A long-planned city center for Laguna Niguel could see construction work kick off later this year, after the two local developers heading the project received approval from government officials to revamp the size and focus of the project.
Burnham-Ward Properties of Newport Beach and Irvine’s Sares Regis Group last month got approval from the Orange County Board of Supervisors to move ahead with a revamped plan for Laguna Niguel City Center, which will add 275 apartments alongside nearly 111,000 square feet of commercial space, as well as a new library for the city.
The new plan will reduce commercial space at the project, primarily by reducing the number of offices built, as well as eliminating a planned parking garage on the 24-acre county-owned site adjacent to Laguna Niguel City Hall at Crown Valley Parkway and Alicia Parkway.
The retail portion of the $260 million project, meanwhile, will be slightly increased.
The latest approvals come more than six years after Burnham Ward first proposed the project, envisioned as a downtown for Laguna Niguel, OC’s 16th-largest city with about 65,000 residents.
Sares Regis will handle the residential component of the project, which is expected to include 275 apartments with “resort-like amenities.”
The developers are operating under the Laguna Niguel Town Center Partners name to build the project and have entered into a public-private partnership to develop the mixed-use complex, whereby they will pay the county rent under a long-term ground lease running 89 years.
$200M+ Initial Cost
The project, first approved in 2019, was expected to cost between $200 million and $220 million and had a planned 2023 construction start date. Entitlements were received in mid-2022.
The pandemic and resulting decline in demand for new office space put that timeline and the development plans in flux.
“Office space is being downsized due to the collapse of financing available for new office space, declining office rents, and the rise of remote office work,” according to a recent filing from the Board of Supervisors about the project.
The development initially called for 158,600 square feet of commercial space, including 77,100 square feet of office space.
The new plans call for just 15,000 square feet of office space, representing an 81% reduction.
Retail plans for the site, now totaling 110,708 square feet of commercial space, have increased from 77,100 to 95,708 square feet.
A parking structure expected to largely hold office workers has been eliminated from the revised development plans, with surface parking now planned.
“Eliminating the parking structure brings down costs materially and improves the financial viability of the project, while also enhancing the project’s site circulation and parking layout by providing more convenient parking for the new library,” board filings said.
The size of the new library at the site is being boosted by nearly 60%, to 16,250 square feet.
The number of apartments in the project remains the same.
New Cost: $260M
While eliminating the parking garage will cut costs, the total price tag for the development is increasing amid inflation and rising construction costs.
The developer now believes the total development costs for the proposed revised project “will be approximately $260 million, including $15 million for construction of a new county library,” according to filings.
Over the 89-year ground lease, it is estimated that total lease payments to the county will be approximately $452 million, with $185 million from the commercial portion of the project and $266.6 million from the apartments.
Those lease payments will total $5.2 million annually for the first 10 years of the lease, before rising over the course of the deal.
County officials now believe the project could start work in the latter part of 2026; the developers have until December to complete construction drawings, permit applications, and record a final map, filings indicate.
“These updates keep the project financially stable and on track for late 2026, while retaining 275-unit residential component and improving traffic flow, parking, and long-term development options,” said Board of Supervisors Vice Chair Katrina Foley.
“For residents, shoppers, and business owners, this long-term revenue helps bring new amenities, jobs, and infrastructure improvements to the area—further boosting our local economy,” she said.
Lengthy Process
The Laguna Niguel project has been envisioned in various forms for over a decade.
In 2015, the city and county announced it would work with Shaheen Sadeghi, the founder of Costa Mesa’s LAB Holding LLC, for what was to be a $150 million development called the Agora Arts District. The plan, which was to include a food hall, didn’t move ahead and the partnership ended in 2017.
The new partnership with Burnham Ward and Sares Regis was announced in June 2019.
It’s the second big South County public-private partnership that involves Burnham Ward, whose other developments have included Costa Mesa’s South Coast Collection, or SOCO, Newport Beach’s Castaway Commons, and the recently revamped Gateway in Mission Viejo.
It’s also heading up the retail and restaurant component of Dana Point’s massive harbor renovation project, where work is well underway.
The other two primary partners are Bellwether Financial Group, which is building new docks, and RD Olson, which is constructing two hotels.
