GSA Relists Iconic 90-Acre Ziggurat Building in Laguna Niguel: Opportunities and Challenges Ahead

The federal government has enlisted CBRE as the exclusive advisor to market the unique Chet Holifield Federal Building, also known as the Ziggurat, located in Laguna Niguel, South Orange County. Spanning approximately 90 acres, this distinguished property is coming back to market with guided tours set to begin on March 4. This is the third attempt to sell the Ziggurat within the past three years, and it brings with it a history of bidding wars and legal challenges, highlighting the complexities surrounding federal real estate transactions.

A Storied History of the Ziggurat

Originally designed by acclaimed architect William Pereira and completed between 1968 and 1971, the Ziggurat serves not only as an architectural marvel but also as a symbol of Southern California’s commercial landscape. Originally intended for North American Aviation, which later became part of Rockwell International, the building has housed various federal agencies, including U.S. Citizenship and Immigration Services and the IRS. Now, as federal agencies transition out, the property faces a new chapter that could transform it into mixed-use developments or residential spaces, pending the necessary zoning changes.

Recent Sales Challenges

The property has had a tumultuous history in the market. Initially listed in early 2023 with a starting bid of $70 million, the first auction garnered zero interest, prompting the General Services Administration (GSA) to relist the property in mid-2024 without the historic preservation clause. This time, the response was overwhelming, resulting in 157 competitive bids and a final offer of $177 million from Hilco Development Services. However, the sale quickly unraveled due to legal disputes involving allegations of collusion, culminating in a termination of the sale by the GSA.

Following this, the GSA awarded the property to Hoag Memorial Hospital for $159 million, only to cancel that deal as well, citing irregularities in the bidding process. This complex legal saga underscores the challenges of conducting federal property sales and the impact of potential bidding conflicts.

Market Context and Future Value

With the current listing, CBRE has shifted away from an online auction format in favor of a best-offer strategy. The property is strategically located at the intersection of Alicia Parkway and La Paz Road, a mere four miles from the Pacific coast, making it one of the largest developable land parcels available in South Orange County. As surrounding areas host significant retailers like Costco and Walmart, the Ziggurat’s location positions it favorably for prospective buyers.

The GSA highlights that approximately $300 million in repairs and upgrades will be necessary to bring the Ziggurat up to modern standards. This substantial capital requirement raises questions about the feasibility and potential return on investment for investors, especially as it relates to developing the property into residential or mixed-use spaces.

Improvement in Orange County’s Office Market

Despite the specific challenges surrounding the Ziggurat, the broader office market in Orange County is showing signs of improvement. Reports indicate stable average asking rents and a positive net absorption rate, suggesting a healthy demand for office space. However, the Ziggurat’s future is likely to hinge more on land value than current office trends. Previous bids indicate that the land could fetch up to $1.9 million per acre, notably lower than comparable properties that are trading closer to $4.6 million per acre. This discrepancy may attract interest from developers considering a change in property use.

Redevelopment Potential Amid Market Dynamics

The decision to demolish the existing structure in favor of new construction is a key consideration for potential buyers. Zoning changes from the City of Laguna Niguel will be crucial for any redevelopment plans, and the city has not yet confirmed its willingness to create new housing options on the site. Given the historically thin construction pipeline in Orange County since 2008 and the trend of converting underperforming office spaces to residential or industrial uses, the market dynamics may favor a transformative approach for the Ziggurat.

Conclusion: A New Chapter Awaits

As tours commence for the Ziggurat, the listing represents what many consider a generational investment opportunity. The extensive history, coupled with the potential for future development, will likely attract a new wave of bidders interested in transforming this iconic property. The combination of a large, developable footprint in land-constrained South Orange County and a clearer legal landscape could very well make the third time a charm for this storied federal building. Whether the upcoming sale transitions smoothly, engaging forward-thinking investors, remains to be seen.