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Upon the closure of the El Toro Air Field in Orange County in 1999, the existing landing strips were turned into the nations largest RV storage lot, with 2500 RV's parked on the runways. A sorely needed commodity in the Orange County area, since the high cost of land made it unfeasible to allocate 2 million dollar an acre land for the storage of RV's. In 2005 Lennar Corp purchased the closed El Toro Marine Air Base for 650 million, with the idea to develop 10,000 homes and 2 million sq ft of commercial / industrial property.
In 2009, the idea was put on hold during the economic down turn. The City of Irvine received about 200 million from the developer to partially fund the Great Park Project. Governor Brown, again due to the economic downturn,
In 2012, it seemed the economic recovery was under way, and Lennar and Five Point Communities, a sub set of Lennar Corp, renewed their plans and pushed forward with development.
Early in November, 2013 All Star Services, the operator of leased land held by the City of Irvine and Lennar Corp / Five Point Communities,
On November 27th, 2013, the City of Irvine gave Lennar Corp and Five Point Communities approval to build an additional 4600 homes in exchange for Lennar to complete the Great Park project also located on the runways directly in the path of the 2500 stored RV's. This presents a potentially great problem for all Southern California RV owners.
All Star Services contractually had an obligation to give 30 days notice, which they did, not leaving the City of Irvine much chance to react. There are few people willing to take on such a huge monthly debt with the possibility of just months left before the land owners have to relocate all the RVs. They are trying to move the contact to another company, partially owned by All Star Services, with a reduction in rents of $70K per year, along with a 120 days notice to vacate with tiered rent reductions during the notice period.
The 2500 RV's are all parked directly in the path of the Great Park Project development. At best, the life of the RV storage is reported to be measured in months,
The revenue per acre from El Toro RV Storage is about $2,450 ($147,000 divided by 60 acres). The land value by anyone's estimation is about 2 million per acre. So, on a total investment of $120,000,000 (60 acres times $2,000,000), the projected return on investment is $1,764,000 or 1.47% annually. That is a terrible return on investment by anyone's measure. Any responsible company will recognize the low return on investment, and utilize the land to its highest and best use.
Obviously, all of this will result in
First off, the cost for storage of RV's will increase dramatically by this summer if the RV's are asked to relocate. That is a given. There is little available storage in the Orange County area due mainly to the high cost of land. The era of inexpensive outdoor storage in Orange County is over.
There may be a huge exodus of RV owners seeking another storage solution. This in itself will create a massive problem, as even in the outlying areas, there is very little storage available. In talking to owners of RV storage facilities in the Riverside area, they are preparing for this by way of increasing prices. It is a natural occurrence since limited supply and increased demand always means higher costs.
When I built Eucalyptus at Beaumont, I knew this was going to happen. I had been watching the sale of El Toro to Lennar, and felt this was going to be a great opportunity. What I didn't know, (no one else did either), was the impending disaster of the 2009 economy crashing. All of the plans for El Toro were put on hold. Everything stopped.
Fast forward to 2013, it seems the economy is mending itself, despite our administration efforts that appeared to be headed towards self destruction. Real Estate is once again selling, Banks are lending, and people are buying RV's and other consumer discretionary items once again. We are all feeling pretty good.
Here at Eucalyptus at Beaumont, we only have 12 units left. Five were sold last weekend. People with vision are buying their storage to head off the forthcoming increase storage costs. Both immediate increases, and future increases. My feeling has always been, "Rentals return nothing". " I have never known anyone to get rich by renting".
The math is easy. Own your enclosed storage unit for as little as $271 per month. Your costs are controlled. In five years, you could enjoy significant appreciation. Can you say the same for rentals?
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