A 33-home project in some parts of Silicon Valley often doesn’t even warrant a news story. But in Los Gatos, among the Bay Area’s most sought-after — and least active — residential development markets, pretty much any new project is significant.
That’s why my heart skipped a beat when I learned late last week that Taylor Morrison was the new owner of a 3.3-acre development site that’s seen much of the town approval work already taken care of. In Los Gatos, that’s a very big deal.
The property in question, at 375 Knowles Ave., was actually owned by Santa Clara County and deemed “surplus” a few years ago. In an effort to offload unnecessary holdings — and make some money — the county solicited offers for it.
It ended up going into contract not with Taylor Morrison, but KT Urban, the Cupertino-based development firm run by brothers Mark and Ken Tersini. (I wrote about another KT deal today, involving the Oaks shopping center in Cupertino.)
KT wanted to build residential on the site, which is located just behind the Vasona Station retail center on Winchester Boulevard. Only problem: It wasn’t zoned for housing.
In the end, the town council last fall agreed with KT that the land made sense for residential, and approved a zoning change after the developer agreed to reduce the height of some of the units that face an existing residential community.
KT closed on the property from the county, paying $10.75 million, or roughly $325,000 per unit. It then immediately sold the property to Taylor Morrison for $15.6 million, or $473,000 per unit. (I’m told KT will remain involved going forward in some capacity. Mark Tersini declined to comment.)
So what’s going to get built? The homes will all be single-family detached (a product type that is exceedingly rare these days given the dearth of available land) and range from 2,000 square feet to 2,200 square feet, with three and four bedrooms. Pricing hasn’t been set, but a company representative tells me that they hope to be open for sales in late 2016.
“Los Gatos is one of the most desirable enclaves in the entire Bay Area, which is why Taylor Morrison has long had an interest in building homes there,” Veronica Roberson, Taylor Morrison’s vice president of sales and marketing for the Bay Area, said in a statement. “Several years of design efforts and coordination with the town have culminated in a rare opportunity for us to build a charming, boutique community that fits in well with the surrounding neighborhood. We are excited to be involved in this new venture in Los Gatos, and look forward to introducing the town to Taylor Morrison.”
This is not the only project recently snapped up by a major homebuilder in Los Gatos.
In August, SummerHill Homes acquired a 10-acre site at 100 Prospect Ave. where it can build 17 very high-end homes (starting price: $3.5 million). Like the Taylor Morrison purchase, SummerHill’s was a unique opportunity: It bought it from the Sisters of the Holy Names.
Scottsdale-based Taylor Morrison has been among the most active homebuilders in the region during this economic cycle. First American Title Co. ranks it No. 2 on its Top 20 Builders list for the first half of 2014 in the Bay Area and San Joaquin counties. Taylor Morrison closed 191 homes in the first six months, second only to D.R. Horton at 197.
The company has four actively selling communities in Santa Clara County: Palomar in Campbell; Madrone Plaza in Morgan Hill; Villas at Mabury Park in San Jose; and Hamilton Court in San Jose.
It is finishing up sales at Willow in Sunnyvale, Torreon in Morgan Hill and Avenue in Milpitas.
In San Mateo County, it is closing out Verona Ridge in San Mateo.