Sares-Regis Group Breaks Out on Its Own With Luxury Apartments
COMMERCIAL
Carter Chappell inherited a smaller region when he was elevated to head up the Southern California operations of McCarthy Building Cos. But that doesn’t mean he has been any less busy.
Chappell took over as head of the Southern California region when his predecessor, Michael Bolen, was promoted to chief executive of the St. Louis-based construction company. As part of a restructuring, McCarthy split its California operations in two. The company’s California operations had grown substantially from the four employees it was started with in 1984 to more than 330 this year.
Since taking over, Chappell has led the company through one of its strongest years since it set up shop in Orange County, posting $232 million in revenue for the 12 months ending in March.
(In the Business Journal’s July 17 list of the largest commercial construction firms, McCarthy was shown to have posted a 22% fall in revenue for the 12 months through March. The decline was the result of McCarthy’s recent restructuring as it compared the company’s newly formed Southern California unit vs. the roughly $298 million in sales the company had statewide for the 12 months ended March 1999.)
Through the first quarter of the latest fiscal year ended June 30, McCarthy’s Southern California operations had achieved 50% of the firm’s stated sales goals for the year, Chappell said, declining to discuss specific numbers.
“This latest fiscal year we see more opportunities than we are willing to propose taking on because we want to make sure we have the resources to handle the job properly,” Chappell said. “The opportunities still are out there and are very, very strong in the markets we operate in.”
In OC, McCarthy is involved in several projects, including Trammell Crow’s Pacific Vista office development in Lake Forest and a Kaiser Permanente facility in Santa Ana. In all, the company’s ongoing OC projects account for roughly $85 million in revenue, Chappell said.
Looking forward, McCarthy is in the pre-construction phase for the planned Ritz-Carlton hotel in Irvine, proposed for the Park Place office complex at the corner of Jamboree Road and Michelson Drive.
“There’s a lot we’re encouraged about, but again we’re looking at each project on an individual basis and we want to make sure we have the resources to take care of our customers,” Chappell said.
Still, Chappell sees some clouds on the horizon, especially the recent increases in interest rates and the increasingly tight supply of ready-to-build land in OC.
“(The interest rate hikes) certainly will affect one segment of the marketplace,” he said, “but other segments are not necessarily interest rate dependent for their source of money, like schools, where a big portion of their money will come from the state.”
As land values escalate, Chappell expects an increasing number of developers and landlords to tear down older one- and two-story buildings to develop multi-story buildings.
“It will be more feasible to go back and demolish those buildings and replace them with new facilities,” he said.
RESIDENTIAL
As reported in last week’s Business Journal, Sares-Regis Group is close to finalizing a deal to acquire almost 11 acres from Prudential Insurance Co. at the corner of Jamboree Road and Campus Avenue, with plans to put up a 548-unit apartment complex.
The move is a first for the firm in that it will be building high-end luxury apartments for is own account. Its past work on similar facilities has been for Irvine Apartment Communities and others.
Barry Kamel, president of the Irvine-based company’s multi-family development division, see the opportunity as a rare one.
“We see it as a unique and fabulous project opportunty,” he said. “Being next to the (University of California, Irvine) nature preserve is a terrific amenity for us. We’ll have a great number of our units with views toward and over the wetlands, toward UCI and Fashion Island.”
Featuring one-, two- and three-bedroom units, Watermarke,as the project has been named,will have amenities such as a pool, spas, tennis courts and urban courtyards. Watermarke will sport a northern European architectural motif.
“This will be the most luxurious product we have done for our own account,” Kamel said.
While rents were estimated in the company’s business plan for the project, actual figures have not and will not be released to the public until the beginning of the marketing phase, so that Sares-Regis will be able to price the project competitively in the rapidly escalating Orange County rental marketplace.
Construction is expected to begin in the second quarter, with move-ins anticipated for roughly 14 months after that.
