A development site in Costa Mesa’s arts district that’s earmarked for a luxury apartment project has traded hands at one of the highest per-acre prices in the region recently.
An affiliate of Lennar Multifamily Communities, the apartment development arm of Miami-based homebuilder Lennar Corp., completed the purchase of a roughly 4.8-acre parcel on Anton Boulevard last month, a few blocks from South Coast Plaza.
The site, on the grounds of The Met office complex, was entitled a couple of years ago for the Symphony Apartments project, which calls for two upscale six-story apartment buildings totaling 393 units.
A pair of condominium towers was once envisioned for the property, but those plans were scaled back to a midrise rental development.
Construction on Symphony Apartments is scheduled to begin in mid-2019 under the new ownership, according to Ryan Gatchalian, LMC Southern California divisional president, who works in the company’s Aliso Viejo office.
He said that while a few tweaks to the complex’ design might be made, the project will remain a midrise rental development.
Symphony Apartments will have 154 two-bedroom units and 239 one-bedroom units. Apartments will range from 750 square feet to about 1,400 square feet, according to city documents.
The project’s prior owners envisioned units would be marketed to “renters by choice,” those who can afford to own homes but choose not to.
Back in 2014, monthly rents for the project’s largest units were to be about $4,000.
Pricey Land
Rents could end up being higher, if the price paid for the site is any indication.
Lennar Multifamily Communities paid about $55.5 million for the site, Gatchalian said. That includes two transactions, property records show. A little more than $39 million went to a venture between Stockbridge Capital Partners in San Francisco and Costa Mesa-based McCarthy Cook & Co., and more than $16 million bought out the ground lease from Santa Ana-based Sakioka Co., a longtime area landowner.
The transactions give LMC full control of the site and the underlying land, Gatchalian said. They work out to about $11.5 million per acre.
The only other multiacre development sites in Orange County that sold for more than $10 million an acre in the past five years were for waterfront properties on Coast Highway, according to CoStar Group Inc. records.
The project’s location near South Coast Plaza and the Segerstrom Center for the Arts justifies LMC’s investments, Gatchalian said.
“It’s a very high-barrier-to-entry market,” he said, noting a slow-growth measure in Costa Mesa that took effect last year.
Symphony Apartments would be the second upscale rental project recently brought to Costa Mesa’s arts district, an area that’s getting heavy construction.
Foster City-based Legacy Partners plans to open its midrise 580 Anton project this year on the opposite side of Anton Boulevard with 250 units.
The Symphony Apartments development site previously held two restaurant buildings, which have been vacant for several years. The buildings are at the corner of The Met campus, whose offices, parking lots and outdoor areas have been getting a massive overhaul during the past year headed by McCarthy Cook.
The commercial developer was part of a venture that bought the 17-acre office campus, previously called MetroCenter at South Coast, about two years ago for a reported $233 million.
A-Town Arrival
Symphony Apartments marks the second OC development site that LMC is known to own. It’s also overseeing opening construction at A-Town, a 43-acre site in the Platinum Triangle area of Anaheim.
The first phase of the 400-unit midrise project on Katella Avenue and State College Boulevard will open this spring, Gatchalian said. A total of 1,746 homes and apartments are planned upon buildout.
LMC was formed in 2011, and as of 2016, it had a development pipeline topping $7 billion and over 23,000 apartments.
The torrid pace of construction, both in OC, where about 7,500 units were built last year, and across the country, hasn’t moved the developer to hit the pause button, Gatchalian said.
“We still feel the multifamily market is strong. We feel good about it.”
But, “We’re being careful about the locations we choose. That’s (a reason) we bought in Costa Mesa,” where barriers to entry are so high.
