Apartments Give Way to Best Buy Store in Orange
By MATHEW PADILLA
Equity Office Properties Trust is resorting to plan B in Orange.
The Chicago-based real estate investment trust is selling a five-acre site near The Block at Orange to consumer electronics retailer Best Buy Co. after hitting city resistance in its bid to build apartments at the site.
Equity’s first choice for the land was to sell to a luxury apartment developer, according to sources. But Orange officials resisted changing the zoning for the land to allow for apartments, they said.
Instead, Best Buy plans to open a store of about 45,000 square feet at the northeast corner of Chapman Avenue and Manchester Avenue, according to the city.
The site also includes 9,000 square feet or so of restaurant space and nearly 3,000 square feet of space for a fast food eatery.
Equity’s apartment bid was part of a trend of putting up apartments or condominiums in urban areas, as seen in Fullerton, Anaheim and Santa Ana, among other cities.
But Equity’s lesson in Orange: just because a landowner thinks a parcel is ripe for housing,and developers want the land,doesn’t mean local officials will sign off, especially if there’s competition from a lucrative retailer.
“The city of Orange, like most cities, covets its commercial base for its revenue,” said Jim Reichert, Orange’s acting economic development director.
Richfield, Minn.-based Best Buy is in escrow to buy the site. A spokesperson for Equity declined to comment for this story.
Orange and neighboring Anaheim approved several projects that rezone land from commercial use to housing before Equity received bids from apartment developers and began talks with the city, Reichert said.
Developers plan to put up some 2,100 luxury apartments in a small swath of Central County, stretching from The Block at Orange to Angel Stadium in Anaheim.
Orange, Reichert said, has agreed to housing at three other sites: the old Orange Drive-In theater, the former Orange Cinedome, and a former Ramada Inn site. The city also has given initial approval to Arlington, Va.-based The Mills Corp., operator of The Block at Orange, to build 500 apartments at the shopping center.
“Given that (those projects) had already been approved, there was some concern of eroding the commercial base any further,” Reichert said.
Besides, the site on Manchester and Chapman is ideal for shops, Reichert said. The site is visible from the Santa Ana (I-5) Freeway and is close to the Orange (57) Freeway, he said.
Even with OC’s housing shortage, cities still prefer shops to housing, said Walter Hahn, a real estate economist with the Irvine office of Ernst & Young.
“They want the sales tax revenue,” Hahn said. “Secondly, for apartments, the cost of providing service exceeds the revenue the city gets.”
Cities often prefer houses to apartments, Hahn said, because they have a higher assessed value than apartments, creating more tax revenue.
“I don’t see the cities’ attitude toward this changing, particularly since they are all strapped for money these days,” Hahn said.
Other sites in Irvine, Anaheim, Fullerton and Lake Forest are being rezoned from office or industrial uses to allow homes or apartments, because of the county’s demand for housing.
In Irvine, Phoenix-based Opus West Corp. is reshuffling its planned mix of buildings at a site it owns on Jamboree Road and Campus Drive. Opus plans to build less office space and has nixed plans for a hotel. Instead, the developer is set to build two condominium towers.
Some manufacturers, such as St. John Knits International Inc. and Royalty Carpet Mills Inc., aren’t too happy about new housing being built in and around Jamboree. Future residents could threaten their existing operations by complaining about trucks, noise and odors, they said.
