The federal government is finally preparing to offload the largest office building in South Orange County, via auction.
The General Services Administration (GSA) hopes to secure a new owner for the Chet Holifield Federal Building in Laguna Niguel, with an online auction scheduled to launch in March 2023.
The 1 million-square-foot building, commonly referred to as the Ziggurat Building but currently dubbed Laguna Ridge by the GSA, was built in 1971 by William Pereira, and was initially intended to be a manufacturing facility for North American Rockwell.
Its future has been the source of speculation over the past decade as the government, which acquired the building in 1974, considers new uses for the approximately 90-acre site.
Bids for the seven-story building and surrounding land will start at $70 million, according to the GSA.
A final sales price hasn’t been estimated, though the land could be worth $300 million or more if housing and other highest and best uses are ultimately allowed for the entire site, real estate sources have previously told the Business Journal.
However, the current offer may leave the main Ziggurat building intact; a buyer must execute a preservation easement for 26 acres of the property, including the office building, the west and east guard stations, the north driveway and rooftop parking areas prior to closing, according to GSA filings.
That’s not to say the building will continue to operate as a government hub for the long term, with all tenants expected to vacate the property by the end of 2024.
The auction will begin March 7 with bids required by April 24; a $300,000 bid deposit is required.
Development Opportunity
The GSA issued a press release last week urging “developers, investors and other potential buyers to consider this opportunity,” which marks the fourth time in a little over a decade that the government has evaluated the future of the iconic Chet Holifield property, located on Avila Road just off Alicia Parkway. It’s in the northwest portion of the city, a largely residential area with shopping centers nearby.
“The sale of Laguna Ridge is one example of GSA’s commitment to right-sizing the federal real estate portfolio,” Dan Brown, acting regional administrator for GSA’s Pacific Rim region, said in a statement.
“The sale of this large parcel of land in Laguna Niguel creates an economic development opportunity in Orange County while generating proceeds for the U.S. taxpayer.”
The government last proposed in 2020 selling several underutilized properties across the county, including Laguna Ridge.
A sale could come at a sizeable discount to the $3 million or higher per-acre prices seen for other notable land sales in OC of late, factoring in entitlement risk, environmental concerns, necessary demolition work and the city’s involvement in new uses of the site.
The Public Buildings Reform Board (PBRB), a new federal advisory committee established by the Federal Assets Sale and Transfer Act of 2016, noted last year that the site is “not presently zoned for future use resulting in a significant difference between the current value of the property and its value as entitled for its future highest and best use.”
A profit-sharing model between the government and buyer is possible to allow for that discrepancy, according to the PBRB.
Under FASTA, proceeds from the sale will be used for future consolidation actions to save taxpayer funds, according to the GSA, such as additional sales of “unneeded federal property.”
Tenants
The United States Citizenship and Immigration Services (USCIS) agency is now the site’s largest occupant.
If sold, all tenants but the USCIS are scheduled to be relocated by August 2024 into about 222,000 square feet of space elsewhere in the region.
Meanwhile, the USCIS will need 380,000 square feet, and federal agencies are working to develop “the optimal solution to maximize the sales proceeds and facilitate the USCIS move to more modern facilities,” according to an update last year by the GSA.
