Toll Roads Pave Way for South County Development

South Orange County is undergoing an unprecedented housing and business boom fueled in large part by the controversial network of toll roads now being built.

New housing tracts are rising up in picturesque hills and valleys, as bulldozers and earthmovers break ground for office buildings and hotels and signs advertise new retail space for lease.

The highways--California’s first public toll roads--are tugging development toward them like magnets, helping transform the remote bedroom communities of South County into a hub of activity.

An astonishing 102 residential projects, with plans for 11,642 new homes, were underway in South County in the second quarter, according to data compiled by the Irvine consulting firm Meyers Group.

That’s not even counting the huge Talega community planned in San Clemente, which is slated to include 5,000 homes, offices, shops and two golf courses.

The toll roads also are greasing the wheels of economic growth, experts say, by better connecting existing businesses and shopping centers in the more established mid-county region with the young professionals who want to live in South County.

They say the growth is spurred in part by the area’s improved access.

“You can’t use it if you can’t get to it,” said Louis Masotti, director of UC Irvine’s real estate management program.

Southern California’s highway system ushered in the region’s sprawl in the 1950s and ‘60s, paving the way for new communities and industries. Orange County owes its tremendous growth in large measure to the Santa Ana and San Diego freeways, which helped transform the area’s citrus groves and bean fields into suburbs and business parks.

Highways, in transportation jargon, are “facilitators” of growth. They don’t, by themselves, stimulate new development--if the region were in a recession, building new roads wouldn’t help. But as the economy improves, they are making expansion possible.

“It’s an added bonus, like the icing on the cake” of the county’s increasing prosperity, said Esmael Adibi, director of Chapman University’s Anderson Center for Economic Research.

Nearly a year after its opening, the San Joaquin Transportation Corridor continues to spark controversy. Opposed by environmentalists, the 15-mile toll road stretching from Newport Beach to Interstate 5 in San Juan Capistrano is now drawing criticism because of lower-than-expected ridership.

But the San Joaquin tollway--as well as the partially completed Foothill Transportation Corridor and the Eastern Corridor, due to open in about a year--is attracting businesses anyway.

Fluor Corp., for example, could have chosen just about anywhere to build new headquarters for the nearly 2,000 workers at its current offices in Irvine.

The engineering and construction giant picked a new development alongside the San Joaquin Hills toll road in Aliso Viejo for its planned 1999 relocation.

“The toll road was definitely a large influential factor in our decision to choose [Aliso Viejo],” said company spokeswoman Lisa Boyette.

At a new development of 1,200 homes in Aliso Viejo, “two things have been helping us sell homes--the improvement of the roadways and the good school system,” said Mike Rafferty, president of developer Koll Communities’ Hearthside Homes division.

“We see people coming from Huntington Beach, Newport Beach, Costa Mesa, that normally wouldn’t have been looking down in this area,” he said.

Parker Properties’ big commercial development alongside the San Joaquin toll road in Aliso Viejo owes its existence to the new highway. The Summit will eventually include 1.7 million square feet of office space in 14 buildings, a health center, day-care facility and restaurants.

The first two buildings are under construction, and they’ve already lured two major tenants--RemedyTemp, a fast-growing temporary services agency currently based in San Juan Capistrano, and Safeguard Health Plans, a managed care company in Anaheim.

Parker Properties Chairman John B. Parker began planning the project a decade ago, in anticipation of the roadway being built. “We believe the Summit will become the office hub for south Orange County,” he said.

“Without the tollway, that would never happen.”

To be sure, the economic awakening of South County can be traced to many factors, not the least of which is the county’s strong business climate. Development typically occurs when unemployment is low, companies are growing and people are feeling upbeat about the economy.

South County has long been considered ripe for growth compared with the older and more congested north. Developers for years have had their sights set on the area, with its large tracks of raw and relatively affordable land, but the recession of the early 1990s put a halt to most projects.

Now that the economy is resurging, they’ve been descending on the region.

However, many have concerns about how few residents have been using the toll roads.

Although ridership has been gradually increasing, the San Joaquin tollway averaged just 53,304 vehicles a day in August, well below the initial forecast of 94,500 a day by last April.

Critics have blamed the low ridership on the price--it costs $2 each way, regardless of the time of day. Many observers believe that the simultaneous widening of the El Toro Y freeway interchange, and Californians’ resistance to paying tolls, have also deterred drivers.

“It’s absolutely great, but atrociously priced,” said Kim Meyer, who works in accounts payable at Monitoring Automation Systems, a security software developer in Irvine. Even though the toll road cuts the 30-minute commute from her Laguna Niguel home in half, she takes it only on days when she’s especially pressed for time.

Paul Glaab, a spokesman for the Transportation Corridor Agencies, the quasi-public agency that operates the trio of new toll roads, said that new pricing structures and other ways to boost ridership are being studied.

