The federal government is in the process of auctioning off a famous office building in Laguna Niguel, California. The Chet Holyfield Federal Building, also known as the Ziggurat, was designed by renowned architect William Pereira. It’s an interesting building with a Mesopotamian feel, but to me it doesn’t seem particularly successful.
of OC Registration There have been a series of news articles about the auction, with frenzied bidding resulting in a price far above expectations, presumably because the property includes not only an office building but also 89 acres of land in one of California’s most desirable communities, just a few miles from Laguna Beach. The articles include the following graph:
Keep in mind that the original asking price was only $70 million, and one of the reasons people were surprised is that this was GSA’s second attempt to sell the building.
By the way, this is the second auction for the 53-year-old ziggurat. In the first auction, the buyer was obliged to preserve the ziggurat’s structure, There were no bids.The long-running response to the latest auction was that the lack of development restrictions meant buyers The building, designed by the late renowned architect William Pereira, will likely be demolished.
At the time the building needed to be saved, not a single developer was willing to bid even $70 million for the highly sought-after property; once that restriction was lifted, at least two developers were willing to pay more than $150 million (the auction is still ongoing).
From this information, we can infer that the economic cost of this particular regulatory barrier was at least $84 million, the difference between the current auction price and the lowest bid in the previous auction.
But even that figure underestimates the cost of regulating the property. The new owners would be allowed to remove the eyesore, but would face a complex web of regulations and lawsuits from all kinds of interest groups wanting to minimize development. This is California, after all.
I’m not sure, but I think developers would be willing to pay hundreds of millions of dollars for this land if they were given complete freedom to develop it, and I also think the resulting development would be very impressive — the kind of grand projects that the U.S. used to be good at, but that somehow exceeded our capabilities.
