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Tuesday, Sep 27, 2022
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Momentum Builds for Stalled Millenia Project

THE CORKY MCMILLIN COS.

CEO: Mark McMillin.

Revenue: Did not disclose.

No. of local employees: Did not disclose. However, in response to a San Diego Business Journal Book of Lists survey last year, a company official put McMillin’s local full-time employment at 151 as of Aug. 1.

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Investors: Did not disclose.

Headquarters: Point Loma, Naval Training Center.

Year founded: 1960.

Company description: Provides a range of real estate investment, land development and home building services.

The Corky McMillin Cos.’ Millenia project, a 3,000-home mixed-use project on 210 acres of land tucked up against the state Route 125 toll road in Chula Vista, has everything going for it. It’s green, it has affordable housing, it will prompt the creation of more open space than the planned construction, it’s designed to add jobs to the neighborhood and it’s fully entitled.

But it’s not under way yet and may not be for two or three more years.

“You plan in the bad times and build in the good times,” said Todd Galarneau, senior vice president for land development with The Corky McMillin Cos. “We are looking at the market and thinking about opportunities two or three years from now.”

Because of the size of the project, (just smaller than Old Town at 230 acres), construction is expected to take 20 years to complete in phases.

“It’s a challenging time to bring a project to market,” Galarneau said.

McMillin bought the land in Otay Ranch immediately south of the Otay Ranch Town Center, bordered by the state Route 125 toll road on the west, Birch Road to the north and Eastlake Parkway to the east, in 1998. The company pursued entitlements briefly at the time, then decided the market wasn’t ready. In 2004, as the real estate market heated up, they started working on it again and submitted an application for entitlements in 2006 that was approved.

“We were talking to office builders, retail, hotels and everyone wanted in,” Galarneau said. “It’s a good project in a good location and it will be a great development.”

A Turn for the Worse

But things changed quickly and for the worse. By the end of 2008 funding for projects like these — in fact for most projects — had dried up. Many developers sold off their projects at whatever state of development they were in, while others simply walked away from them.

McMillin shelved the fully entitled project, then looked at it again for different reasons. Funding was impossible to obtain, and there hadn’t been a worse time to sell new homes since the last time the piece of land was set aside.

McMillin considered selling Millenia to Stratford Land, a Dallas-based and privately held land investment company, and began meeting with them.

“We began talking with The Corky McMillin Companies as an investment partner in Millenia in the fall of 2010,” said Diane Belcher, Stratford Land’s director of investments for Arizona and Southern California.

As the two companies met, they took a liking to each other, Galarneau said.

“They’re a very sophisticated group of professionals,” he explained. “We started talking to them about buying the project and we looked across the table and realized we had complementary strengths.”

Investment on the Table

The two companies announced their plan to work together in February.

Stratford invested an undisclosed amount of money, said to be between $15 million and $50 million in the project which has been valued at $4 billion brought to market. The company, which has brokered more than $1.5 billion in land deals and raised more than $500 million in equity in its 28 years of land deals — mostly in the sunbelt — likes the project and isn’t looking for design changes.

“Millenia is located in the center of the successful and desirable Otay Ranch community in Chula Vista,” Belcher said. “We see this well-planned and forward-thinking project as an early beneficiary of a recovery in the national economy and regional real estate market.”

The partners still haven’t begun building on the graded grounds. But they’ve got a 20-year window on the entitlements, which include very detailed subdivision maps, and plans for streets, landscaping, sewers and drainage. The western eighth of the project is planned as a business district, with two other sectors set aside for mixed commercial use, about 3.5 million square feet of office, retail and community space. About 20 percent of the 3,000 homes are reserved as affordable housing and Galarneau hopes to see 10,000 jobs within the planned community.

“It’s a great plan,” Galarneau said. “It is very walkable, has a village center and every house is three minutes from a park. We have transit integral to the design.”

McMillin organized focus groups and designed for people under 30 and empty nesters — urban, walkable neighborhoods where people can find plenty to do in walking distance. The company conducted focus groups to figure out what people really want and discovered that the middle age group wants to stay home with their kids, while the other two age groups want friendly neighbors and coffee shops and gathering places.

“We went around the country and asked developers and planners what they would have done differently at their successful developments,” Galarneau said. “They told us make sure you have dog parks and you put in what you need to pick up after the dogs, and make sure you understand your market and build flexibility into the plans so you can respond to changes and to new opportunities.”

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