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Lyon Buys Cypress Site for 244 Homes

William Lyon Homes plans to turn a big infill development site it just bought in Cypress near the Los Alamitos Race Course into an active-adult community that would be the first of its type for the company in Orange County.

The Newport Beach-based homebuilder recently closed on a 28-acre site at the intersection of Katella Avenue and Enterprise Drive a little more than a mile north of the San Diego (405) Freeway. It paid about $55 million, or a little under $2 million an acre, according to multiple real estate sources.

It’s among Orange County’s largest and most expensive infill land deals over the past decade.

The property was once considered for a large industrial project, but about three years ago its prior owners began to re-entitle it for an age-restricted development of 244 single-family homes.

It’s one of the largest for-sale residential developments on the books in OC outside of the area’s three main master-planned communities in Irvine and Ranch Mission Viejo.

It’s also a step up in local unit size for William Lyon Homes, which builds across the Western U.S. and has a market value of about $700 million.

The project, now called Barton Place, has more than double the number of units of the next-largest housing project William Lyon Homes has under way in Orange County, according to the builder’s latest annual report from March.

It owned 354 lots here at the end of last year, including a few remaining ones at Mackay Place, a 47-unit project also in Cypress that’s nearing completion.

“It’s a challenge to find the right deal in OC” outside of the area’s master-planned communities or smaller infill locations, because of limited land opportunities, said Chief Executive Matt Zaist.

Ovation Entrée

The latest venture into Cypress marks a new product offering in OC for William Lyon Homes. In March, it unveiled the Ovation housing development brand to focus on the active-adult market, which is for homebuyers older than 55. The age group is one of the fastest-growing segments of the housing industry.

The goal for Ovation is to differentiate William Lyon’s offerings from other adult communities, such as larger ones centered around a golf course, “by cultivating an appealing brand lifestyle for 55+ buyers who prefer a more intimate, unconventional and contemporary residential environment,” the company said in announcing the brand.

Expect to see modern styling, use of natural light, indoor-outdoor spaces, and smart-home technology, among other features, the builder said.

It’s a “segment we’ve really been thinking about for a fair amount of time on a corporate level,” Zaist said last week. “It’s something you just can’t dabble in.”

The communities the company’s planning to build under the Ovation program will range from about 250 homes to as many as 750, Zaist said. Other projects planned under the program are in the Seattle, Las Vegas and Phoenix areas.

At Barton Place in Cypress, two types of single-story homes will be built in the gated community, a paired-home product ranging from 1,400 square feet to 2,200 square feet, and detached homes of 1,750 square feet to 2,500 square feet.

William Lyon Homes hasn’t announced pricing yet. Zaist said the paired homes should be more affordable than the typical new-home offering in OC.

Sales should begin around the start of next year, with models opening in the spring, he said.

Switch in Plans

The land was sold to William Lyon Homes by a venture operating as C33 LLC, an entity headed by Newport Beach-based real estate development and investment group Province Group LLC.

Irvine-based land brokerages Land Advisors Organization, WD Land and Hoffman Group were involved in the sale.

It’s taken nearly five years to get the Cypress land, which is part of a vacant 33-acre development site that’s ready for construction.

The site was once part of the Cypress Golf Club, which closed in 2004. It was long owned by a partnership that included Ed “Doc” Allred, owner of the adjacent Los Alamitos Race Course.

In 2012, the entire 33 acres was sold to San Francisco-based industrial developer Prologis, which planned a multibuilding distribution facility.

Residential neighbors’ opposition to the industrial proposal stalled development, and Prologis sold back the land to Allred’s group, which struck a $33 million deal with the Province Group-led entity about three years ago, according to real estate sources.

In 2015, the city of Cypress signed off on a plan to turn the 28-acre portion of the site into senior housing, and a five-acre site next to it was earmarked for a smaller retail project.

The smaller parcel hasn’t sold and is one of several sites in Cypress being considered for retail development. The Los Alamitos Race Course has also been eyed as a big redevelopment site potentially holding a variety of uses, if it were to close.

The decision to put senior housing at the 28-acre site comes at a good time in the market for the product type, according to Sal Provenza, a partner with WD Land who was involved in the transaction.

“We have seen the age-qualified market evolve significantly over the last 10 years,” he said. “In the past, age-qualified homes would sell for a discount to a traditional home nearby. Now, in many markets, AQ homes can sell for a significant premium, especially in affluent markets like Orange County.”

The trend is expanding to the Inland Empire, where a 1,443-home development near Corona called Terramor has a host of companies are building homes for people over 55, including Irvine-based CalAtlantic Group.

“We are seeing this trend in markets like Ontario and Jurupa Valley, where AQ drives a higher land residual and homebuyers are not overly dependent on low down payment FHA financing,” Provenza said.

In Orange County, the largest new development catering to older buyers is Rancho Mission Viejo, which has built a large portion of the first two communities at its master-planned development for 55-plus buyers.

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