58.2 F
Laguna Hills
Friday, Dec 9, 2022

Back to Building

Newport Beach-based Irvine Company is phasing out its headline-making executive builder program after a little more than a year to focus on its own recently revamped Irvine Pacific LP homebuilding division.

Irvine Co. land has been used for a majority of the new homes built in Orange County over the past year, a trend that looks likely to continue this year. Earlier this month the company announced it would start selling close to 2,600 homes to be built by Irvine Pacific this year at its new Stonegate and Laguna Altura developments.

More recently, the developer said it has plans for Irvine Pacific to also handle a smaller project in a Woodbury development called San Marino.

Stonegate is a 2,000-home project located on Irvine Boulevard between Sand Canyon Avenue and Jeffrey Road. That’s in the same vicinity as several other Irvine Co. home projects near the former El Toro Marine Base.

Laguna Altura is slated to be a gated community in south Irvine near Laguna Canyon, in the hills overlooking the Irvine Spectrum. It’s set for 596 homes.

The San Marino project calls for 86 houses priced near the $1 million mark in the south end of Irvine’s Woodbury development.

Irvine Pacific Workload

Irvine Pacific is expected to build all of the Stonegate, Laguna Altura and San Marino homes announced to date, a roster that includes eight single-family home types and one townhome project. The three projects are slated to open for sales this spring.

Stonegate and Laguna Altura will be the largest residential developments to open in the county since Irvine Co.’s Portola Springs community in 2006.

The decision to move ahead on the projects—each of which had seen plenty of grading work done last year—was largely a response to better-than-expected sales at other Irvine Co. home developments, said Dan Young, president of the company’s community development division.

“Simply put, we ran out of product,” said Young, whose division plans and oversees building of homes, parks and shopping centers on Irvine Co. land.

A majority of the 1,989 new homes sold in OC last year were on the developer’s land (see related story, page 21).

The decision to rev up Irvine Pacific, which had been dormant until last year, is a marked change in strategy.

Many of the homes sold last year on Irvine Co. land were financed under what the developer called its executive builder program.

Under that plan, a handful of builders were selected to put up homes in new Irvine developments. The hired builders were paid 3% to 6% of each home’s price.

Passing Grade

The executive builder plan was used “to test if the market was there,” Young said.

The results led the developer to resume its more traditional practice of selling lots to builders that put up homes meeting specifications set by Irvine Co.

Meanwhile, Irvine Pacific restarted after some 20 years on the sidelines, a strategy that cuts out the use of third-party builders on Irvine Co. land.

The strategy led to more than 1,250 homes that have been built and sold on Irvine Co. land since the start of 2010—activity that flew in the face of an ongoing hangover in many other housing markets.

“We’ve proved there is a market, a deep market” in Irvine, Young said.

The success in getting the local market rolling led to a recent decision to phase out the executive builder program, according to Young.

Early on, the executive builder program “filled a very important role in allowing us to take advantage of the talents of some of the most respected builders in the market,” Young said.

Those included two new companies—Tri Pointe Homes of Newport Beach and New Home Co. of Aliso Viejo. Irvine-based California Pacific Homes, a longtime builder that had mothballed operations, ramped up again, while Riverside’s Van Daele Homes largely entered the OC market using the program.

Other homebuilders still will be in the mix when it comes to opportunities on Irvine Ranch land, but they’ll have to take on land acquisition instead of staying busy with the executive homebuilder program (see related story, page 20).

“We still intend to involve residential builders, where they acquire lots,” Young said.

Irvine Co. hasn’t figured out yet how—or if—outside builders will be involved in future phases of the Stonegate or Laguna Altura projects, Young said

Efficiencies Seen

Turning up the volume on Irvine Pacific’s operations should improve efficiency and bring enough volume to drive down material costs during what’s expected to be a busy building year, said Young, who also serves as president of the homebuilder.

Outside Irvine Pacific, the company currently has 10 active projects in the hands of builders who bought lots from the developer, according to Young.

Builders that have bought their own land to build on of late include Irvine’s Standard Pacific Corp., Los Angeles-based KB Home, Scottsdale, Ariz.-based Taylor Morrison Inc., Newport Beach’s William Lyon Homes Inc. and Van Daele Homes.

“We intend to keep that program going,” Young said.

Those land sales came prior to recent signs of a full-scale recovery in the local residential market.

Irvine Co.’s valuation of what its land is worth may have played a large part in the decision to put Irvine Pacific in charge of the new projects, according to sources familiar with the land owner.

Homebuilders were believed to be paying close to $3 million an acre for Irvine Co. land last year, according to real estate sources.

As the market for sales in Irvine continued to improve, Irvine Co. reportedly sought land sales closer to $3.5 million per acre near the end of the year. Prospective buyers are said to have balked at that price, and rather than drop prices, Irvine Co. opted to ramp up its use of Irvine Pacific.

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.

Featured Articles


Related Articles