The pace of land sales has picked up amid recent signs of a homebuilding recovery in Orange County,
But it’s still a far cry from the aggressive days of the pre-recession peak of the market, according to a sampling of local land brokers, developers and homebuilders.
Private builders have been doing the bulk of land purchases in the county of late. For the most part they’ve been for relatively small chunks, according to market data.
Among the 18 largest land sales to close in OC in the past two years—a combination of raw land, busted projects and other deals covering lots for about 1,500 homes—only four were made to publicly traded companies, according to data from the Irvine office of Land Advisors Organization.
“It’s improving and public builders are looking at more properties, but they’re still taking their time,” said one industry official whose clients are eyeing a number of area properties.
The situation in the county follows a national pattern.
Nationwide, publicly traded builders have reduced their land holdings from 2.2 million lots to 700,000 lots during the past four years, according to Irvine’s John Burns Real Estate Consulting Inc.
About 200,000 of those lots saw construction in the same period, according to the consulting firm.
Recent deals made by Irvine’s Fieldstone Group of Cos. are reflective of the cautious approach many area builders are taking on land buys.
Fieldstone is focusing on smaller lots where they can start building in a matter of months instead of spending years working on planning and entitlements.
Last summer, privately held Fieldstone, which also operates under the Fieldstone Homes name, bought a six-lot property near Dana Point’s boundary with San Juan Capistrano.
It’s planning homes as large as 3,600 square feet at the site, some with ocean views. The company expects to begin selling the homes in the first half of this year.
Fieldstone also recently bought an eight-home lot in Rancho Santa Margarita’s Trabuco Highlands master planned community.
It has plans for homes that will be about 3,500 square feet and expects to begin selling in early 2012.
“It’s a period where you’re looking for land, and looking for financing at the same time,” Fieldstone Chief Executive Bill McFarland told the Business Journal last month. “We’re not going to limit ourselves, but we’re not meeting a quota, either.”
Officials with privately held City Ventures LLC in Santa Ana, one of the more aggressive local land buyers here in the past year or so, said this month they’re looking at 20 deals for every one that ultimately goes through.
Farmers looking to sell excess land are just as likely to be sellers as banks offloading distressed land, said August Belmont, who heads up CV Communities LLC, City Ventures’ suburban division.
Some Quick Deals
A few City Ventures land deals have been completed in less than one week, officials said. Fast deals still call for extensive due diligence.
“We’re cautious in our underwriting,” said Chairman Craig Atkins.
That caution has resulted in a few local purchases for the nascent company in areas such as Santa Ana and Brea.
City Ventures also has seen a few deals fall through, such as last year’s $26 million bid for Newport Beach land owned by chipmaker Conexant Systems Inc.
That 25-acre deal went to Irvine’s Shopoff Group LP. The developer said it’s looking at the site largely as a commercial-driven deal, although residential development is a possibility down the road.
Lambert Ranch
In terms of immediate development, the most expensive buy here of late was for Lambert Ranch, a family owned tract of raw and agricultural land that sits amid the Portola Springs development near the former El Toro Marine base.
The 51-acre plot of land was acquired by New Home Co., a recently launched homebuilder based in Aliso Viejo that counts several prominent local executives among its ranks, including former John Laing Homes chief executive Larry Webb.
The plan is to build 169 high-priced, stand-alone homes in a gated community on the Lambert Ranch land. A grand opening for the development could take place by early next year, according to New Home officials.
Terms of the Lambert Ranch sale weren’t disclosed, although sources put the likely purchase price in the $1 million- to $1.4 million-per-acre range.
That’s relatively cheap for land in the Irvine area.
Newport Beach’s Irvine Company is believed to have sold its land at prices ranging up to $5 million per acre to builders during the boom years.
$3 Million Mark
More recently, Irvine Co. land sales have begun to recover to the $3 million-per-acre mark as homebuilding has picked up steam in the past year, according to sources (see related story, page 18).
Elsewhere in the county, residential land generally sells at prices from $1 million to $3 million per acre, depending on the density of a proposed development.
In Huntington Beach, a 23-acre site a few blocks from the ocean is reported to have traded hands in mid-2010 for about $45 million, or just about $2 million per acre.
Christopher Homes, part of Newport Beach’s PLC Land Corp., bought the land from John Laing Homes and plans a 201-home project there called Pacific Shores.
Looking in Lake Forest
Among upcoming sales, brokers point to a handful of Lake Forest land sites that are likely to trade hands soon, depending on how re-zoning efforts in the city play out.
Land Advisors Organization’s website lists 12.7 acres in Lake Forest—known as Whisler Ridge—as being up for sale. The land could hold 68 homes as big as 3,200 square feet. The project would cost a developer about $10 million to complete, according to marketing materials.
Platinum Triangle Parcel
Land Advisors’ also is marketing a 3.8-acre parcel in Anaheim’s Platinum Triangle that’s listed for sale on its website. A 320-condominium project had been planned there, according to the website.
Los Angeles-based Cathay Bank is the seller of the property. The bank took back the land along Orangewood Avenue from its prior developer more than a year ago.
Builders, including Miami’s Lennar Corp., which has operations in Aliso Viejo, paid as much as $4 million-an-acre for land in the Platinum Triangle during the peak years of the market. Lennar had expectations of building several thousand homes and condos in the area.
The downturn put those plans on hold and brought prices down. Land deals in the area—which only has seen apartment development and a few condo projects built in the past five years—likely can be had for less than half that amount.
