Building Toward Conclusion
Just as the real estate market is heating up again, builder Costain Homes Inc. is expected to shut down its operations after selling its remaining homes in Thousand Oaks, industry sources say.
Executives at Costain and its parent company, British conglomerate Costain Group Plc in London, wouldn’t comment on their plans for the U.S. home-building unit. But several sources close to the company said the Newport Beach business would be closed.
Costain Group “just didn’t want it to grow,” said Ken Agid of Costa Mesa, a real estate consultant. “It wasn’t any reflection on its profitability or lack of profitability.”
Indeed, Costain Homes has been a consistent producer of houses since it was created in 1986. And it weathered some rough years during the long recession of the early 1990s.
Last year, it sold 152 homes in Southern California, ranking it 43rd among Southern California builders, according to the Meyers Group in Irvine.
Small builders like Costain are finding it harder to survive in the Southern California market, analysts say. Several have shut their doors or have been acquired by larger companies looking to capitalize on the experienced management at the small firms.
A greater scarcity of land has created a bidding war for some parcels, and analysts say that a British parent company focused on other core businesses could have made it difficult for Costain to react quickly with capital when land became available.
Costain pioneered the construction of move-up housing in the Inland Empire, putting homeowners in larger, more expensive homes. It became one of the few builders of such homes in that region.
The company also was one of the first home builders in the nation to name a woman, Julie Newcomb Hill, as its president and chief executive. Hill, 50, declined to comment on the company’s plans or whether she would organize a group to buy the assets of the company from Costain Group. “I’m not at liberty to say anything,” she said.
Those who know the high-profile businesswoman and philanthropist say it is unlikely she will stay out of real estate for long.
If the British firm is trying to sell the company, it would not be the first time. Costain Group put its home-building unit up for sale twice before, once in 1990 and again in 1994, when the engineering and construction giant was shedding its British home-building operations.
Hill and her husband, Costain Homes Chairman Peter Hill, tried to buy the subsidiary in 1994 with the help of builders Dale Dowers and Hadi Makarechian. That offer was rejected by Costain Group’s board, which decided to continue operating the company. Makarechian and Dowers later purchased home builder J.M. Peters Co. in Newport Beach.
Housing analysts say the company has been winding down its operations for several months. The company completed construction of communities in Murrieta, Temecula, Chino Hills and Victorville last year.
Its only active project is the Summit at Lang Ranch, a 111-home community in Thousand Oaks that opened last year. The company, which is selling the houses for $339,900 to $439,900, has 23 units remaining.
Costain hasn’t bought any more land, industry sources said. Indeed, it recently sold what analysts say is its last piece of undeveloped land, a 776-acre parcel in Mountain Cove near Corona, to developer Communities Southwest in Irvine.
Consultant Agid estimated that the home builder now has about two dozen employees.
Costain hasn’t developed any Orange County projects. After receiving a cash infusion from its parent in 1994, the company announced plans to acquire unused school sites in affluent areas in Orange and Los Angeles counties. It was scheduled to build 60 homes on a site in Fountain Valley. However, that deal fell through, school officials say.
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Costain Homes at a Glance
Headquarters: Newport Beach
President/CEO: Julie Newcomb Hill
Founded: 1986
Business: Home builder
Parent firm: Costain Group, a London-based conglomerate
1996 sales: 152 homes
Status: Private
Current Project
The Summit-Costain Lang Ranch
Location: Thousand Oaks
Opened: 1996
Total homes: 111
Number sold: 88
Price range: $339,900-$439,900
Concept: Single-family detached, three plans
Size: 2,400 to 3,331 square feet
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Completed Projects
Costain Homes has been active in San Bernardino, Riverside and Ventura counties. An attempt to enter the Orange County market in 1994 fell through. Completed projects include:
Riverside County
* Murrieta: Costain Classics
* Temecula: Vintage Hills, Costain Collection
* Rancho California: Costain Signet
San Bernardino County
* Chino: Costain Knolls at Gordon Ranch
* Victorville: The Seasons
Source: Market Profiles, Costain Homes, Times reports
Researched by JANICE L. JONES / Los Angeles Times
