Developed list of permitted and non-permitted uses (site zoned Commercial Corridor), as impacted by local and state restrictions and requirements.
Land
Newport Beach, CA
Vacant Land/off-site Parking Lot
Case Study Snapshot
Newport Beach, CA
Highest and best use analysis and development planning for a family-owned parcel targeting an 18-20% IRR.
Project
Vacant Land/off-site Parking Lot
Square Footage
22,000
Services
Investment Advisory, Development Advisory
01
The Ask
The client, a legacy restaurant-operator, wanted a comprehensive investment and development plan targeting an 18-20% IRR on a family-owned parcel of mostly vacant land.
02
Overview
The subject site was owned by a group of family members in trust. The family members had been in the restaurant business for 50 years, and operated a legacy restaurant on a separate site. The subject site, on the other hand, was being operated as an offsite parking lot that was not bringing much value to the owners.
As a result, the owners wanted to demolish the parking lot and redevelop the site, while targeting an 18-20% IRR and low-to-modest leverage. However, redevelopment of the site posed certain challenges. Zoning regulations imposed minimum parking requirements that considerably lowered building cover, and height restrictions limited upward expansion.
The site was also subject to the California Coastal Act, which added an additional layer of land use complexity. The uneven terrain and other site schematics also required extensive and careful site planning. The family members were ultimately looking for the perfect plan that would align with their legacy, vision, and the site logistics. Quasar stepped up to the challenge.
03
Our Solution
The Quasar team executed a detailed highest and best use analysis for the site. We produced an array of possible development paths, while generating robust feasibility studies for every single pathway. We ultimately crafted a development proposal with investment recommendations that would see true to the client's legacy and vision, and successfully tackled the challenges presented.
04
The Breakdown
Collected and analyzed data on micro- and macro-drivers including demographics, income, employment, supply and demand, and consumer trends and preferences.
Surveyed stakeholders and eliminated uses opposed by the community, such as a 24/7 convenience store.
Proposed underground parking to meet requirements and developed value-maximizing uses including a retail store, luxury food and beverage, mixed-use, multifamily, and compact retail.
Proposed and assisted in the development of a bi-phasal project delivery strategy and initial site design that replaced existing uses while adapting to site schematics.
Ran financials on all possible development pathways and site uses and conducted base, best, and worst-case scenario analyses.
Proposed the highest and best use and planned for the sustained viability of the venture through SWOT analysis and risk management.
Injected market-tested assumptions into underwriting to help ensure the success of the deal and the continuation of the client's legacy.
05
Final Recommendation
Based on a thorough and conservative review of construction cost/financials, completion timeline, cap rates, vacancies, and interest rates, economic drivers, and community sentiments, we proposed the development of a Luxury-Experience Restaurant.
Such a proposal not only took advantage of the prime location of the site and the prevailing trend towards experiential spending, and boasted an unlevered IRR of 20%, but most importantly, would uphold the client's legacy with dignity, for generations.