Lennar Corp. has acquired a massive and rare 41.5-acre development site in San Diego with plans to build a 601-home community. Like other markets in Southern California, San Diego has a housing shortage. This new home community, which is set to deliver next year, aims to address the need for more housing supply with a broad mix of home styles, including 99 single-family homes, 105 triplex homes, 120 townhomes and 277 apartments.
“Demand for housing in general in San Diego continues to outstrip supply annually,” Kevin Nolen, a director at Cushman & Wakefield, tells GlobeSt.com. “Single-family housing demand in the entry-level category continues to be one of the places that continues to shine, despite some overall sluggishness in housing demand due to an increase in interest rates. The area the project is being developed is known for larger single family homes, so the entry level housing being built will be welcome for buyers looking to be in the area but have previously been priced out.”
Lennar purchased the property from Atlantic Pacific Cos. for an undisclosed price, and Nolen represented Lennar in the transaction, along with his Cushman & Wakefield colleagues Tim Winslow and Jason Kimmel. “This redevelopment site was underutilized and had the proper zoning in place to allow for a development of this nature. The owner was a long-term holder and apartment owner,” says Nolen. “We presented to them a scenario in which they could remain an apartment owner on the site by selling off a section of the property to a for-sale developer. The for-sale developer, Lennar, would run the project through entitlements and deliver the original owner a pad to which they could build back new apartments to rent. It was a win-win for both the buyer and the seller.”
This was an unusual opportunity, but in general, land sites, particularly of this size, are a an unusual find in San Diego. “It is extremely rare to find a site of this size in San Diego,” adds Nolen. “Much of the remaining large tracts of land are located on the edges of the suburbs and are raw land developments. Those types of developments, however, can present added challenges such as potentially being less favored by locals who may view them as sprawl, along with new issues that the raw land developments back into fire prone areas.”
For Lennar, the site was a perfect fit for a housing development. It is located in Rancho Penasquitos, a suburb in North County. In addition to building the housing community, it plans to invest an additional $10 million in infrastructure improvements, like sidewalks, landscaping, a bike lane along Carmel Mountain Road, new traffic signals along Carmel Mountain Drive and a sound wall along Interstate 15. “The project also provided a unique opportunity to provide housing to a range of demographics, from the first time homebuyer to a second homebuyer with an expanding family,” says Nolen. “The location in one of San Diego's northern neighborhoods known for excellent school districts and proximity to jobs also made it a no brainer to get involved with. The property also was unique in that it was a large redevelopment parcel, which has become a priority for cities and states across California rather than raw land development.”
With demand for more housing in San Diego, there is also demand from developers for quality land sites. Nolen's team currently has another site in East Mission Valley. The 22-acre site is already entitled for nearly 1,000 rental homes. “Our team is actively searching for projects that have size as it presents the best opportunity for developers to build with the greatest economies of scale,” he adds. “Other large projects of size that we currently have available include multiple developments in downtown San Diego, within Little Italy, Cortez Hill and the East Village.”
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Kelsi Maree Borland
