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Sunday, Oct 2, 2022

$48M Sale for One of IBC’s Remaining Housing Sites

One of the last sites in the Irvine Business Complex approved for housing redevelopment under the city’s current 15,000-unit cap for residential entitlements in the fast-growing area has traded hands for a hefty price.

A pair of developers—homebuilder KB Home and apartment builder Alliance Residential Co.—last month completed the purchase of two adjoining industrial sites at the intersection of Alton Parkway and Von Karman Avenue, a few miles northeast of John Wayne Airport.

The transactions totaled nearly $48 million combined, property records indicate.

That’s roughly $5.3 million an acre for the 9-acre site at 2152 and 2182 Alton Parkway. The price is about $1 million more an acre than recent comparable deals in the immediate area.

The land currently holds two warehouse buildings totaling about 200,000 square feet of industrial space; that were built in the early 1970s, according to brokerage data.

Those buildings, listed in CoStar Group Inc. records as being recently vacated, will make way for a pair of housing projects, although a timeframe for construction hasn’t been announced.

The site was entitled in 2016 for 357 residential units, city records indicate. Los Angeles-based KB Home (NYSE: KBH) is expected to head the construction of 93 townhomes, while Phoenix-based Alliance Residential will undertake a 264-unit apartment complex.

An affiliate of KB Home paid just over $28.6 million for its portion of the project, while an entity tied to Alliance Residential paid about $19.1 million for the remainder.

The two sales work out to a price of about $72,000 per apartment unit, and about $308,000 per townhome site.

Both projects will face their share of competition for renters and homeowners.

The development site is about a block from the Diamond Jamboree shopping center and a slew of newly built midrise apartment projects, as well as a few for-sale townhome developments.

Alliance has other multifamily projects underway not too far from the Alton property. About two miles away on Red Hill Avenue, it’s heading the construction of The Heritage, 1,221-unit apartment complex in Santa Ana, just over the city line from Irvine.

It paid about $76,000 per developable unit for the Santa Ana site a couple years ago, according to prior Business Journal reports.

KB Home’s largest project underway in Orange County is in Lake Forest, where it’s building a 163-home portion of the Iron Ridge housing project, a development headed by Newport Beach-based Landsea Homes.

The industrial sites on Alton Parkway were sold in separate transactions by an affiliate of Laguna Beach-based Wong Properties and Dynasty Real Property Group in Irvine, real estate records indicate.

Cap Approaches

The sale comes as developable land is running out in the 2,700-acre IBC, covering much of the industrial portion of Irvine near John Wayne Airport.

The city enacted a 15,000-unit cap on residential development in 2010, when only a few thousand condos and apartments had been built.

The area’s since seen a flurry of construction, with developers scrambling the past two years to snap up the last entitlements granted by the city.

A few projects studied but not approved by the city over the past year or so would have pushed residential development over the entitlement cap, requiring general plan amendments.

A few groups have opted to take different approaches to working around the cap.

A 3-acre site in Irvine across the street from the District at Tustin Legacy shopping center, for example, was proposed a few months ago for a housing project for older residents.

The IBC site, at 16542 Millikan Ave., currently holds a single-story commercial building that’s about 21,000 square feet. The land was previously considered for a traditional housing development, but that proposal never moved ahead.

Instead, a two-building, 424,000-square-foot senior housing facility holding 370 living units was proposed.

An eight-story west tower would contain 230 independent-living quarters. The six-story east tower would hold 110 assisted-living quarters and 30 memory-care rooms, according to city filings from October.

The development group submitting the new proposal argues that since the project will not function “in a manner consistent with a typical residential development,” it’s not subject to that zoning ordinance and the 15,000-unit cap, according to city filings.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.

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