Source: Tom Reimers, President, (949) 852-8288 x28
The Land Advisors’ High Desert Team recently closed a multi-million dollar sale on a five-subdivision portfolio in the High Desert. Collectively, the five land assets consist of 364 residential lots in varying stages of development. A private investor (represented by John Reeder of the Mimi Song Company) purchased the portfolio with the intent to hold for the long term. Land Advisors represented the portfolio’s seller (a lender), in the transaction.
The details of the five portfolio assets include:
- “Barcelona Heights II” is located within the City of Hesperia and consists of 91 single family lots with a minimum lot size of 5,801 square feet. The lots were sold in “partially finished” condition with a recorded final tract map.
- “Copper Crest” is located within the City of Hesperia and consists of 71 single family lots with a minimum lot size of 6,000 square feet. The lots were sold in “mostly finished” condition with a recorded final tract map.
- “Autumn Glen IV & V” is located within the City of Victorville and consists of 66 single family lots with a minimum lot size of 7,000 square feet. The lots were sold in “mostly finished” condition with a recorded final tract map.
- “Falcon Point II” is located within the City of Lancaster and consists of 131 single family lots with a minimum lot size of 7,000 square feet. The lots were sold in unimproved condition with an approved tentative tract map.
- “Adelanto-5” is located within the City of Adelanto and consists of 5 single family lots with a minimum lot size of 7,000 square feet. The lots were sold in “mostly finished” condition with a recorded final tract map.
“This was a challenging transaction due to the nature of five different subdivisions (and two counties) involved in the sale,” noted Land Advisors’ Senior Marketing Consultant Randy Coe, who has been selling residential land in the High Desert for about 10 years. “However, this was the largest remaining Bank REO finished lot opportunity in the submarket, and offered a significant value for the buyer of the portfolio,” he said.
In a separate transaction, the High Desert Team also recently led the closing of “Tuscany III” in Victorville. The transaction consisted of 142 unimproved single family lots with an approved tentative tract map. A private investor purchased the subject lots from Mojave & Onyx LLC for, with the intent of holding the project until the housing market returns.
In the Victor Valley submarket, three residential land deals have closed escrow since August of this year. Two of the deals were distressed, and all three were considered to be undervalued by their purchasers.
- The first sale consisted of 276 single family lots in Victorville that sold to a private investor in late August. The investor bought the land from a lender in “blue-topped” condition with a recorded final map.
- The second project included 244 unimproved single family lots with an approved tentative tract map. A private investor bought this Victorville project from a private homebuilder looking to generate cash and divest from some fringe markets.
- The third project closed escrow just this week. A private investor purchased 36 single family lots, four model homes and seven standing inventory homes in Hesperia from a lender. The buyer intends to finish the homes and sell them to homebuyers at retail prices. It plans to hold the unfinished lots until the market recovers.
The larger story here is that the buyers of these properties are typical of the groups looking to buy land in the Victor Valley right now. All are well-capitalized private investors looking for long term (4-10 years) investment opportunities. These buyers are coming to the table with cash and are taking advantage of the extremely depressed land values in the region. In many cases, active Victor Valley investors are utilizing overseas investors to get their deals done.
Land Advisors Organization, which has been tracking residential land values in the Victor Valley for about fifteen years, currently sees values at about $42,500 per single family lot in “finished” condition (7,200 sq. ft. lots). At the market peak in 2006, these same lots were trading for about $130,000 per lot (a 67.3% drop from peak).
Despite the dismal news in land values, recent data shows that many Victor Valley residents are choosing to stay in the area. In some areas, populations within the submarket are actually increasing. People are moving into the area to take advantage of the affordable housing and increasing job growth opportunities.
Users of industrial facilities are also taking advantage of the low prices. In September, United Furniture Industries (UFI) signed a lease for over 505,000 square feet of industrial space from Sterling Capital Investments in the Southern California Logistics Centre (SCLC). When this new space is occupied, UFI plans to employ 400 local Victor Valley residents over the next 36 to 48 months.
Source: Randy Coe, CCIM, Senior Marketing Consultant, (949) 852-8288 x18