Residential Developers Vie for Sites
Residential developers in SoCal are mostly focused on acquisition of infill development sites. Builders and financers currently have their sights set on any available infill development sites through tear downs, rezoning and alternative land use, Market InSite Real Estate Advisors managing director Bob McFarland tells us. Particularly stringent environmental constraints by local governments in Ventura and Santa Barbara counties, and disappointing sales in the Inland Empire during the second half of 2014, are generating even more pressure to find new housing site in LA, Orange and San Diego counties.
The attraction of infill development sites within the coastal counties isn't difficult to understand, Bob says. The principal employment centers of Southern California exist within their boundaries; costly infrastructure—think streets, sewer, utilities—are already in place; the counties have a built-in scarcity of available housing to meet demand; and the increasing population needs shelter, including trading up, down or across in new or existing housing. Recently Market InSite launched as a new residential real estate development advisory and data firm serving developers, investors, debt and equity providers.
Though the demand for residential sites is stiff, that kind of development doesn't always win the day—the demand for other kinds of properties, such as office, is now increasing too. Recently the 152k SF 1200 North Main, an office building in Santa Ana, traded for more than $12M. The project was originally slated for an adaptive reuse conversion to residential, Avison Young's Dan Vittone tells us. But the OC office market has strengthened enough that it warranted the acquisition of the property as a value-add office investment. Dan, along with colleague Alan Pekarcik, repped the seller, LA-based Positive Investments. The buyer was Small Giant. The property was 55% leased when sold.