Anaheim now trying to block a 3rd Theme Park

[DisneyMickey]

What's amazing is that in the 12 months since this SunCal fueled saga took off, the housing market in OC has totally collapsed. And the last 90 days of the credit crunch and what it means for the next five+ years of homebuilding has just put a deadbolt on the closing door.

Here's another Anaheim example from a condo developer with much deeper pockets than SunCal:

Lennar just spent tens of millions of dollars prepping the land for Platinum Triangle with sewers, streets, sidewalks, electric/data cabling, etc. in anticipation of building 5,000+ housing units. Lennar was going to build a dozen condo towers between 24 and 35 stories tall on all of these new streets they've created. They've spent three years getting it all ready, and the first units were to begin construction in a few months and the first homeowners were going to move in by 2009.

But now... it's all been stopped. Lennar has announced it has suspended construction on any new housing in Anaheim's Platinum Triangle. Lennar is capping off the new infrastructure, and the streets and blocks and parks will all sit there empty. The market for pricy condo's in OC has evaporated in the last 90 days, and now there is no market for what they are selling. Pundits are saying there won't be anyone living in Lennar's Platinum Triangle development until 2012 at the earliest. Maybe even later.

And SunCal is right in there with them. Who in their right mind would build 1,500 shoebox condo units packed in next to a freeway now? No one is left to buy such a product. And yet SunCal has to stick to its guns for awhile longer lest they lose a whole lot of face. Disneyland will still be in business in 2009, and 2012, and 2020. But where will all these developers be who were fueled on an over-hyped, over-priced, and purely speculative home market built on dodgy lending from now-bankrupt mortgage brokers? Who is SunCal going to sell 1,500 condo units to exactly?

Buh-bye SunCal. And Lennar. And D.R.Horton. And all of the other developers trying to build condo's in Anaheim. Disneyland will still be doing business in Anaheim this year and in the future, but don't let the door hit you on your way out of town.

Interesting post.

[TP2000]

SunCal's bloated, overblown condo units will in no way bring in the kind of sales tax revenue (fire, police, teachers, hospitals etc...) that Disney's projects routinely provide.

That's just it. There will be no SunCal housing, even if Disney suddenly changed its tune and held a big Welcome To The Resort District SunCal! rally on Harbor Blvd. with Mickey Mouse and the Disneyland Band and the pretty blonde Disneyland Ambassador cutting the ribbon.

The market for housing has dried up in the last 12 months. And the market for $500,000 high rise shoebox condo units next to a 14 lane freeway and some ghetto gangbanger apartments has completely disappeared. Those types of developments, the exact type of thing SunCal was proposing for this unattractive piece of land, could only have been conceived in a housing bubble of unprecedented proportions. The housing bubble has burst. And it will be at least 15 years before we ever get back into that sort of situation again. Buh-bye SunCal.

I'll be fascinated to watch this unfold, and see how SunCal tries to back away from this issue that they created in the first place.

Disneyland will still be in business in Anaheim next year, and many years to come. But now SunCal has to pack up its carpet bag and slink back to the home office in Irvine while it tries to figure out if it goes bankrupt like so many other over-leveraged developers.

[techskip]

What's amazing is that in the 12 months since this SunCal fueled saga took off, the housing market in OC has totally collapsed. And the last 90 days of the credit crunch and what it means for the next five+ years of homebuilding has just put a deadbolt on the closing door.

Here's another Anaheim example from a condo developer with much deeper pockets than SunCal:

Lennar just spent tens of millions of dollars prepping the land for Platinum Triangle with sewers, streets, sidewalks, electric/data cabling, etc. in anticipation of building 5,000+ housing units. Lennar was going to build a dozen condo towers between 24 and 35 stories tall on all of these new streets they've created. They've spent three years getting it all ready, and the first units were to begin construction in a few months and the first homeowners were going to move in by 2009.

But now... it's all been stopped. Lennar has announced it has suspended construction on any new housing in Anaheim's Platinum Triangle. Lennar is capping off the new infrastructure, and the streets and blocks and parks will all sit there empty. The market for pricy condo's in OC has evaporated in the last 90 days, and now there is no market for what they are selling. Pundits are saying there won't be anyone living in Lennar's Platinum Triangle development until 2012 at the earliest. Maybe even later.

And SunCal is right in there with them. Who in their right mind would build 1,500 shoebox condo units packed in next to a freeway now? No one is left to buy such a product. And yet SunCal has to stick to its guns for awhile longer lest they lose a whole lot of face. Disneyland will still be in business in 2009, and 2012, and 2020. But where will all these developers be who were fueled on an over-hyped, over-priced, and purely speculative home market built on dodgy lending from now-bankrupt mortgage brokers? Who is SunCal going to sell 1,500 condo units to exactly?

Buh-bye SunCal. And Lennar. And D.R.Horton. And all of the other developers trying to build condo's in Anaheim. Disneyland will still be doing business in Anaheim this year and in the future, but don't let the door hit you on your way out of town.

