RESIDENTIAL
Irvine Company switched up the way it financed home construction on its land last year when it kicked off its executive builder program, paying builders a fee to put up homes at its Woodbury, Woodbury East and Stonegate East projects.
The company also reworked the way it designed and sold homes, according to Dan Young, president of Irvine Co.’s community development division.
“In 2009, if we hadn’t decided to reinvent the home, we wouldn’t have been nearly as successful as we were,” said Young, who was one of the local executives profiled in last week’s Business Journal as part of our Businessperson of the Year issue.
That profile largely focused on Irvine Co.’s decision to move ahead with homebuilding in a sluggish market for new homes.
The decision wouldn’t have paid off without a lot of groundwork that included research on customer habits and buyer preferences, said Young, who compared the company’s latest batch of homes to Apple Inc.’s iPad tablet computers.
“We had to bring something new to the market,” Young said.
Those new features included larger “California Rooms” that combine indoor and outdoor space, big windows and tall ceilings, the elimination of traditional, less-used living rooms in smaller homes and more practical designs in kitchens and other areas.
“The most satisfying part is making these homes, designed for living the way buyers want them to,” said Young, who visits new models to hear what prospective buyers are saying about what they like and dislike.
Thanks to customer feedback, homes being built by the company’s own Irvine Pacific LP unit now count a lot more counter space in the kitchen in addition to placing microwaves lower to the ground, among other tweaks.
Another big factor for buyers: With construction costs off 20% or more from the peak of the market, Irvine Co.’s homes have been priced at levels comparable to those in the resale market, roughly in the range of $300 to $345 per square foot.
“You get a lot of house for that price,” said Young, who noted that some upgrades in smaller Irvine Pacific homes going up now are comparable to those seen in typical custom homes.
“You need to spoil (buyers),” he said.
Another way the company’s doing that is by bringing one big part of the buying process in-house, in a way.
It has “imbedded” two banks—Bank of America Corp. and Wells Fargo & Co.—in its home sales process to help smooth out the appraisal process and to help buyers figure out how much home they are bank-approved to buy.
“We think that’s an untold story of our success,” Young said.
What’s next? The company said it plans to open a design center in a Woodbury shopping center this spring to help give prospective Irvine Pacific homebuyers a better understanding of the process, according to Young.
COMMERCIAL
A Florida-based real estate investor has snapped up three Long Beach shopping centers from Irvine’s Bixby Land Co.
North Miami Beach-based Equity One Inc. paid $72 million for the three centers, which are near the retail hub of the Long Beach traffic circle. Tenants include a Ralphs grocery store, Vons, Ross Dress for Less and Rite Aid.
The centers total about 273,000 square feet.
The properties sold for about $264 per square foot.
Two of the properties are debt free and the other had an $11.6 million mortgage that will be assumed, according to Equity One.
Bixby’s been looking to shift toward being more of an owner of industrial properties of late and has been selling off older retail buildings. Proceeds from the sales in Long Beach will be used to buy additional industrial properties, officials said.
Pavilion Deal Financed
Santa Ana’s Orange County High School of the Arts said it has completed a $30 million financing deal that will allow it to buy the former OC Pavilion building on Main Street in downtown Santa Ana.
The sale of the building by Mike Harrah’s Caribou Industries first was reported by the Business Journal last summer.
The OC Pavilion building, which had been one of local developer Harrah’s better-known properties, will be used for classrooms, studios and performance space by the charter school.
The $30 million financing deal also involves the school’s purchase of a building south of the existing campus to serve as a visual arts facility, and a refinancing and renovation of three other buildings.
The financing deal was put together by Long Beach’s Farmers & Merchants Bank and lender Clearinghouse Community Development Financial Institution. The deal involved the use of the Treasury Department’s New Markets Tax Credit Program, officials said.
School officials said they’re embarking on a mission to raise $21 million to repay the loans in the next seven years.
