Brookfield Residential is closing in on its largest-ever land deal in Orange County, for a nearly 75-acre parcel of developable land in North Irvine that’s expected to hold over 1,200 homes and apartments, and sell for more than $600 million.
Such a deal, if completed, would be among the largest residential land sales seen in Orange County in years.
The Canadian homebuilder, whose Southern California operations are based in Costa Mesa, last week was tapped by the city of Irvine as its development partner for Gateway Village, a residential development planned near the intersection of Portola Parkway and Jeffrey Road, across the street from a new phase of development in the works at Orchard Hills.
Gateway Village will be among the larger housing Irvine projects not overseen by either of the city’s two big master-planned developers, Irvine Co. or Five Point Holdings LLC (NYSE: FPH).
The city of Irvine got control of the land last year, as part of an agreement with Newport Beach-based Irvine Co. that resulted in the closure of the nearby All American Asphalt plant, whose operations had angered area residents.
An expansive nature preserve is also part of the 2023 land deal, in which the city paid $285 million to the factory’s owners for its land.
The sale of nearly 75 acres of city-owned land, previously owned by Irvine Co., to a homebuilder or residential developer was planned to recoup those costs.
$1.4M Average Price
Brookfield’s proposal for the land calls for a residential development with a total of 1,236 units, comprised of 927 homes and 309 apartments the city describes as “affordable.”
They’ll be spread across 11 parcels, on land totaling 74.7 acres when factoring in areas for things like a neighborhood park and an amenity center.
Homes are expected to have an average unit size of 1,844 square feet and an average per unit price of $1.4 million. That equates to an average price of nearly $760 per square foot.
The city expects the Gateway Village project to hold some of the more affordable new homes seen in the area of late.
Attached new homes on the market in Irvine at the end of 2023 have largely been selling at average prices between $1.1 million and $1.5 million, while detached new homes on the market had asking prices between $1.5 million and $3.4 million, according to data from Irvine’s Land Advisors Organization.
More expensive offerings in the city, such as those at Irvine Co.’s Orchard Hills, are currently sold out and awaiting new phases of product to open.
Brookfield’s purchase price is expected to run between $601 million and $654 million, depending on the final deal structure implemented, according to city filings.
The midpoint of the expected sales price range equates to a nearly $8.4 million per-acre price, and a per-unit price of nearly $508,000.
Familiar Bidders
The company’s bid was chosen over bids from a number of other builders, including Toll Brothers, Lennar, Shea Homes, and a joint bid between Tri Pointe Homes and Pulte. Most of those builders have done considerable work at nearby developments overseen by Irvine Co. and FivePoint.
“Initial bids valuing the city’s Gateway Village land ranged from $231 million on the low end to $541 million on the high end,” according to city filings. Subsequent bids from Brookfield, Toll, and the Tri Pointe/Pulte venture saw higher prices offered.
Brookfield’s Gateway Village’s neighborhood design “was compelling and of high quality,” according to a city report. “The planned neighborhood amenities include pocket and neighborhood parks, a community garden, and a community recreation center that features a clubhouse, pools, meeting rooms, and event spaces.”
What’s more, the winning bid “incorporates more attainable housing,” according to city staff.
Next Steps
The framework for the deal, which got unanimous city council approval last week, has yet to be finalized.
Once the details of the agreement between the builder and the city are completed in a few months, city council will again vote on the deal.
Assuming it gets approved, “the development process will commence in earnest,” the city said.
Current projected timelines call for the entitlement processes to be completed in 2025, with grading and land development activities beginning in 2026.
The current timeline “contemplates homes sales beginning in 2027 and culminating in 2030/31,” according to the city.
Local Presence
Brookfield, which runs a large portion of its homebuilding operations out of its Costa Mesa base, ranked No. 5 among homebuilders by sales in OC last year, with 214 sales, according to Business Journal data.
It’s been among the larger builders at Tustin Legacy, that city’s former Marine base, where a new, 400-home project it headed up, dubbed The Landing, at the intersection of Barranca Parkway and Tustin Ranch Road, is reported by the company to be sold out.
A purchase of the Irvine site would boost Brookfield’s base of home lots in Southern California by over 40%, according to regulatory filings.
The company reported owning over 2,758 lots in Southern California at the end of 2023, down from 6,178 at the end of 2022.
