Perhaps nowhere is the real estate recovery more apparent than in the Builders category. The cranes did indeed return in 1997, and awards were handed out in three categories: largest office project, largest industrial project and most active developer.
In addition, an award was given for the largest investor among L.A. County-based real estate companies. The winner was Beverly Hills-based Arden Realty Inc.
Top Office Project
Winner: PacTen Partners and Morgan Stanley Real Estate Fund II
Glendale Plaza
Runners Up:
M David Paul Development LLC
Burbank Media Studios North
Dorn Platz
400 N. Brand Blvd.
The long high-rise construction drought ended in 1997 when PacTen Partners LLC broke ground last August on its 24-story Glendale Plaza, which turned out to be the year’s biggest office project at 520,000 square feet.
The tower, which will offer 550,00 square feet of office space and is surrounded by a parking structure and a series of landscaped courtyards, is costing “in the neighborhood of $100 million” to develop, according to Nyal Leslie, chief executive and founding partner of PacTen.
The Glendale Plaza, which PacTen is developing in partnership with Morgan Stanley Real Estate Fund II LLP, is expected to be completed in March 1999. It is the first speculative office building to be developed in the city of Los Angeles since the early ’90s. Leslie said his company is in serious discussions with tenants for 25 percent of the building.
“We’ve been around long enough to see the trends, and all the market indicators showed that the Tri-Cities area was the best place to build a new office building in L.A.,” Leslie said. “We believe that the level of interest in the building will really pick up as tenants start to project their space needs for next year.”
PacTen is already moving ahead, looking to develop office buildings in Valencia and Orange County. The project in Valencia is in the contract stage.
Leslie started PacTen with partners Pete Hillman and Dennis Fitzpatrick in 1996, after knowing them professionally for about 25 years. Leslie previously was president of development company Metropolitan Structures West Inc. Hillman was a founding partner at real estate brokerage firm Grainger Co., and Fitzpatrick was president and chief executive of Beverly Hills Savings.
“(Hillman, Fitzpatrick) and I realized that we had a common vision,” Leslie said. “We put new development as a centerpiece of our business plan, and our foresight has been borne out.”
Leslie said he and his associates are not concerned about a spate of over-development that would drive down the office market.
“I’ve seen a lot of developments proposed, but very few actually have started,” he said. “The capital markets are much more cautious today than they were last time around.”
And where did the company name come from? All three partners played college basketball in the Pacific 10 conference.
Sara Fisher
Top Industrial Project
Winner: Fremont Associates
Harbor Gateway Commerce Center
Prudential Real Estate
Mid-Counties Distribution Center
The O’Donnell Group
The O’Donnell Group Industrial Distribution Center
The year’s largest industrial project got underway in the closing days of 1997. Torrance-based Fremont Associates Inc. began developing the 1.25 million-square-foot first phase of the Harbor Gateway Commerce Center, which is being built on a 67.5-acre site formerly occupied by a Lockheed Martin Corp. facility near the Harbor Gateway area of Los Angeles.
“This type of development has been virtually shut down in the South Bay since 1991,” said Eric Knirk, Fremont’s director of marketing. “Not only is this the largest, but it is one of the area’s first state-of-the-art developments.”
Phase One, which consists of three buildings totaling 1.25 million square feet, is expected to be completed in August. Reflecting Fremont’s faith in the recovering market, it is building the project on speculation. However, Knirk said that the company already has tenants expressing interest in over 50 percent of the development, attracted by the project’s location between the port and L.A. International Airport.
Fremont also plans to launch a second phase in building the Harbor Gateway, but has not yet finalized a timeline. That phase will develop 300,000 square feet of building space on 14 acres. The buildings in this area may be designed to accommodate corporate headquarters.
Most Active Developer
Winner: Fremont Properties
Torrance
Runners Up:
The Voit Cos.
Woodland Hills
J.H. Snyder Co.
Miracle Mile
The massive Harbor Gateway project also powered Fremont to another award most active developer in Los Angeles County, based on square footage that broke ground in 1997.
In addition to Harbor Gateway, Fremont broke ground on two industrial projects in La Mirada a 229,000-square-foot project at 14051 Rosecrans Blvd., and another 108,000-square-foot project nearby at 13939 Rosecrans.
The company also has a 284,00-square-foot industrial project under construction in Santa Fe Springs.
Not a bad showing for company founders Stephen G. Hoy and F. Michael Krotz, who parlayed their long-term friendship into a business partnership 11 years ago.
Hoy and Krotz met while working at CB Commercial Real Estate Group Inc. Both men originally worked in the Los Angeles office, but Hoy moved to open CB’s Anaheim office in the mid-’80s.
Since Fremont’s creation, it has targeted L.A. and Orange counties for several large-scale projects. It has built the 500,000-square-foot Carmenita Distribution Center in Santa Fe Springs and the 1.2 million-square-foot Rancho Business Center in Downey.
In addition to the Harbor Gateway project, Fremont is pursuing projects for a 10-acre piece of land in Santa Fe Springs and a 15-acre parcel in Los Angeles.
“The company didn’t start out small and grow into large-scale projects,” Knirk said. “We started out with big transactions. Carmenita was our first project.”
Sara Fisher
