's some really well-located real estate and it's underutilized ... Clairemont Mesa, Kearny Mesa. Some of these areas are due for some redevelopment," Wright said.

"I think well-located, but underutilized, functionally obsolete properties are going to be targets of developers in this cycle. I think that will be kind of the hallmark of the next ten years."

And, while acknowledging the strength of the UTC, Carmel Valley and Sorrento sub-markets, Wright expressed an affinity for downtown, as well as a desire to see single-tenant tech-type employers locate there.

"I'd love to see somehow, someone figure a way to get tech downtown. I think the people that are employed in the tech industry like downtown. They live downtown. They play downtown. But they work in the suburbs," Wright said. "What I never thought would happen would be high-quality development fill-in between 12th Avenue and the freeway ... and that's happening. So, it'd be great to get tech down there. It really would."

  • Posted on   08/22/13 at 04:51:11 PM   by Josh  | 
  • RSS
  • |
  • More
Posted in News

Reader Comments (0)

Comment Post Comment