1.26 Acre Lot | South Pasadena | Very Rare Opportunity 17 Maximum Condos Per Zoning

Highlights:

• Prime South Pasadena Location
• Opportunity to Build 15 Condos
• Bankruptcy Sale
• Large 1.26 Acre Lot
• High Barriers to Entry Market

Description:

The LAAA Team of Marcus & Millichap has been selected by the owner's bankruptcy attorney to exclusively list and market this rare assemblage of three adjacent lots in one of the most sought after South Pasadena markets. The three lots combined offer a developer the chance to build 15 high-end condos on this huge 54,969 square-foot lot (1.26 acres) in prime South Pasadena, California.

The rarity of this development opportunity is proven by the extremely small number of land sales that have happened in this market. According to CoStar, there have only been 7 land sales in the past 10 years in South Pasadena.

To prove the market for brand new condos in this location, an investor needs only to look at the two lots on both sides of this offering. The adjacent lot to the west of this offering at 167 Monterey Rd is a 9-unit Condominium project that was built in 1993. Furthermore, the lot directly adjacent to the East at 191 Monterey Rd is another 9-unit Condominium project that is finishing construction this year. 

Before filing for bankruptcy, the owner of these lots began the process of getting these 3 lots assembled and entitled to build 15 high-end luxury condos. The zoning allows for a max of 17 units/condos, but the current owner's research suggested that 15 units/condos was the more reasonable. 

PROJECT DESCRIPTION:
Below is a project description that the current owner submitted to the City of South Pasadena, before filing for bankruptcy, in April of 2019.

The project involves demolition of three single family homes (constructed in the 1940’s), and grading for the construction of 15 condominium units. The project would also involve the subdivision of three separate parcels into 15 condominiums. Two – car parking and guest spaces are provided for all units in a subterranean garage that opens onto street level. The 15 two story units are comprised of (4) 3 bedroom / 3½ baths, (5) 3 bedroom / 2½ baths, (5) 2 bedroom / 2½ baths, and (1) 1 bedroom/ 1½ bath and range in size from 1,100 Square Feet to 1,900 square feet. Each unit has direct access to more than 200 square feet of private open space and 1,300 square feet of common open space. The Floor Area Ratio for the project is 47% and covers 25% of the lot; where both are allowed by ordinance to reach 50% respectively.

The demolition of the structures at 181 Monterey Rd was approved by the Cultural Heritage Commission (CHC) on February 21, 2019 per Certificate of Appropriateness. The structures at 185 and 187 Monterey Rd were found not to be of historical significance at the same CHC meeting and referred to Planning Commission for design review. The Natural Resources and Environmental Commission (NREC) recommended for approval to the Planning Commission 29 trees for removal and their subsequent replacement by 58 new trees at an August 28, 2018 meeting. 

Before Land Cost
In order to provide some very rudimentary math for a prospective developer/buyer, we are estimating the "all-in" costs to build each luxury condo will be around $625,000 per condo, and this number includes all fees involving getting the project to RTI, soft costs, and hard costs for rentable and non-rentable square footage. Then, recent sale comparables of new construction condos in the area suggest that these luxury condos will sell for around $800 per SF on average. With an average projected condo size of 1,565sf, a developer can expect an eventual sales price of $1.25M on average for each finished condo. This means a developer can expect around $625,000 of profit per condo built, and if there are 15 total condos built, that is a total estimated profit of $9,375,000. 

After Land Cost
Lastly, after taking out the land cost of $3.3M, and some other miscellaneous costs of around $1.0M (holding costs, loan payments, closing costs of selling condos, etc.), we are estimating a potential net profit of over $4.6M! This comes out to 25% developer's profit on net revenues from the sale of all condos.