The distinctive, pyramid-esque Chet Holifield Federal Building in Laguna Niguel, nicknamed the Ziggurat, has been on the auction block for the last month, but it failed to draw a single bid by Wednesday’s 9 a.m. deadline, April 12.
U.S. General Services Administration officials will now try to determine why the building, which the federal government has decided is surplus property, didn’t sell and what the next steps are, a spokesman said, adding the starting bid of $70 million was suggested because “that was what the market dictated.”
Though there were no actual bids, GSA officials did take several registered bidders on tours of the property, said spokesperson Christi Chidester Votisek. Now, GSA will re-evaluate its sales strategy and determine how and when the property will be offered for competitive public sale.
Updates for future reoffering will be posted.
The building near Alicia Parkway has been a landmark in South Orange County for half a century. It was designed by William Pereira, who is known for the Transamerica Pyramid in San Francisco and the Los Angeles International Airport.
For decades, the building — named in 1978 after the longtime congressman from California — housed thousands of federal employees from up to 12 agencies, including about 2,000 from the U.S. Citizenship and Immigration Services. For the past several years, it has only been about half full.
Local realtor Antho Zueck, who sells homes in two neighborhoods surrounding the building — and grew up a mile from it himself — made a video of the Ziggurat after the public auction was announced.
“It’s always been a subject of interest for me,” said Zueck. “The more research I did, the more I loved the building. I like how it has a connection through the architect to so many other iconic buildings throughout California.”
Zueck, a former Montessori teacher, said he got some interest from his video with prospects actually calling about it, but nobody put down a deposit, he said.
On Wednesday, he was “moderately surprised” to hear there were no bids on it.
“It’s such an attractive property, and the pricing was pretty good,” Zueck said. “But there are upkeep costs to renovate the building and bring it up to municipal code. And, because it’s a historic property, they’ll have to preserve it.”
He’ll watch to see what happens and if the federal government changes the price or terms of the property sale — such as if the government still partially remains in the property.
“Price isn’t everything; sometimes it comes down to the terms,” he said. That’s likely what happened here.”
As a resident of Laguna Niguel, Zueck said he shares the sentiment that the building should become something useful for residents of South Orange County, noting discussions about converting the parking lot into a community garden.
In 2016, Ryan Harman, senior vice president at Lee & Associates, sold the nearby Laguna Design Center. At the time, he said, his client had a lot of interest from developers who wanted to put up mid-rise residential dwellings. But, given today’s commercial real estate climate, he said he wasn’t too surprised that the public auction didn’t get any bids.
“The auction platform is a problem,” Harman said. “The rise in interest rates has affected the developer’s ability to get financing, now double of what it was. It makes underwriting more challenging. If there is a historical designation and the federal government wants to do a lease-back, the deal is not clean; you don’t just pay $70 million and do what you want.”
“There’s a lot of risks associated with that deal,” he said.
The site in general has been on people’s radars for years, Harman said, well before the public auction. But if someone did buy the property, it could take years to get entitlements done and get through city regulations, Harman said. Meanwhile, it would be difficult for an investor to make money on the empty property and surrounding land, he said.
“For me to lease that as regular office space, I don’t know that there is a lot of demand for that old-school building,” Harman said. “I would reassess the property as a seller.”
Laguna Niguel City Manager Tammy Letourneau said she has not heard from the GSA about what its plans may be for the building or if it will put it back on the market.
But city zoning, she said, can change depending on the project. As an example, she pointed to the council’s approval of a mixed-use and residential project that includes a state-of-the-art library planned near the Civic Center.
“We are excited to work with any future developer,” she said, adding that the entire property is very important to the city. “Nothing is set in stone.”
The Ziggurat building was among a dozen buildings identified in 2021 by federal officials for sale under the Federal Asset Sale and Transfer Act. Under the FASTA legislation, proceeds from property sales will be used to consolidate further and sell off excess federal properties, officials said.
Another federal building on about 17 acres in Silicon Valley’s Menlo Park with a suggested price tag of $120 million also went without any bids.
The Ziggurat is near several strip shopping malls as well as the Aliso & Wood Canyons Wilderness Park.
With the property’s size and location, it was advertised by the GSA as offering “a unique development opportunity as one of the largest land parcels available in the market within highly desired South Orange County” and officials highlighted its “unparalleled flexibility and growth potential with a unique location, size, view amenities, and re-zoning potential.”
This story has been updated.
