Nearly 11 acres of undeveloped land on Seal Beach’s coast is up for sale, with expecta-tions that the buyer will turn the site into a hotel.
The owner, Seal Beach-based Bay City Partners LLC, is asking $26.5 million for the 10.7-acre parcel, which has been empty for nearly 30 years. An adjacent 0.6-acre parcel also is for sale, for $6 million.
Zoning for the main property should allow up to 150 hotel rooms to be built on the site. A majority of the land, which runs next to the beach, would remain available for public use and as open space.
Brokers at the Newport Beach office of Marcus & Millichap Real Estate Investment Services Inc. are marketing the land, which is at the southwest corner of Marina Drive and First Street, next to the San Gabriel River channel.
The site’s about nine blocks north of the Seal Beach pier.
Getting full approvals for development could take about 18 months to two years, according to Syd Warburton, a broker with Marcus & Millichap. It could cost up to $750,000 to get the approvals.
The property is expected to be sold in the next four to six months, according to Warburton. Several hotel developers have expressed interest, he said.
Building a 150-room hotel at the site would cost about $32 million, or about $215,000 per room, according to the brokerage’s marketing material.
Hotels in the area have been selling for about $460,000 per room. They’ve had a capitalization rate,or expected return from room rates and other revenue,of nearly 7%, according to Marcus & Millichap’s figures.
The site’s zoning was approved in 1996. Brokers believe the city might consider a larger hotel,up to 300 rooms,if the smaller, adjacent parcel is part of the project.
Other developments proposed for the site have included houses and condominiums, as well as an assisted-living facility.
Housing?
Housing might be the preferred option for surrounding neighbors, according to Marcus & Millichap officials. It also likely would be the most lucrative option.
An ocean lot less than 400 yards away from the site, totaling about 4,000 square feet, recently sold for $5.6 million.
But the city might favor a hotel, which would bring in more tax money.
Bay City Partners bought the land in 2000 for a reported $4.5 million from the Los Angeles Department of Water and Power.
The property could be one of the few remaining ocean-front hotel developments in Orange County.
Other coastal hotel projects in the early stages of planning include the 90-room Headlands Resort Dana Point, which is at least two years away from breaking ground, according to a spokesman for the project.
In San Clemente, a hotel tentatively planned for the Marblehead housing development likely would come even later. Also being considered for San Clemente is a boutique hotel for North Beach Village.
Marcus & Millichap also is listing two sites near Dana Point’s beach.
A 1-acre site within Doheny State Beach Park, which could hold a 151-room hotel, is being marketed for $18.5 million. Above Dana Point Harbor, a site that could hold a 41-room hotel is listed for $7.5 million.
There are 26 hotels under development in OC this year, compared to 24 a year ago and 12 in 2006, according to Irvine-based Atlas Hospitality Group.
Orange County has seen four hotels open so far this year, including one in Seal Beach,the 110-room Hampton Inn & Suites.
