SoCal market snapshot
Many counties outside L.A. are basking in the glow of residential and commercial growth
Kavita Daswani
San Diego County
As San Diego enjoys a biotech boom, new residential developments are flourishing, in part to meet the demand of the growing workforce in the coastal county.
This year, about 7,000 apartment units will be added to the San Diego market, up from the 4,000 units that were added in 2016, according to Steve Hovland, director of research for HomeUnion, which builds and manages real estate portfolios for individual investors.
Among the noteworthy developments in the county is The Park in upscale Bankers Hill, a 14-story, 60-unit residential building due to be completed in summer 2017 by San Diego development and investment firm Zephyr.
New residences are also popping up in the suburbs. A modest 75-room hotel in El Cajon will be converted into apartments, according to the San Diego Business Journal. Plans were also recently approved for the $30 million Carlsbad Village Lofts, which will include 106 apartments. And in neighboring Santee, KB Home launched sales at its single-family residential development, River Village.
“From both a commercial and residential standpoint, San Diego is on solid footing,” said Hovland. “We are seeing above-average growth, which will stay that way through 2017.”
Richard Freeark, senior vice president of the San Diego region at C.W. Driver — a top building firm in the state — described the real estate sector as “very positive.”
“The hospitality sector is strong, renovations of current retail properties are ongoing, and projects that have been on hold are taking root and moving forward,” Freeark said.
In 2016, local employers added 32,000 new positions in technology and biotech, a field that accounts for 24 percent of the region’s GDP. About 26,000 more local jobs in the field will be added in 2017, according to research by HomeUnion.
“A lot of people don’t realize that San Diego has its own presence of biotechnology firms,” said Freeark, adding that exorbitant property values in tech-heavy locations such as Silicon Valley and Silicon Beach have pushed companies toward alternative communities.
Orange County
Foreign buyers, particularly from markets in the Far East and Middle East, have helped to fuel ongoing developments in Orange County’s residential, commercial and multi-use sectors.
Upcoming projects include the 68-acre Five Lagunas, on the site of the former Laguna Hills Mall, which will encompass approximately 350 high-end apartments, a park with water features, a movie theater and retail space.
But experts warn that a glut of supply could put a damper on the rental market. According to research conducted by HomeUnion, rising rental housing inventory in both multifamily and single-family homes “will place downward pressure on 2017 rents, which will moderate to growth of 2.8 percent in 2017.”
The company suggested that investors could find stronger appreciation in properties around the coastal communities of Huntington Beach and Costa Mesa, or inland, in Tustin and Yorba Linda.
At the moment, the overall market mood within the county is hopeful. “The recent modest increase in interest rates has actually motivated many buyers to get off the fence and purchase,” said Gary Longobardo, brokerage manager at Engel & Völkers Newport Beach. “Optimism in the economy is very high right now throughout the OC.”
That has led to a boost in hospitality ventures as well. The 15-story Marriott Irvine Spectrum close to the 5 and 405 freeways in Irvine is set to open in October, and the Lido House, a boutique hotel in Newport Beach, is set to begin receiving guests in 2018.
“Los Angeles is on fire, and Orange County has started to pick up some of that momentum,” said Bill Wilhelm, president of Irvine-based R.D. Olson Construction.
Ventura County
Though this county’s booming agricultural industry limits options for redevelopment, its plains, mountains and beaches are an attractive draw for property hunters looking to take advantage of more affordable prices outside Los Angeles. Developer Watt Communities’ upcoming 91-home project Enclave, for example — where houses will start in the low $500,000s for 1,637 square feet and up — has already seen brisk sales.
On the commercial front, a joint-venture deal struck in December 2016 between the Bascom Group and Harbor Associates will revamp the 159,186-square-foot, two-building Conejo Spectrum in Thousand Oaks.
Paul Miszkowicz, a principal at Harbor, told the Ventura County Business Journal that the acquisition represents its sixth value-add office purchase in the last year and a half in Southern California and its first in the L.A. region.
“We intend on building on our recent momentum by sourcing new opportunities and pursuing similar strategies in high-demand Southern California submarkets in order to meet our acquisition goal of $250 million by year end 2017,” Miszkowicz said.
Santa Barbara County
Santa Barbara’s scenic coastline and pedigreed heritage have made it one of the most enviable — and priciest — counties in Southern California. Zoning and construction laws are notoriously tight: It can take between four and eight years for approvals to be granted.
The most significant new residential development in the past decade, Estancia, will come onto the market this September. Located on Santa Barbara’s illustrious State Street, the project is a collaboration between local developer Franciscan Developments, William Hezmalhalch Architects and the Cearnal Collective design firm. Prices will start at around $1 million for the project’s 72 Spanish Colonial homes.
In Montecito, TV host and high-end house flipper Ellen DeGeneres and wife Portia de Rossi put their six-bedroom home on the market for $45 million. The two bought it for $26.3 million in 2013 and acquired two adjacent properties after the initial purchase. They’d been using the property — complete with two swimming pools and an outdoor kitchen — as a weekend home, according to the Wall Street Journal.
Riverside County
Though known for its tract housing, this Inland Empire county is also home to the Coachella Valley (with its high-profile annual music festival) and the resorts in Palm Springs and La Quinta.
The new residential development PGA West, a 2,000-acre golf and lifestyle community in La Quinta, is counting on the area’s attractiveness to vacationers. The development’s homes are priced from the low $300,000s to the $800,000s.
On the commercial side of things, construction has begun on a 73,000-square-foot retail development in the city of Eastvale, in northwestern Riverside. Slated for a fall 2017 completion, the Eastvale Marketplace will be anchored by a 30,560-square-foot Smart & Final Extra! discount grocery store.
Experts say the developments are good news for an area that was hit hard during the recession.
“House prices collapsed 60 percent, but one of the things that’s surprised me is how well it’s come back,” said Richard Green, director and chair of the USC Lusk Center for Real Estate, who added, “The industrial market in the Inland Empire is on fire.”
San Bernadino County
Spanning just over 20,000 square miles, San Bernardino is the largest county in the U.S. by area, encompassing cities such as Yucaipa, Rancho Cucamonga and Upland.
One of the most anticipated upcoming projects is a mixed-use development along Rancho Cucamonga’s main thoroughfare, Foothill Boulevard. Plans have been approved for The Vintner, a 182-unit complex on five acres including a four-story building consisting of live-work spaces, common areas, a courtyard and pool. It will also offer a skydeck, an outdoor common kitchen, rooftop fireplaces and communal dining facilities, according to the Inland Valley Daily Bulletin.
Developer Fore Property Co. of Santa Barbara is working on The Vintner with Rancho Cucamonga-based real estate consulting firm Charles Joseph Associates, whose president, Chuck Buquet, said the multi-use live-work aspects of the property would attract young professionals.