Big-Ticket Development Lots Are Popping Up Around L.A.

There are several big-ticket land sites for residential development popping up on the market in Los Angeles. However, as commercial developers know, not all land sites are created equal. Commercial developers are stepping up to prep the land sites for development, including everything from grading to entitlements, and then selling to high-end consumers who can then build their dream home. With rising demand for housing and limited land to build them, these new land sites are giving luxury homebuyers new options.

One such land site is Stella Nova, a 30-acre site in Bel Air that recently hit the market with a $60 million price tag. Commercial developer Sandstone Capital has prepped the site for construction, and laid the foundation. “This is an exception to the rule. Most of what we do is commercial,” Eri Kroh, president of Sandstone Capital, tells GlobeSt.com. “I put in a lot of the work that needed to be done—I did the heavy lifting. Now, someone else can come in and build their own home. I could build the house, but everyone has different taste. It doesn’t make sense to build a house that will likely be redone.”

Lynn Teschner, a broker at The Agency handling the deal, has seen the rising trend as well. “It takes years to entitle these parcels and put them together,” she says. “There is a limited amount of dirt left in Los Angeles. There are vertical lots like ski slopes, but if it has a view, people are finding a way to build on it.” Other big-ticket sites on the market include the $150 million 120-acre Enchanted Hill land site in Beverly Hills, a 10.6-acre site in Bel-Air listed at $150 million, and a 157-acre site in Beverly Hills, which is up for $650 million.

Kroh says that the entitlement process and navigating the challenges of development in L.A. has a lot to do with why commercial developers are stepping into the residential space. “The entitlement process is very difficult in L.A., and it seems like it is getting more difficult now,” he says. “But, it’s a case of ‘if you can’t stand the heat, get out of the kitchen.’”

Selling the dirt might also be a way for developers to maximize profits, especially considering rising construction costs and the limited buyer pool for a home of this caliber. “There are no comps to a property like this. It is really whatever anyone is willing to pay,” adds Kroh.

Teschner has only quietly brought the Stella Nova site to market, but has already received interest. “There have been very successful showings, and it has just hit the market,” she says. “This is not the kind of home that will get several offers on day one. There are a limited number of people in this caliber.”