It’s no surprise that Newport Beach’s The Irvine Company,the county’s top owner and developer of apartments,is behind the largest apartment complex opening this year, an 890-unit, upscale project known as The Enclave.
What is surprising is the location of The Enclave: Costa Mesa’s arts district.
The apartments are the Irvine Co.’s first in the county that aren’t on the Irvine Ranch, a historical stretch of land that includes parts of Newport Beach, Laguna Beach, Irvine, Tustin, Orange and Anaheim Hills.
The Enclave, opening this month, is the company’s first property of any type in Costa Mesa. Development in the city has been dominated by Henry Segerstrom, whose family is behind South Coast Plaza, the Orange County Performing Artscenter and several office buildings.
The Irvine Co., which also has apartments in Silicon Valley and San Diego, isn’t concerned about venturing into new ground.
“It’s a stone’s throw from our projects in the Spectrum and Newport Beach,” said Max Gardner, president of the Irvine Co.’s apartment communities division. “We’ve got a good understanding of the area.”
Leasing Land
Another difference of this project: The Irvine Co. doesn’t own the land, which is near South Coast Plaza, along Anton Boulevard and Sakioka Drive.
It’s leasing the 40 acres for The Enclave from the Sakioka family, which long has owned much of the undeveloped land in the South Coast area.
The Irvine Co. looked into buying the land outright, Gardner said. But the Sakioka family preferred a ground lease, he said.
“It’s not our typical strategy,” Gardner said.
The project is opening its doors to its first tenants this month and has finished work on part of the complex, including a 1-acre park that’s set to host outdoor movies and events, a plush indoor theater that holds 30 people and a pair of saltwater swimming pools surrounded by cabanas.
“The last few years, we’ve been focused on how to provide extended living space,” Gardner said. “If we do it right, it serves as an extension of the apartment.”
Work still is moving forward on many of the actual apartments, which will open in phases during the next year or so. Construction work for the 46-building complex is being handled by Irvine’s Western National Contractors, part of Irvine’s Western National Group.
Rents
Rents for the apartments,which average about 1,000 square feet,are in line with most of the Irvine Co.’s newer OC complexes: $1,450 to $2,600 for two-bedroom units. The complex is opening with about 25 leases signed, and another 20 or so expected by the end of the month.
That’s about on par with preleasing for The Village, the last big Irvine Co. apartment project that opened about two years ago in the Irvine Spectrum. The first three sections off The Village are about 95% full.
The Enclave has the distinction of being the first apartment complex to go up in Costa Mesa in nearly 15 years. But it’s not lacking upscale competition.
A few blocks away, Denver-based Apartment Investment and Management Co. is about halfway through a $60 million upgrade of a 770-unit complex across the street from the Ren & #233;e and Henry Segerstrom Concert Hall.
The 20-year-old buildings, which previously were known as The Lakes Apartments, have been renamed as 3400 Avenue of the Arts. Upgrades to the apartments include gourmet kitchens, wiring for high-definition TV and a new fitness center and rock climbing wall.
Monthly rents at the 3400 Avenue of the Arts complex are going up by more than $600 per apartment, putting rents for most of the apartments at comparable levels to those of the Irvine Co. complex.
The two apartment projects are finishing amid a slowing market for home sales, which has put several high-rise condominium tower development plans around South Coast Plaza on hold.
The slowdown is having an effect on the apartment market, too, Gardner said.
“We expect to see more modest growth for the rest of the year, opposed to the past two or three years,” he said.
The Enclave is projected to be the biggest apartment project opening in the county this year. In all, about 1,250 apartments are expected to open in OC during 2008, compared to 2,000 in 2007 and about 1,900 the two prior years, according to Marcus & Millichap Real Estate Investment Brokerage Co.
Rents are projected to increase an average of 5.2%, to $1,624 per month, according to Marcus & Millichap.
