Construction on three apartment complexes proposed along the Jamboree Road corridor in Irvine has been approved and could start by the end of the year.
The complexes, totaling about 530 apartments in all, are expected to be the first residential developments to break ground in the largely commercial area known as the Irvine Business Complex in several years.
Arlington, Va.-based AvalonBay Communities Inc. recently got the city’s approval to move ahead on a 179-apartment project at the intersection of Jamboree Road and Richter Avenue, near the Diamond Jamboree shopping center.
The four-story project is next to the 280-unit Avalon Irvine complex that AvalonBay—which owns about 2,000 apartments in Orange County—built a few years ago at a cost of $77 million.
Dallas-based Mill Creek Residential Trust LLC has the approvals for the other two projects: a 156-unit development just off Alton Parkway, also next to the Diamond Jamboree center, and 194 units a few blocks away on Kelvin Avenue.
All three proposed projects are on sites previously used by industrial companies. Each site is entitled for condominiums but is expected to be built as apartments. They could be converted back to condos eventually, based on market conditions.
With construction costs at affordable levels—and signs pointing to an upcoming surge in demand for rentals—the goal is to get the projects moving ahead later this year, according to the developers.
“We’d like to get them started before the end of the year,” said Brad Perozzi, managing director for Mill Creek’s West Coast division, who works out of the company’s Costa Mesa office.
Mill Creek last month announced a $200 million investment by Rockwood Capital of New York and Crow Holdings, a real estate investment offshoot of Dallas-based Trammell Crow Residential.
The Irvine Business Complex covers about 2,800 acres around John Wayne Airport and has been a commercial and industrial center in the past. During the last housing boom, plans for more than 10,000 condos and apartments were proposed before the slumping market and a series of lawsuits from neighboring businesses and cities put them on the back burner.
Lawsuits filed in 2007 by Tustin and Newport Beach officials argued that Irvine approved area projects in a “piecemeal” approach, without the necessary environmental studies on the effects of turning the area from commercial and industrial uses to a largely residential center.
Plans for the AvalonBay project were first submitted to the city in 2006. The Mill Creek projects were initially submitted in 2007, said Tim Strader, Jr., a principal for Irvine-based Starpointe Ventures, a development consultant.
“These projects have been in limbo for so long,” Strader said. “They were caught in the middle of the legal challenges.”
Settlements were reached with the neighboring cities, and a more thorough environmental impact report was completed by the city of Irvine last year, according to Strader.
Irvine’s Planning Commission approved the three apartment projects last month, and an appeal period recently passed.
Least Risky
For now, apartments appear to be the least risky development option for the area.
There’s only one active housing project in the area, Lennar Corp.’s Central Park West project along Jamboree Road and Michelson Drive. Central Park West resumed sales last year after being mothballed for a couple years.
Meanwhile, more than 1,200 apartment units that got started before the recent recession have gone up along the same stretch of Jamboree Road in the past four years.
Among newly built complexes in the area that report occupancy levels, Avalon Bay’s existing complex on Alton Parkway was about 95% full at the end of 2010.
For the market at large, “the stars are aligning” for an apartment boom, according to a report this month from Irvine’s John Burns Real Estate Consulting.
Among other factors, the report notes that more than 1.2 million young adults moved back in with their parents from 2005 to 2010, which “is huge, pent-up demand for rentals.”