Nonetheless, throughout the business community, the prevailing belief is that the toll roads are adding momentum to the accelerating economy.

Since the San Joaquin corridor opened last November, “my gut tells me that the gap is closing” between housing prices in tony Newport Beach and the South County coastal communities, said Jeff Meyers, principal of the Meyers Group.

In Laguna Niguel and Mission Viejo, the value of all types of projects under construction during the first eight months of the year surpassed the total for all of 1996, according to a new report by the county planning department. Officials said the upswing is partly due to traffic improvements.

In Aliso Viejo, several retailers are adding outlets near the San Joaquin highway, including Barnes and Noble, Staples and Petsmart. Edwards Cinemas plans a 20-screen theater complex next to the toll road.

These businesses are no doubt attracted to Aliso Viejo simply because the 10-year-old community is maturing, said Wendy Wetzel, a spokeswoman for the developer, the Mission Viejo Co.

“But it’s also retailers knowing they would have enough visibility from the toll road,” she said.

Some merchants at South Coast Plaza in Costa Mesa and Fashion Island in Newport Beach report increased traffic from South County residents since the San Joaquin road opened.

“The corridor has been fabulous for Fashion Island,” said Nina Robinson, director of sales and marketing. The mall’s Haagen-Dazs ice cream shop, for instance, reports that 75 to 100 coupons given to toll road users are being redeemed each day.

At South Coast Plaza, the Trattoria Spiga restaurant attributes a 6% increase in sales to new patrons taking the toll road to the mall.

Retailers at the other end of the San Joaquin toll road say they’re also benefiting. Chris Wenham, director of operations at Decorative Arts Villa, an antiques and home decorating business in San Juan Capistrano, said the city’s upscale merchants have been getting more customers from the Newport area.

“Before, it was a real expedition” for clients from mid-county to shop and dine farther south, he said. Now, “it’s a hassle-free day.”

Byron Roth, president of the Irvine investment firm Cruttenden Roth Inc., said the San Joaquin toll road has made it easier for his firm to do business with the biomedical entrepreneurs springing up in South County and northern San Diego County. The improved access, he believes, will help the region in its effort to emulate Silicon Valley’s high-tech success.

Meanwhile, construction continues on the Foothill and Eastern corridors. Seven miles of the Foothill roadway are open; by 2003 it will stretch 30 miles from Orange County’s inland foothills to Interstate 5 near the San Diego County border.

While the foothill area of South County has given rise in the past several years to bucolic, equestrian-oriented communities, observers say the toll road is now helping usher in commercial and industrial development.

Among the companies now based in Foothill Ranch, near the corridor, are trendy eye wear maker Oakley Inc., which moved from Irvine last April. Bal Seal Engineering Co., a fast-growing maker of devices that help regulate everything from heart pacemakers to semiconductor manufacturing, plans to move its 200 employees from Santa Ana to a new Foothill Ranch plant in March. A dozen industrial buildings are also under construction in the town.

In Rancho Santa Margarita, six industrial projects are underway, and about two-thirds of the land set aside for a 350-acre industrial park has been sold, with developers attributing the strong demand in part to the Foothill corridor.

New hotels are also slated to open soon in Foothill Ranch and Lake Forest.

Don Vodra, chief operating officer of Rancho Mission Viejo, said the developer’s new Las Flores and Ladera communities will also benefit from the Foothill tollway by easing residents’ commutes to the employment centers of central Orange County.

“The better the roads, the easier it is to market it,” he said.

When it opens in October 1998, the Eastern Transportation Corridor will be a 24-mile highway starting at the Riverside Freeway near the Riverside County border, and later splitting into two legs ending at Jamboree Road in Irvine and Laguna Canyon Road into Laguna Beach.

Although much of the adjacent land isn’t suitable for development, it will ease commutes from the Inland Empire to Orange County’s commercial districts, observers say.

As ridership on the new toll roads grows--which transportation experts believe is inevitable--other economic benefits are expected to surface: Expanding businesses will draw employees from farther distances; shorter commuting times will boost productivity; the shipment of goods will be quicker and arrival times more predictable--a critical factor in industry’s shift to just-in-time manufacturing.

“In the business world, time is money,” said Glaab.

Some experts argue that toll roads tend to shift development from one area to the other.

“These highways, to the extent that they create economic development, probably do so at the expense of other areas,” said Marlon Boarnet, an assistant professor of urban and regional planning at UCI.

It’s an issue that will probably receive greater attention in coming years, said David Forkenbrock, director of the Public Policy Center at the University of Iowa and a nationally recognized highway expert.

Though a case can be made that new highways improve business efficiency, it’s not clear if the gains are sustained over the long term, Forkenbrock said. Adding to capacity typically induces new traffic and in time, congestion returns and savings disappear.

“Someone once said that relieving congestion by building more roads is like curing obesity by buying a bigger belt,” he said.

Even so, it’s hard to dissuade the developers and other optimists who are betting that the region’s new toll roads will rev up business.

