Want a reason why OC’s luxe housing market is holding up amid economic concerns? Look no further than LA’s government, and its recently enacted mansion tax.
The city’s Measure ULA is a transfer tax that levies a 4% charge on all residential and commercial real estate sales in the city above $5 million. For deals above $10 million, there’s a 5.5% charge.
In March, prior to Measure ULA becoming effective, there were 126 home and condo sales above $5 million in the city of LA, the LA Times reported on May 5, citing data from the Multiple Listing Service.
“In April, once Measure ULA took effect, there were two,” the LA Times’ Jack Flemming wrote.
OC’s luxe market, by contrast, had a banner April. Seven homes sold above $10 million last month for a cumulative $126.3 million. That’s more than double the nearly $46 million in sales volume seen the month prior, our Katie Murar reports; see page 30 for more.
There were 35 deals above $5 million in OC last month, according to Murar.
Don’t be surprised to see a larger collection of business and investors migrating from LA to OC in the coming years, one source of optimism for the area’s collection of office owners during a shaky time for occupancies and pricing.
Cushman & Wakefield brokers note that firms like Virgin Galactic (NYSE: SPCE) and 99 Cents Only Stores moving their bases from LA to Tustin of late point to an emerging trend.
The economic resurgence is “being driven by concerns over Greater LA crime and traffic with the added benefits of lower OC sales tax and housing costs,” C&W says.
Data indicates there’s over 80% less violent crime in OC than in LA.
For more on the state of the area’s office market, see our front-page feature, part of this week’s Commercial Real Estate Special Report.
The Government Services Administration put a $70 million starting price on Laguna Niguel’s Chet Holifield Building, better known as the Ziggurat building.
The number of groups currently willing to make that minimum bid for the nearly 1 million-square-foot federally owned building on 89 acres: none, following an online auction that concluded last month.
Interest rates, lending issues and other economic concerns appeared to play a part in the lack of interest, as well as talk that the site could be given a historical designation by the government, limiting redevelopment options.
The GSA says it is going to reevaluate its plans for selling the site, which it calls Laguna Ridge.
Golden State Foods Chairman and Chief Executive Mark Wetterau died last week after 25 years at the helm of the Irvine-based foodservice giant, which he helped grow to over $5 billion in annual sales, making it one of OC’s largest private companies.
For more on Wetterau, a frequent member of the Business Journal’s OC50 listing of influential local execs, see next week’s print edition.