I would venture to call this being slightly short sighted. At some point there will be another housing crunch and the construction costs will only go up as time goes on. If you build in the slump you are in a position to cash out during a peak, meanwhile your competition is frantically trying to build and it's costing them a fortune. As to SunCal... they are literally right down the street from DL, talk about luxury... this a a realtor's dream.

[TP2000]

As to SunCal... they are literally right down the street from DL, talk about luxury... this a a realtor's dream.

The piece of land SunCal owns is nowhere near attractive. It's next to 14 lanes of busy Santa Ana Freeway. It's wedged alongside cheap 1970's apartment complexes that have multiple families living in one unit and are home to some of the worst gang problems in Anaheim. There is no surrounding infrastructure to support middle and upper-middle income residents; all of the shopping options nearby are seedy liquor stores or greasy tacquerias.

No one in their right mind would ever buy a unit in the upscale SunCal development, unless it was the middle of an over-hyped housing bubble. Those bubbles come along every 20 years or so, and we just saw the bubble of 2002-06 pop in a big, bad, ugly way that is threatening to drag the entire economy into recession.

Will SunCal really build 1,500 units no one wants and then sit on them for years and years waiting and hoping that another housing bubble comes along? Very, very doubtful.

I would bet two churros that what SunCal's executive team is doing right now is trying to find a face-saving exit strategy from the Anaheim Housing Mess they got themselves into. Disney isn't going to back down, because Disney is already doing business and investing heavily in Anaheim. Disneyland rides through recessions every decade, just as they have since the sharp recession of 1957-58. Disneyland isn't going away. But SunCal can't afford to stick around any more. They are selling a product that no one is buying, especially when the product is where SunCal wanted to put it.

I'll say it again; the next chapter in this Anaheim Housing Mess is going to be the most interesting.

The next chapter is called "The Bubble Bursts and SunCal Leaves Town", and it will be fascinating to watch how they do it and who they blame.

[Mac Daddy]

What's amazing is that in the 12 months since this SunCal fueled saga took off, the housing market in OC has totally collapsed.

Totally Collapsed is a bit strong. I just read last week that the overall market in OC was UP 1% over last year at this time. I agree that there is a slump, but not a collapse. Back in 1991...THAT was a collapse.

[TP2000]

Totally Collapsed is a bit strong. I just read last week that the overall market in OC was UP 1% over last year at this time. I agree that there is a slump, but not a collapse. Back in 1991...THAT was a collapse.

The increase was in multi-million dollar estates along the ocean in Corona del Mar and Laguna Beach. Their value will also decline soon. Middle and Upper-Middle class home prices are declining quickly, although the countywide statistic gets skewed when someone buys a 20 Million dollar clifftop estate in Laguna.

Shoebox condo developments have halted entirely. Lennar spent tens of millions of dollars getting all of that land in Anaheim's Platinum Triangle ready for condos. Lennar laid sewer lines, underground electrical lines, data lines. Lennar plotted out new streets. Lennar agreed to pay for fancy landscaping and street furniture at the request of the Anaheim Planning Commission. Lennar plotted out new parks and wide sidewalks, and have even dug deep into the Anaheim bedrock for expensive underground parking. Lennar has spent a huge sum of money to get ready for the first families to move in to their towers in 2009. Now all of a sudden... Lennar has delayed applying for building permits from the City of Anaheim for 12 months. That first 12 month delay will grow longer and longer and longer.

Check back around the year 2012 or 2013 to see how it's going.

The other condo developments already under construction in Anaheim's Platinum Triangle have switched to apartments instead of condos, only because they already spent the money on the construction and had to do something with the product they just built. D.R. Horton bailed out of the 2100 At Platinum Triangle development it was building as condo's. Instead, it turned over the ownership and operation of the building under construction to AvalonBay Communities, an apartment management firm. The building was built to condo specifications, which means it cost a lot more than if it had been built as apartments from the beginning. It is unclear if there is actually a market for $2,000 per month apartments in central Anaheim wedged next to the backside of McDonalds and a view of the Denny's across the street. AvalonBay is about to find out though, as leasing begins soon.

The other condo construction just down Katella, Stadium Club Condominiums, has just been rechristened as... wait for it... Stadium Club Apartments. Again, the developer got in just a few months too late to think twice, and with structural steel already laid and framing beginning, they are changing them from condo's to apartments. All of those developers will pray that a high-price luxury apartment market even exists on Katella Avenue. My bet is that it doesn't, but time will tell.

As for the housing collapse; trust me, it's collapsing. When a huge national developer like Lennar stops all plans for construction on a piece of land they've just spent tens of millions on to prep it for 2,000 units, you know something is up. Or rather, in this case, something is down.

[shadow]

Idea: Let Disney do it, BUT make them more responsible for the taxes they said they would be paying out to the city on their last endeavor.

If I understand it right (if I am incorrect, please let me know—hopefully without taking the lower road), the last project Disney did, was approved under the fact that they said XX% would be paid to the city in taxes or whatever. A news article said they fell WELL below that.

