A portion of a former industrial facility in Costa Mesa’s Westside that’s slated for an infill housing project has sold in one of the larger land deals in the city in recent years.
Meritage Homes Corp., a Scottsdale, Ariz.-based homebuilder with a handful of Orange County projects to its name, recently closed on the purchase of land at 671 W. 17th St., a 9-acre site close to the Newport Beach city limits.
The Westside Gateway site is entitled for 177 three-story townhouses and live-work units in three different product types. Meritage bought land that will hold 135 of the homes.
Property records show the builder paid roughly $35 million, or about $260,000 per lot.
No residential land sale in Costa Mesa had topped $30 million in over five years prior to the deal’s closing this month, according to CoStar Group Inc. records.
The land was sold by a venture headed by Irvine-based developer Westport Properties Inc., which paid an undisclosed amount for the property in 2014.
The deal was brokered by Brandon Johnson, managing director of Newport Beach-based Tierra Development Advisors.
Westport, a real estate company that’s primarily an owner and operator of self-storage facilities, is headed by principals Charles Byerly and Drew Hoeven. The company said the institutional capital-backed venture that bought the site in 2014 is keeping ownership of the remaining 42 home lots for the time being but plans to sell the land later.
“This is an extremely unique opportunity for Meritage, and we expect the remaining lots to be a hot commodity in the near future,” Johnson said.
Infill Site
Plans for redeveloping the site have been under way for over 10 years.
The property, which is near the intersection of 17th Street and Superior Avenue, originally was developed in the 1950s as an aerospace-related industrial facility. Former occupants include aerospace company Argo-Tech Corp., an affiliate of Cleveland-based Eaton Corp. that made and tested liquefied natural gas pumps there.
Argo-Tech sold the site in 2007 for an estimated $20 million, according to property records. Remediation work began in 2008 to prepare it for future residential uses, according to city filings. A 153,000-square-foot industrial facility there was razed about a year ago.
Residential entitlement work was led by Newport Beach-based Diamond Star Associates Inc.
Westside Gateway is by far the largest infill redevelopment project by unit count cleared for the city’s Westside since Costa Mesa first approved plans for revitalizing the area’s housing base in 2006.
The 18 projects in the area that have been built, approved or proposed since then encompass 586 homes, according to city filings from March. The second largest of the projects is Lighthouse, an 86-unit project by Taylor Morrison on Whittier Avenue that’s now selling.
Scottsdale-based Taylor Morrison also is selling homes at a new 49-unit townhome project called Superior Pointe, which is adjacent to Meritage’s development site.
The three-story Westside Gateway homes will run from 1,800 to 2,100 square feet, and most will include three bedrooms and roof decks, according to city filings.
Some units will have home offices of about 300 square feet that are meant to appeal to homebuyers with small businesses and to entrepreneurs.
Pricing will start at a little more than $700,000 for the homes. Meritage officials said their portion of the project is scheduled to have sales models under construction early next year and home deliveries by the summer of 2017.
A heavy amount of groundwork was under way at the site as of last week.
OC Growth
The Westside Gateway plans add to Meritage’s growing Orange County development portfolio.
The publicly traded company, whose market value is $1.4 billion, has a local office in Newport Beach, but only one of its 10 Southern California communities where homes are now for sale is based here. Prices at that project, Cirrus in Rancho Mission Viejo, start at about $840,000.
The builder has one other notable area infill development project in the works: Encanto, a 52-home project in Lake Forest. The 5.8-acre single-family home project is on Alton Parkway just south of the Baker Ranch housing development, where homes will range from 1,950 square feet to 2,240 square feet, according to Meritage.
The land for the Lake Forest project, at 25192 Commercentre Drive, sold earlier this year for an estimated $9.5 million, according to CoStar records. Meritage’s website says the project should open this summer.
Most of the company’s active Southern California communities are single-family home developments; it has only one townhome project similar to the Costa Mesa development currently selling, in Montclair.
The Costa Mesa acquisition “allows Meritage Homes to continue our expansion into the Southern California coastal markets while offering our customers a home that represents the Orange County beach lifestyle,” said Kevin Kimball, division president of the builder’s Southern California operations.
