ALISO VIEJO — Five months after the city approved a new housing community, Meritage Homes officially acquired the office property, which was recently re-entitled for a 61-unit townhome development.
The Scottsdale, Arizona-based homebuilder paid $14 million for the Flow, a 36-year-old Class B low-rise office complex on 2.8 acres at 95 Argonaut in Aliso Viejo, according to CoStar property records.
Meritage paid about $229,500 for each approved housing unit on the site before construction and other costs.
CoStar records show that the sale was recorded as a land-value transaction, which reveals the property’s redevelopment potential was higher than its value as an office building.
Meritage purchased the site from Argonaut Offices LLC, an entity affiliated with Newport Coast real estate investor Mike Moshayedi, according to CoStar records.
Moshayedi, along with his brothers, Mark and Manouch, founded Simple Technology, or Stec, in 1990, a Santa Ana-based company that designed and sold memory modules and flash memory drives, which Western Digital acquired for $340 million in 2013.
The Moshayedi family is well known in commercial real estate and owns several properties along Newport Beach’s Mariner’s Mile, as well as other retail buildings across Southern California.
Office to Housing Conversion
The purchase and planned redevelopment of the Flow site come at a time when cities are seeking more housing options and office landlords are dealing with aging buildings and changing demand for office space.
Orange County is among the top areas in the country for converting office buildings into homes or demolishing offices for new housing.
A CBRE report says that last year, Orange County had 26 projects totaling 4.2 million square feet of office space either under conversion or planned for demolition.
This year, the Newport Beach Planning Commission approved Lincoln Property Company’s plan to tear down a seven-story office building on Quail Street and build 100 market-rate townhomes. Lincoln Property also plans another office-to-housing conversion at 1300 Dove St., next to the newly approved 1500 Quail St. project.
Meritage’s Plans
Over the past few years, Meritage and Moshayedi have worked together to get new entitlement approvals for the office property.
Meritage plans to tear down the current two-story, 48,000-square-foot office building, built in 1990, which sits within a larger business park. To the west, across Glenwood Drive, the site is surrounded by several residential neighborhoods.
Most of the office building is empty. Only two tenants remain: Whallis Group, a law enforcement staffing agency, and Wilson’s Jewelers, according to CoStar.
Meritage plans to build a new community with 61 three-story townhomes, including three units set aside for low-income families.
The townhomes will range in size from 1,210 to 1,765 square feet, with two to four bedrooms each.
City staff reports say the 61 units will be spread across eight buildings, with each building having seven or eight attached homes.
Each home will have a two-car garage. The community will also offer 28 guest parking spaces, a private park, a barbecue area, a shaded structure, picnic tables, and a children’s play area.
Meritage Homes did not return a request for comment.