“I think the impact of the [toll way] system is just going to give Orange County, particularly south Orange County, a real rebirth,” said Parker, the commercial developer.

“We’ve been waiting for it for a long time.”

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Taking to Toll Roads

Much of Orange County’s new development--particularly the commercial ventures--is taking place near its toll roads. In South County, where the roads provide an alternative to often clogged interstates, the value of commercial building permits issued during the first six months of this year more than doubled the comparable total for last year. Major commercial and residential projects underway or scheduled for construction in the county:

1. Irvine Spectrum Entertainment Center expansion

Location: Irvine Spectrum

Size: Adding 250,000 square feet of retail and restaurant space

*

2. Spectrum Crossroads

Location: Irvine Spectrum

Major tenants: Sears Homelife, JCPenney

Size: 130,000 square feet

*

3. Aliso Viejo Town Center

Location: Aliso Viejo

Major tenants: Edwards Theaters, Petsmart, Staples, Barnes & Noble

Size: 300 acres; 260,000 square feet

*

4. Home Depot Center

Location: Laguna Hills

Major tenants: Home Depot, Stater Bros.

Size: More than 25 acres

*

5. Kaleidoscope

Location: Mission Viejo

Major tenants: Edwards Theaters, Bristol Farms, Sav-On, Staples

Size: 215,000 square feet

*

6. Summit

Location: Aliso Viejo

Tenants: RemedyTemp, Safeguard Health Plans

Size: 64 acres, 1.3 million square feet

*

7. Fluor Corp. headquarters

Location: Aliso Viejo

Size: 7 acres

*

8. Fluor Corp. Engineering Building

Location: Aliso Viejo

Size: 23 acres

*

9. Oakley Headquarters

Location: Foothill Ranch

Size: 418,000-square-foot office and manufacturing complex

*

10. Ladera

Location: East of Mission Viejo

Size: 4,000-acre site slated for planned community of about 8,000 homes, plus an additional 2,400 acres of commercial, recreational and open space

*

11. Las Flores

Location: Adjacent to O’Neill Regional Park

Size: 1,000-acre site slated for about 2,000 homes

*

12. Brookhollow Business Park

Location: Rancho Santa Margarita

Size: Office complex of more than 74,000 square feet

****

New nonresidential permit valuations through June, in thousands:

*--*

1996 1997 Dana Point $577.3 $165.4 Irvine $27,743.1 $55,332.7 Laguna Beach $216.7 $177.1 Laguna Hills $351.0 $1,166.3 Laguna Niguel $1,843.9 $4,394.7 Lake Forest $7,224.4 $22,002.5 Mission Viejo $2,419.3 $1,186.7 San Clemente $2,544.2 $395.4 San Juan Capistrano $973.2 $3,407.5 Total $43,893.1 $88,228.3

*--*

Note: Permit data does not include alterations and additions to existing structures.

In the Works

More than 100 new home developments and 52 commercial projects are underway in South County, with Aliso Viejo and Rancho Santa Margarita the scenes of much of the action. South County residential developments, and commercial projects of more than 10,000 square feet:

Residential

*--*

Projects Homes Aliso Viejo 21 2,628 Coto de Caza 10 809 Dana Point 2 397 Dove Canyon 3 170 Foothill Ranch 3 453 Laguna Niguel 7 646 La Flores Ranch 7 755 Mission Viejo 12 1,428 Rancho Santa Margarita 17 2,146 San Clemente 3 249 San Juan Capistrano 8 611 Trabuco Canyon 3 352 Wagon Wheel Canyon 6 998 Total 102 11,642

*--*

Commercial Offices

Projects

Irvine Spectrum: 6

San Clemente: 1

Aliso Viejo: 2

Industrial

Projects

Irvine Spectrum: 8

San Clemente: 1

Rancho Santa Margarita: 6

Lake Forest: 15

San Juan Capistrano: 1

Foothill Ranch: 12

Sources: CB Commercial Real Estate Group; Meyers Group; Construction Industry Research Board; Fluor Corp.; Irvine Co.; Parker Properties

Researched by JANICE L. JONES / Los Angeles Times

Orange County’s Toll Roads

* San Joaquin Hills Transportation Corridor (SR-73): Completed last November, the 15-mile road extends from Newport Beach near John Wayne Airport to Interstate 5 in San Juan Capistrano.

* Foothill Transportation Corridor (SR-241): Construction began in 1990, and a 7-mile portion is open. By 2003, it will span 30 miles from Orange County’s inland foothills to Interstate 5 near the San Diego County border.

* Eastern Transportation Corridor (SR-241 and SR-261): Started in 1995 and due to open in a year, this 24-mile stretch will start at the Riverside Freeway near the Riverside County line. It will split farther south, with one leg merging with Jamboree Road in Irvine and the other connecting with Laguna Canyon Road into Laguna Beach.