Developers Scramble to Scoop Unentitled Land

LOS ANGELES—Storm Properties has purchased an unentitled parcel of land from International Church of the Foursquare Gospel for an undisclosed price. The land site was excess property for the church, and required a zoning change. The church brought the property to market in a highly competitive sale, illustrating the strong demand for housing supply in the South Bay market.

“Most of the homes in the South Bay market are more than 50 years old, so there is a significant amount of demand for new home product and there certainly isn't enough supply,” Alan Kwan, director of acquisitions at Storm Properties, tells GlobeSt.com. “The church was looking for someone to perform on an unentitled basis and pay all cash, and we were able to step up given our roots in the South Bay community. We have been in the community for more than 50 years, so we got comfortable with the location and the development challenges very quickly.”

Storm Properties plans to build McCoy255, a neighborhood of 21 two-story single-family homes. Homes in the community will have three-bedroom floor plans and range in size from 1,662 square feet to 1,822 square feet. The project will cost an estimated $13 million, and is scheduled for delivery in mid-2016. Although the site is not entitled, Kwan estimates that the entitlement period with take six to nine months. “We received a lot of support from the surrounding communities, so we think we'll be able to go through the process pretty quickly,” he says.

High demand for housing in the South Bay, which is driven largely by the growth of employment centers and the limited existing supply, drew ample interest from developers to the sale. To stay competitive, Storm Properties paid all cash. “The property was widely marketed and there was significant competition, but I think what helped us was our ability to get comfortable quickly, close all cash and our experience in the South Bay,” says Kwan.

Brandywine, another home developer, also recently launched a for-sale housing development in the South Bay, citing the high demand in the area and the job growth has major drivers that attracted them to the project. Brighton, the name of the community, will feature 60 for-sale single-family homes aimed at the workforce demographic.