Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, bought a land parcel in California’s Silicon Valley for a $100 million project to develop townhomes and condominiums, according to the broker on the transaction.
The land, sold by Costa Mesa, California-based builder Warmington Residential, is a 12.5-acre (5.1-hectare) former industrial tract in Milpitas, about 6 miles (9.7 kilometers) north of San Jose. It is permitted for 98 townhouses and 108 condos, Hoffman Co., the broker, said in a statement today. Terms of the deal weren’t disclosed.
Toll Brothers, based in Horsham, Pennsylvania, has been competing to expand in Northern California, where land prices have soared as growth in the technology industry boosts employment and few parcels are available for construction. The median home price in Santa Clara County, where Milpitas is located, rose 19 percent in August from a year earlier to $647,478, according to DataQuick, a real estate data provider.
“It’s an epicenter in the Bay Area for future growth and demand,” Cameron Fowler, the Hoffman broker who represented Warmington, said in an interview.
James Boyd, president of the Western region for Toll Brothers, and Greg Mix, president of Warmington’s Northern California division, didn’t immediately reply to telephone messages seeking comment.
Northern California is among Toll Brothers’s best-performing markets, Chief Executive Officer Douglas Yearley Jr. said during an Aug. 21 earnings conference call. For land buying, “it’s tough out there,” he said.
“Both coasts continue to be the most difficult markets to find land,” Yearley said. “California is land constrained with a lot of players.”
The Milpitas project, called Traverse, is expected to start construction in mid-2014. The development is estimated to cost more than $100 million, based on the land and infrastructure improvements, Fowler said.
Toll Brothers controlled 47,200 lots as of July 31. The average price of the 3,787 homes sold during the quarter that ended that month was $651,000. The median price of new U.S. homes sold in July was $257,200, according to Commerce Department data.
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