LAGUNA HILLS — A long-empty office campus, which the city identified as a good spot for new housing, will soon become a 480-home residential community.
Las Vegas-based Kingsbarn Realty Capital & Development and Irvine development partner Kelemen Company are transforming the former HERE@Laguna Hills at 23422 Mill Creek Drive and Spectrum Summit Plaza office campus at 23272 and 23282 Mill Creek Drive into a mixed-use residential neighborhood on 18.5 acres.
The project dubbed Terravita will replace seven office buildings and parking lots with 259 attached homes, a mix of three-story high duets, duplexes and triplexes, as well as a 221-unit apartment building. Company officials said that 24 of the apartments will be reserved for very low-income households.
The Business Journal estimates the project to cost more than $300 million or about $650,000 a unit, not including the parking structure. In Orange County, the median active list price for a condo and townhome is about $800,000, according to housing data site, Reports on Housing.
CoStar reports that the company bought the two-property Summit Plaza from CJ Summit Property LLC for $14.5 million in 2023. Kingsbarn and Keleman acquired the five-property HERE campus from The Cigna Group for $64 million in 2022.
Phil Mader, president of Kingsbarn Capital & Development, told the Business Journal they decided to redevelop the office campuses because of the current state of the office market, in which fewer employees are coming into a physical office building, and they wanted to do what’s best for the community.
“We saw an opportunity to reimagine the property in a way that better serves current and future residents, supports the city’s housing goals and creates value for the community,” Mader said.
City Votes
The Laguna Hills City Council approved the project with a 4-1 vote in February, but it was not formally announced by Kingsbarn Realty until June.
“This approval marks an important milestone for Terravita and reflects years of disciplined planning, collaboration, and perseverance,” said Phil Mader, president of Kingsbarn Realty Capital & Development, in a statement.
The project team includes architects from Urban Arena and AO, as well as land-use counsel Morgan Gallagher from Cox, Castle & Nicholson.
The construction schedule has not been announced yet.
Founded by CEO Tibor Kelemen, Irvine-based Kelemen is a commercial real estate investment, development and property management firm that has increasingly focused on repositioning older office properties to meet changing market demands.
It has more than one million square feet of office space under management, including the 10-story Atrium building in Irvine which it bought in 2018 for $106.8 million – marking one of the most notable office transactions in the John Wayne Airport area at the time.
Split Council
While the city council approved the redevelopment, some members were reluctant or voted against it.
This disagreement shows how many cities and officials feel about the state’s Regional Housing Needs Assessment (RHNA) requirements.
RHNA is a state-mandated plan that tells cities how many new homes they need to plan for, for all households.
Cities must adopt a Housing Element or zone for the required density, or they risk fines and the loss of state funding.
Laguna Hills says the city needs to plan for 1,985 new housing units, with about 46% set aside for low- and very low-income households.
City Councilman Dave Wheeler described the city’s housing requirements as “an endless morass.” He voted against the project.
City Councilwoman Erica Pezold said the project is not the best use of the site. She voted for it but said she would have preferred single-family homes with accessory dwelling units.
“This project isn’t the best project. It’s not,” she said at a meeting, adding that it’s not the developer’s fault for bringing it to the council.
Terravita to Replace Seven Office Buildings
For over 40 years, the property was used as an office campus.
During the city’s housing element review, the city identified the site as underused and a key opportunity for new housing as Laguna Hills worked to meet state requirements.
The development will offer both homes for sale and for rent, along with private parks and recreation areas. A six-story apartment building with a six-level parking structure will also be built.
Jeff Pori, CEO of Kingsbarn, said Terravita shows how older commercial properties can be repurposed for housing to help address Southern California’s housing shortage.
“Terravita is a strong example of how aging commercial properties can be thoughtfully repositioned to meet the evolving needs of Southern California communities,” Pori said. “We are proud to help bring this vision one step closer to reality and look forward to the continued advancement of this important residential community.”
Mader said Terravita’s greatest strength will be the ability to provide a mixed-use range of housing for all types of residents.
“The community is designed to provide housing options for young professionals, first-time homebuyers, growing families, empty nesters looking to downsize and renters seeking a high-quality living experience,” Mader said.
Laguna Hills Mayor Don Caskey supported the project and liked that it offers both rentals and condos. He said it could help younger people buy or rent a home.
“It’s a nice balance of rental and home buying,” said Caskey. “I’m very much in favor of people being able to get into that first home because once you do, you’re off to the races. That’s the American Dream.”
