SAN JUAN CAPISTRANO, CA-CalPERS' recent $100-million outlay into community development at Rancho Mission Viejo is being viewed as a nod to the recovery of more than just Orange County commercial real estate. Steve Duffy, leader of the real estate investment-banking business at Moss Adams Capital, tells GlobeSt.com that the pension fund's investment will have implications in other markets throughout the country.

“CalPERS is a bell cow,” says Duffy. “They are followed around the globe for their investment decisions because of their size and their track record. They were leaders in bringing pension-fund investment into housing in the early '90s in California after the savings-and-loan crisis, and the fact that they are back in the community-development business sends a message to other pension funds around the country that are looking to generate higher returns given the pressures of their pension-fund demands.”

The Rancho Mission Viejo project is expected to create roughly 14,000 new homes on 23,000 acres in South Orange County over the next 20 years. Bloomberg reports that the total investment in the project is about $100 million, about a third of which comes from CalPERS in a private transaction via Resmark Cos., a Los Angeles-based firm that invests in real estate for the pension fund and CalSTERS. Resmark's CEO Robert Goodman revealed to Bloomberg that the investment is new money, invested in “absolutely superior real estate with superb top-notch management, and we think it's a good time in the housing cycle.”

Duffy tells GlobeSt.com that the fact that the fund is investing in community development and not just a small parcel of land speaks volumes about its confidence in the market's recovery. In fact, he says, the move is reflected by recovery in many national markets. “As the excess supply of broken homes in multiple markets has corrected—and over the last few years we have seen prices rise dramatically in those markets—and with a recovery in local economies regarding job creation and household formation, there's a demand for new homes. We've seen that occur across the country in the improvement of the performance of public homebuilders. When public homebuilders improve, we now need inventory in the best-performing markets, and that's what's driving the success of Rancho Mission Viejo.”

Calls to Don Vodra, COO of Rancho Mission Viejo, were not immediately returned to GlobeSt.com.

As GlobeSt.com reported in August, TRI Pointe Homes has opened development of TRI Pointe at Rancho Mission Viejo, which will consist of 105 single-family homes situated amid the network of paths, parks, and gardens that make up Sendero. Ranging from approximately 2,050 square feet to 2,394 square feet, TRI Pointe's homes are priced in the mid $600,000s.