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Corky McMillin Cos. Takes Lead With Reborn $4B Project

San Diego County’s real estate market continues to struggle, but officials at The Corky McMillin Cos. aren’t waiting for a turnaround to begin raising money for Millenia, a $4 billion commercial and residential development planned for Otay Ranch.

Positioning itself for a rebound of the housing and commercial markets, McMillin is looking for investors for the sprawling project formerly known as the Eastern Urban Center.

Todd Galarneau, vice president of project management, said work will get under way when McMillin has found equity partners and secured financing. If all goes according to plan, the sale of attached homes could begin there in early 2012, he said.

The company recently began a campaign to publicize the pedestrian- and transit-oriented project to potential investors on both sides of the U.S.-Mexico border.

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“Since then we have been continuing our effort to look for investors and merchant builders,” Galarneau said. “We are looking for ways to phase the project and bring it out of the ground … It is all multifamily, very much an urban project, which is what separates it from what is in Otay Ranch today.”

Middle Market Project

Millenia was intentionally spelled with only one “n” following a study that was conducted to find an appealing name for the project. The company is aiming at the middle-income market, which is where many buyers will be as the economy improves, said Alan Nevin, director of economic research at MarketPointe Realty Advisors. “They are not going to be doing luxury product.”

Nearly 13 percent of the housing will be designated as affordable, Galarneau said. The housing mix will include rentals and units for seniors. Development will take place on 210 acres east of state Route 125 and south of Birch Road, near the Otay Ranch Town Center shopping mall. As envisioned, the energy-efficient

project will include 3.5 million square feet of commercial space, two hotels, six parks, a fire station, a library, and a public transit station. McMillin envisions a community that will appeal to first-time homebuyers and homeowners who are looking to downsize.

Currently, builders around the county are struggling to compete with discounted foreclosure homes, said Borre Winckel, president and chief executive officer of the Building Industry Association of San Diego. Although there are many uncertainties, within three years it’s likely that the local economy will have grown enough to create demand for new housing, said Kelly Cunningham, economist and senior fellow at the National University System Institute for Policy Research.

Confidence in Market

Some real estate analysts say the Millenia project could help lead the county’s housing industry out of the recession. “I look at the McMillin project as getting out in front of the curve,” said Leslie Appleton-Young, chief economist for the California Association of Realtors.

Galarneau said there are signs that the local housing market is growing stronger.

“The company has confidence in the market going forward,” he said. “The type of development we will see is no longer these large, sprawling single-family master plans. It is going to be more compact, higher-density infill development.”

He declined to discuss how much funding is needed for the project. “We normally have investors,” he said.

Chula Vista City Manager Jim Sandoval said the real estate market meltdown and the resulting spike in home foreclosures were painful for his city, but he foresees a turnaround. The Millenia project will bring badly needed jobs to the community as it provides affordable housing.

“We are looking at the Millenia project as not only providing a more urban lifestyle but it has 3.5 million square feet of space for retail and office,” he said. “The project is very important to our local economy.”

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