Signaling a renewed optimism about the future of Orange County's beleaguered home building business, the Irvine Co. has quietly re-established the residential marketing division it abolished just six months ago.
Rudy Svercek, formerly in charge of Irvine Co.'s Newport Coast sales efforts, has been rehired to oversee the department as vice president of sales and marketing--reportedly at a six-figure salary.
Svercek was laid off last summer when the giant land developer's marketing department was folded into other operations. He decided to return just days after accepting a similarly titled job with Newport Beach home builder J.M. Peters Co.
Svercek was not available for comment Thursday, but Irvine Co. spokesman Larry Thomas said Svercek's return suggests that company officials expect a burst of new home building activity on the horizon.
Among his duties, Svercek will oversee sales of Irvine Co. condominiums, single-family homes and lots for custom home construction. The company abandoned home building in the late 1980s to concentrate on planning and preparing its land for development by other builders. But it announced late last summer that it had retained California Pacific Homes in Newport Beach--owned by Irvine Co. Chairman Donald L. Bren.--as a contract builder to erect homes and condos on Irvine Co. land.
The contract or fee-building program enables the Irvine Co. to develop land it couldn't otherwise sell to builders during the recession.
Thomas said Cal Pacific is working eight residential projects on Irvine Co. land in Tustin, Newport Beach and the Westpark II section of the city of Irvine. In all, about 900 homes will reach the market in the next few years and will make California Pacific one of the county's largest builders. Some in the home-building industry speculate that this renewed marketing means that company officials intend to intensify construction on the Irvine Ranch, which encompasses about one-sixth of the county, or about 63,000 acres.
Thomas, however, said there are no plans to speed up development "except that as home builders see prospects improving they start gearing up."
Land sales to other builders have been lackluster for several years. Compounding the impact of the recession has been the so-called credit crunch caused by banks and thrifts withdrawing from real estate deals. But in a sign of new life in the market, the Irvine Co. recently has sold tracts in Newport Coast, Newport Ridge, Tustin Ranch and Westpark II.
Those deals came together under land transaction policies now common to most large landowners. The Irvine Co. no longer requires a builder to purchase all the land needed for, say, a 100-home tract. Instead, the company permits an option arrangement so the builder buys only the land needed for the first phase--perhaps two or three acres for up to 12 homes, four models and a sales office--and retains the right to continue purchasing land for each subsequent phase.
These deals relieve builders of the tremendous cost of financing the acquisition of land they won't build on for perhaps a year or more, while enabling landowners to move property they otherwise couldn't sell.
Among the builders doing deals with the Irvine Co. in recent months are Standard Pacific Corp. of Costa Mesa, A-M Pacific Greystone Homes of Newport Beach, Upland-based Lewis Homes, and Taylor Woodrow Homes in Newport Beach. The company also is negotiating deals with Kaufman & Broad Homes' South Coast division in Newport Beach, Pardee Construction Co. of Los Angeles and RecreAction Group of Cos. in Newport Beach.
In his new job, Svercek will be working with all the outside builders as well as with California Pacific to coordinate marketing efforts, Thomas said.
One of his first jobs also will be to launch sales of the company's newest custom lot project, Wishbone Hill, in its Newport Coast planned development.
"The Irvine Co. marketing job is probably the premier residential marketing job in the Western U.S.," said Kenneth Agid, an Irvine-based marketing consultant. "It involves high-profile properties at the top of the market, so when they went looking they likely went looking for someone they knew and trusted, and Svercek fit the bill."
Thomas said the decision to re-establish a separate marketing department was made in conjunction with the reassignment of Patrick Smith, senior vice president for residential properties, to head an expanded apartment development division.
The company's two remaining marketing people were assigned to Smith's residential division last year when the marketing department was abolished, Thomas said. "And when Smith was assigned to deal only with apartments, he took several people with him who had handled some of the marketing responsibilities, leaving us with a hole. We decided that things were looking up enough to justify a separate department again, and hired Rudy to head it."