I guess they don't stop at merely stiffing employees... (they should do what they say they will do, regardless of how much money it will help them keep in their pockets)

[techskip]

The piece of land SunCal owns is nowhere near attractive. It's next to 14 lanes of busy Santa Ana Freeway. It's wedged alongside cheap 1970's apartment complexes that have multiple families living in one unit and are home to some of the worst gang problems in Anaheim. There is no surrounding infrastructure to support middle and upper-middle income residents; all of the shopping options nearby are seedy liquor stores or greasy tacquerias.

It is in a location that is extremely close to the park and as the resort district continues to grow with upscale shopping (Gardenwalk) and dining (DTD) the property will become more and more attractive. Whoever does make the decision to develop condos will eventually turn a hefty profit in the long run. They will market this new housing to Disney fanatics in much the same way the current State College/Katella property is marketing to sports fans who could literally "walk to the ballpark".

[JeffYardDog]

Disney sales tax subsidizes Anaheim's police and fire departments. The schools, city infrastructure etc...

City Council seems to have forgotten who butters their bread.

Anyone remember the bad old days when Harbor Blvd was littered with seedy motels and prostitutes and we were all waiting for City of Anaheim to clean it up ???

It was Disney that cleaned up Harbor Blvd.

Funny, none of that stuff was there until Disney built his park. It was orange groves.

It was only after that all that seediness moved in and then Disney left the city to deal with it.

Seems like you have your story backwards.

[TP2000]

They will market this new housing to Disney fanatics in much the same way the current State College/Katella property is marketing to sports fans who could literally "walk to the ballpark".

FOR SALE: 1,100 square foot condo. 2 bedrooms. Sunny dining nook. Granite countertops & stainless appliances. Partial view of Matterhorn. Highspeed Internet For Message Board Surfing. Free Sunday Shuttle Service to Disneyland. Stroll to Liquor Store and Freeway Onramp. $675,000

Hmm.... while I've never heard of a condo developer trying to sell 1,500 units to Disneyland Annual Passholders, perhaps it's an untapped market that could even survive the current housing moonscape.

However, considering the derision and scorn that SunCal executives and spokesmen have thrown at the evil "Disney Corporation", it might be hard for them to market that effectively.

[I. Queue]

Go, TP2000!!!

More. Give us more...

[TP2000]

Go, TP2000!!!

More. Give us more...

Ha! Thanks for the kind words.

But I don't write this stuff. It writes itself, I only summarize it. And it's a fascinating tale to watch unfold these last few months. Tune in to the Anaheim City Council on their webcasts if you ever get a chance, as that group is a laugh riot of ineptness and amateur posturing.

But the best part is that it is only just beginning. As 2007 becomes 2008, the tale of the late, great Platinum Triangle will become Orange County legend.

Closer to Disneyland, the tale of the SunCal Development on Harbor and Haster will not only be a legend, it will literally become a nightmare for the SunCal corporate office in Irvine. SunCal is going to have to figure out a way to back out of this mess gracefully, and my bet is that they are trying to figure their exit out of Anaheim already as we type here.

At the same time, the formidable Disney marketing machine will likely hit the Anaheim voters heavy and hard with press releases and direct mailings about the major investment Disney will continue to make in their community through the end of this decade and beyond. The Orange County Register will continue to fill its pages with stories on proposed condo towers and entire housing developments that have stopped in their tracks, while Disney lays out plans for bold new expansion of its existing Anaheim property. The contrast between the embarassing position SunCal suddenly finds itself in and the cushy position Disney continues to enjoy will grow more and more startling.

The housing market will rebound, as it always does. But that rebound won't show up until sometime next decade. And a bubble big enough to support the silly proposition of $600,000+ condos on Haster Street won't return for many, many years. SunCal won't wait that long, and by that time Disney will have done enough with the land across the street to warrant major hospitality infrastructure instead of shoebox condos with a view of the freeway.

[JeffYardDog]

Go, TP2000!!!

More. Give us more...

TP2000 has revealed to us that, shock of shock, there are actually economic cycles and ups and downs in b business.

Apparently he thinks that jurisdictional decisions should be made based upon those rather than principles.

[Baloo]

Aww, that's so unfair.

Making Disney play by the same rules that they want for everyone else.

As yee sow and all that ...

You have to remember that Disney is not the one that is trying to pull out of a contract that the city and they approved years back. The area put aside should be kept for resort development only.

Disney is trying to make sure that happens for the wellfair of the city.

Disney is not trying to stop Suncal from building. They just want them to follow the guidelines. There is more at stake here than just those 26 acres that Suncal wants to use for housing. If that areas zobe is changed there are three more contractors that already said that if Suncal gets a zonign change then they should also get the rights to change zoning on other property they want to develop around the parks for more housing.







As for the first post, its not Anaheim trying to stop any development, its three city council members which care less for what the people of ANAHEIM want.

[JeffYardDog]

Y

As for the first post, its not Anaheim trying to stop any development, its three city council members which care less for what the people of ANAHEIM want.

That's a bit of demagoguing.

Those city council members are elected representatives of the citizenry. it's only your apparent disagreement with them that indicates that they "care less".

As to what the people of Anaheim want, well that's what the ballot measure will be to decide.