EMPIRE LAND, A COMPANY known as somewhat of a land baron in Southern California and Arizona, has quickly, yet quietly become a major stakeholder in the northern part of the Golden State as well.
Under the stewardship of 25-year home building veteran Keith Fichtner, the Ontario, Calif.-based company has assembled a slew of properties totaling nearly 1,750 acres containing some 6,500 building sites. And with 3,400 more acres holding almost 6,200 lots under “possible acquisition” with letters of intent in the mail, Empire Land of Northern California has set itself up as the “go-to” company when big builders are looking for a place to put down roots.
“We're moving and shaking,” says Fichtner. “We should be one of the big land boys before long.”
It wasn't Empire's goal to be the largest single land holder north of Fresno. It just turned out that way.
On Fichtner's first day on the job—and indeed, for many of the days that followed —his office consisted of a chair at a local library in Pleasanton, and a cell phone and a laptop. Now, just two years later, Empire Land of Northern California has become a separate business unit of what is now called Empire Companies, operating autonomously from the Ontario operation, and will soon to be expanded to a staff of seven.
No Loose Ends “They've been pretty aggressive,” says Larry Young, regional president of Forecast Homes' Northern California division. “We've bought a couple of properties from them and probably will do more.”
Young says he is particularly impressed with Empire, from the developer's land planning skills to its ability to deliver a truly finished product.
“The projects they develop are all very well laid out with good parks and good amenities,” says the Sacramento-based builder whose target market is first-time and first move-up buyers in the $250,000 to $500,000 range. “And they do a really thorough job tying up all those loose ends.”
Liesel Cooper, president of national home building operations for Richmond American in the Western U.S., also has high praise for the developer.
“Not only does Empire have a lot of great land positions throughout California, but they also do all of the forward planning for us, which makes them an ideal partner,” Cooper says. “We have worked together on several successful transactions, and we look forward to more of that in the future as we continue to expand throughout the state.”
Mutual Admiration If big builders like working with Empire, the feeling is mutual: Fichtner says he prefers working with them, too.
“They understand the system, and they close when they say they will,” he explains. “That's why I love ‘em. They don't have to go get their money. The big public companies already have it.”
Finished lots in Empire's Northern California market range from $100,000 to $400,000 versus $100,000 to $300,000 in Southern California. “And you haven't even pulled your permits or dropped off your lumber yet,” says Fichtner. “Land up here is 33 [percent] to 40 percent of the price of the house.”
And that, of course, is why most builders nowadays leave the development business to others. If they didn't, they'd be holding land on their books for years.
“Northern California is one of the toughest places anywhere to obtain permits,” Fichtner says. “But we take that risk so the builders can be manufacturers and not have to carry large amounts of land on their balance sheets as nonperforming assets.”
It's what Fichtner calls an “11th-hour delivery system” that's not unlike inventory on demand. Builders get a finished product on which they can start construction the moment they find a buyer. And they can be finished and done in 60 to 120 days, depending on construction schedules.
With Empire, a builder puts up 5 percent of the lot price to hold the site, another 5 percent when grading starts, 5 percent more when the grading is done, and the balance when he is ready to pull permits and “go vertical.”
Sprawling Portfolio Empire's holdings in Northern California consist of one of the last remaining entry level (based on price point) communities in the entire Sacramento region and a big parcel just south near Stockton, which is said to be one of the fastest growing cities in Stanislaus County.
The entry-level property is Wheeler Ranch, a 405-acre parcel in Plumas about 45 miles north of the state capital that is plotted for 1,377 lots ranging from 6,600 to 9,400 square feet. Grading has already started, and the 670 lots in phase one are under contract to three builders: Forecast, a division of Hovnanian Enterprises (428 lots), Western Pacific (150), Richmond American (92). Work on the second phase is scheduled to begin in April.
Another major project is the 497-acre Patterson Ranch, which is designed for 2,000 lots varying from 4,500 to 10,000 square feet. Currently in the entitlement stage, Empire plans to begin moving ground by early 2006 and sell the first lots later that year.
In an effort to speed approvals at Patterson, the company is offering to build an elementary school and fire station on the site. The plan also calls for a 20-acre medical complex on 20 donated acres that will include a 100-bed hospital, a 75-bed assisted living facility, a 100-bed skilled nursing facility, and doctors offices.
Not quite as large—but coming on line sooner—the 480-acre Weber Ranch will contain 1,866 lots with products ranging from attached units to single-family homes on half-acre lots. Here, entitlements are expected by year's end, with construction scheduled to begin in May. Based on that schedule, Fichtner says land sales will begin in October.
Located contiguous to Stockton's northeast quadrant, Weber Ranch will include more than three miles of trails, a 15- to 20-acre school/park complex, and a 50-plus age-restricted, self-contained component with its own identity. The entire property will be annexed by the city, along with an adjacent commercial complex.
Empire's list of current holdings also includes Park Meadows, an already sold-out 322-acre project in Elk Grove where Forecast and Western Pacific, among others, will build 1,043 houses, and Williams, a small, 30-acre enclave where approvals for 160 6,000-square-foot lots are expected late this year.
Learn more about markets featured in this article: Los Angeles, CA.