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Mar 10

The Registry: “Lennar Continues Bay Area Expansion with $25MM Milpitas Buy”

Posted on March 10, 2015 by  

Miami-based builder Lennar Corp. is further entrenching itself into the Bay Area by taking a development site in Milpitas for a reported $25 million.

Danville-based Trumark Homes was the seller of the 10.7-acre development site, previously called the Waterstone, which had been approved in 2013 for demolition of two industrial structures totaling 105,100 square feet with adjacent parking lots.

The site sits on Californa Circle between Milpitas Boulevard and Interstate 880. It had been approved for development of 84 single-family homes, which would bring Lennar’s cost to nearly $297,000 per unit. According to city documents, the redevelopment also proposed the construction of a six-foot tall, clear-span pedestrian bridge over Penitencia creek, which flows to the east of the development.

The city documents also stated that this location is located in Seismic Zone 4, which is the most seismically active region in the country, and the Environmental Impact Review was planned to address the possible geological impacts associated with seismic activity and the existing soil conditions on the project site.

The development is one of the few single-family projects in the northern South Bay and could give the developer greater ability to command a premium. However, in 2013, according to reports from the San Jose Mercury News, the Milpitas Planning Commission unanimously determined that this project was not consistent with the city’s general plan and its long-term land use strategy and recommended denial of development. While the city council approved the residential project 4-1 in October of 2013, it was noted that Mayor Jose Esteves dissented in that decision calling the project wrong for the area partly because of odors emanating from Newby Island Resource Recovery Park at 1601 Dixon Landing Road, just west of the proposed development.

Lennar is planning to start work on the site towards the end of the year.

Lennar is no stranger to infill areas and has been active in pursuing such opportunities throughout the region. Last summer, the city of Fremont, Milpitas’ neighbor to the north, announced that it had selected Lennar to redevelop Union Pacific’s 112 acres of previously industrial land adjacent to BART in its efforts to redefine Fremont’s Warm Springs District.

In December, Lennar acquired the market-rate residential portion of the 15-acre development project called Foster Square in Foster City, and just a month earlier the company announced a 50/50 joint venture with Macerich to develop an urban outlet portion of the mixed-use development at Candlestick Park in San Francisco.

In August, Lennar Multifamily Communities and New York City-based Deutsche Asset & Wealth Management announced plans to develop Parker Place, and apartment and retail mixed-use project located at 2598 and 2600 Shattuck Drive in Berkeley.