Facing a market flooded with unsold homes and discount-hunting buyers, Lennar has decided to temporarily stop taking orders at one of its largest and highest-profile projects in southern California - Central Park West in Irvine. The Miami-based builder has also postponed construction of two high-rise projects in Anaheim, known as A-Town Metro and A-Town Stadium.
Central Park West, which Lennar has been marketing as its first "urban village," sprawling over four city blocks, was supposed to start moving in its first buyers last month. But company officials concluded that too much of the village was still under construction for early buyers to be able to fully appreciate its amenities and living environment. Emile Haddad, Lennar's chief investment officer, who oversees both projects, also tells BUILDER that his company made its decision because the market in Orange County still has too much unsold inventory of new and existing homes, a condition that's all but mandating significant price reductions to sell anything. "We don't want to discount here," he says about Central Park West, whose home prices range from $500,000 to $2.9 million. The builder has refunded earnest money to buyers who had already purchased homes there. For the time being, Lennar is keeping open Central Park West's sale office, which is across the street from the massive construction site.
Central Park West has been beset by rumors lately, including one where Lennar wasn't going to finish the interior of the buildings, to a recent news report that Lennar had stopped construction on the project. BUILDER observed yesterday that crews were working on several of the village's eight "neighborhoods," and Haddad confirms that the company intends to complete the village in its entirety. However, the company has put on hold construction of two neighborhoods within the village - Marlowe, which will have 365 flats and lofts; and the mixed-use Renwick, with 214 lofts and townhouses, as well as retail shops.
In total, Central Park West is slated to offer a total of 1,318 home units, and models for its townhouses, lofts, and flats are scheduled to open next spring. Haddad says that different phases of construction would be completed between January and November of 2008, although Renwick is likely to run into 2009, assuming its construction is resumed. It remains uncertain, though, when Lennar will start selling homes at this project again. It may not begin until next summer, at the earliest, and could be postponed until January 2009.
Lennar is developing Central Park West with two joint venture partners: an opportunity fund known as Stockbridge for the non-high rise portion of this project; and the developer Intergulf for the high-rise building with 240 units called Astoria. Astoria is about 30 percent sold, says Bruce Darraco, a sales associate working at this project site's "Living Studio" sales office, which includes a model for a 1,586-square-foot condo, one of 26 floor plans this building is offering customers. For now, Astoria is the only component of Central Park West that continues to accept buyers, and Darraco says the building should be ready for occupancy next August. Haddad suggests, however, that Lennar and Intergulf could decide to stop taking orders for Astoria if market conditions don't improve.
In Anaheim, Lennar has suspended construction on A-Town Metro, a high-rise complex for which Haddad says the company has completed the land development and infrastructure installations, and whose construction had been scheduled to begin in January. A-Town Metro is slated to offer 2,681 homes within 11 high-rise towers. Lennar's mixed-use A-Town Stadium project is also on hold, and has been scaled back from its original 1,132 lofts in three towers to 878 lofts in two towers. Haddad told the Orange County Register that Lennar is considering changing some of the condos in A-Town Stadium to apartments.
A-Town will not resume construction until at least next spring, and could be delayed until 2009, Haddad confirms. However, he insists that Lennar isn't abandoning either Central Park West or A-Town. "These are two 'A' properties. But we are not interested in selling either them at discounted prices, so we'll wait until the market clears out some of its inventory."
Learn more about markets featured in this article: Los Angeles, CA.