Homebuilders remain sold on Orange County, with a trio of them investing more than $160 million in separate land deals across the region in recent weeks.
The buys—made by one local public builder and two other firms with a sizeable OC presence—total about 163 acres, and include land both in South and North County.
It signals a resilient residential market in the wake of COVID-19, according to industry observers.
What’s more, recent reports suggest pricing for land in OC has stayed strong, with no downward adjustments made as a result of market uncertainty caused by the pandemic, according to Allison Rawlins Tift, vice president of Irvine-based brokerage Land Advisors Organization.
“These are the first [sizeable] COVID-19 land transactions to occur in Orange County,” said Tift, who was part of a team that represented the buyers in two of the deals, one of which is the county’s largest reported land sale in 2020.
“It’s notable that we stuck to the timeline and price point that was agreed upon prior to the pandemic.”
Lake Forest Return
The buyer for the largest of the three deals is Horsham, Pa.-based Toll Brothers Inc. (NYSE: TOL), which closed on the former Nakase Nursery site in Lake Forest after several years of planning.
Terms of the deal were undisclosed; sources indicate the company paid north of $100 million for the 125-acre property, or more than $800,000 per acre.
The pricing is unchanged from the initial agreement made about five years ago, sources indicate.
The site is between Lake Forest Drive and Bake Parkway, and just south of the 241 Toll Road. It’s has been used as a wholesale plant nursery since the 1990s.
Toll Brothers has entitlements to develop 675 single-family homes; up to 101 rental senior affordable units; a public K-6 school; 12 acres of parks and amenities; and 10.4 acres of open space habitat and restoration area bordering the Serrano Creek.
The value of the Toll Brothers project could run some $400 million or more, once built out. It paid roughly $130,000 per unit being built for the land, according to sources.
Tift and colleague Mike Hunter at Land Advisors represented Toll Brothers, which secured entitlements for the site at the start of the year after a three-year process.
Toll Brothers has familiarity with the area; it partnered with Shea Homes for the nearby Baker Ranch development in Lake Forest.
The deal pairs “a capable local builder with a jurisdiction they have current success in, and is welcoming to quality new developments,” Tift said.
Toll Brothers previously said it could begin building homes at the site by 2022.
TRI Pointe in Orange
Tift, Hunter and Chris Shiota at Land Advisors also brokered another land sale that recently closed, in Orange.
Irvine-based homebuilder TRI Pointe Group Inc. (NYSE: TPH) bought a 3.7-acre site a short walk from Santa Ana’s Main Place Mall, where 74 townhomes are planned.
The site is part of San Diego-based Fairfield Residential’s Town & Country project, a former office complex which it bought from the Colton Co. in 2018 with plans to build a mix of rentals and for-sale homes.
Fairfield, represented by Land Advisors, secured TRI Pointe as the for-sale homebuilder for the project; terms for the deal were undisclosed by the involved parties.
“The transaction closed on time and according to schedule, despite the headwinds of the COVID-19 pandemic, which demonstrated the demand for real estate infill Orange County,” Tift said.
Property records indicate the infill development site sold for around $20.4 million. That works out to a price of $5.5 million per acre, and some $275,000 per lot.
TRI Pointe is expected to invest another $4 million to $5 million in construction costs to build the townhomes.
The site is just south of the Garden Grove (22) Freeway and east of the Santa Ana (5) Freeway.
TRI Pointe is preparing to build three-story townhomes at the site, which plans indicate will likely to average between 1,500 square feet and 2,032 square feet.
Fairfield, meanwhile, is currently building 652 apartments across two project sites at 1000 W. Town Road, adjacent to TRI Pointe’s site.
Construction began last year on the 295-unit Aura Apartments and the 357-unit Vita Apartments, with a 2021 projected opening.
SJC Buy for Lennar
Another notable land deal recently closed: the proposed Farm housing development site in San Juan Capistrano.
The property, along Del Obispo Street next to an Armstrong Garden Centers store, is about 2 miles from the ocean.
Miami-based Lennar Corp. (NYSE: LEN), which previously applied to develop a gated 169-lot residential project on the 34-acre site, closed on the land this month for what property records indicate was $41.2 million.
The deal works out to about $1.2 million per acre, and around $240,000 per lot.
The project has been in the works for several years, and is in the final stages of entitlement.
The homebuilder, among the largest builders at FivePoint Holdings LLC’s Great Park Neighborhoods in Irvine, is expected to start construction next year.