Fifield Looks to Sell Costa Mesa Condo Site

Orange County Business Journal, Oct 1-Oct 6, 2007 by Mueller, Mark

REAL ESTATE: Company plans to build if it can't sell project

Fifield Cos. is looking to sell the Costa Mesa site that's slated to hold the first highrise condominium towers around South Coast Plaza.

The Chicago-based developer is behind the Californian at Town Center, twin 25-story towers with 250 homes planned for the current site of the Lakes Pavilions shopping center.

The Californian-one of six high-end condo projects proposed for Costa Mesa's arts and shopping district, totaling some 1,200 homes-was originally planned to break ground this summer.

The start of construction has since been delayed for at least a year due to the sluggish housing market. A possible sale of the property to another condo developer who would complete the project could push development back further.

The property "has been put on the market, (but) if it does not sell, then it's still an asset we will build," said Tim O'Brien, senior vice president for Fifield's Irvine office.

Fifieid finished its first California condo project last year-a 23-story, 74-unit tower in Los Angeles.

The proposed sale is part of Fifield's strategy to decrease its exposure to the condo market on the West Coast, while putting more emphasis on apartments and office development, O'Brien said.

"We're a little heavy in condominiums here," O'Brien said.

Off the Books

Fifield already has taken another Los Angeles condo project off its books.

Last month, it sold Club View, an ultra high-end tower already under way on the Wilshire Corridor, for $95.4 million to Dubai's Emaar Properties PJSC.

The luxury division of Newport Beach's John Laing Homes, which Emaar bought in 2005 for $1 billion, will complete the 35-unit condo project.

Condos at the project are priced at close to $2,000 per square foot.

It's the first tower project for John Laing, although Emaar has experience building high-rises overseas.

Emaar is building a $4 billion skyscraper in its home country. The 160-story building is set to be the tallest building in the world.

Originally, the Club View and Californian towers were being marketed for sale together, along with another Fifield tower project in San Francisco. Following the sale of the Wilshire Corridor project to Emaar, the remaining two properties are being marketed individually, O'Brien said.

Officials for John Laing declined to comment on whether they'd be interested in building condos near South Coast Plaza.

Fifield's proposed sale of the Californian is reflective of a tough sales market for local condo developers.

The first tour towers built in Irvine-by Bosa Development Corp. and a venture of Opus West Corp. and Geoffrey H. Edmunds California Inc.-were met by eager buyers and investors. Additional projects have seen slower sales.

Other Projects

There are five towers in Irvine and Santa Ana under construction, totaling about 700 condos.

About a third of those condos have been sold to date.

"That product needs to get absorbed," before other towers start getting built, O'Bnen said.

Potential buyers for those upscale homes are sitting on the sidelines as the market readjusts. But the developers of towers are holding the line on prices, even as homebuilders are dropping theirs.

"It's a waiting game right now," O'Brien said.

Fifield was slated to open its sales office for the Califomian by summer's end, but has postponed doing so for the time being, he said.

"There's no reason to be in the market right now. (We're) going to let the market mature," he said.

Depending on how the housing market shapes up, and if a sale doesn't happen, it's possible the Califomian could start construction later next year, with completion in 2010, O'Brien said.

"As weak as the market is in Orange County, and it is weak, it's a temporary situation," O'Brien said.

The decision to delay the Califomian project is good news for patrons of the Corner Office Sports Bar and Grill, which would have to close when development starts.

The popular restaurant in the Lakes Pavilion just renewed its lease into next year, O'Brien said.