By JOYZELLE DAVIS
One of the largest industrial park developments ever undertaken in the San Gabriel Valley is preparing to break ground in the City of Industry.
The city’s redevelopment agency selected Newport Beach-based Koll Real Estate Group to develop the 1.3-million-square-foot industrial park, located near the Pomona (60) freeway off Grand Avenue. Koll plans to break ground in April on the 670,000-square-foot first phase of the project. The entire 14-building project is already entitled and should be complete by 2001, according to Keith Ross, senior vice president for development at Koll.
The $55 million project is coming on line at a time of historically low vacancy rates in the San Gabriel Valley market. The area posted a 6 percent vacancy rate for the fourth quarter of 1997, compared with 9 percent for the like period in 1996, according to Cushman & Wakefield Inc.
There are currently few opportunities for a company to purchase its own building in the City of Industry, and even fewer opportunities for new development, according to Jim Center, an industrial specialist with Grubb & Ellis Co.
“It’s the law of supply and demand, and the limited supply has pushed companies out to Ontario and Irwindale,” he said.
In the 112 million-square-foot San Gabriel Valley submarket, about 405,000 square feet of new buildings were completed last year, according to Cushman & Wakefield.
In the City of Industry, there’s almost no land left for new development outside of the redevelopment zone. Even Majestic Realty Co. has built out almost all of the 10 million square feet it owns in the city, Center said. Majestic does not sell any of its buildings once they are completed.
Koll plans to offer for sale all of its buildings, which range in size from 25,000 to 300,000 square feet. The company has already agreed to construct one build-to-suit project, and is in negotiations with about a dozen more companies interested in purchasing their own buildings, Ross said.
“Every company we’ve spoken with wants to own their own building,” he said.
The industrial park, called The Plantation, will recycle land that currently houses the remnants of an old mill. Koll gave the project its unusual name because molasses was once produced on the site, according to Ross. The design of the project incorporates a water tower, plantation equipment and landscaping into the design.
“We’re getting away from the area’s more traditional warehousing product large cubes with modest landscaping designed to accommodate truck maneuvering,” said John McDonald, a partner at Koll. Instead, the industrial park is targeted toward job-generating companies, such as high-tech and distribution.
The project is expected to generate more than 1,200 jobs and $25 million in annual revenues, according to Carl Burnett, executive director of the city’s redevelopment agency. This is the first project undertaken in the city’s 1,100-acre redevelopment zone in the northeast stretch of the city, which is bounded by railroad tracks and the cities of Diamond Bar and Walnut. The city has owned the land since 1978, although it has been used for farming during the past 20 years.
The city is in the process of devising its master plan for the second phase of its 1,100-acre site, which will probably involve more industrial buildings.
“We wanted this project to be the footprint for future development projects in the area,” Burnett said.
Koll was selected from a group of seven other developers, including Majestic and Trammell Crow Co., that were vying for the project. Koll was chosen in part because of its architectural design, which conceals the truck bays, Burnett said.
The first phase of The Plantation project should be complete by October then Koll will begin construction on the second phase.
Koll is also working on three other major projects in L.A. It is in the process of entitling a 30-acre office project near the Burbank Airport that it is building in partnership with Kilroy Realty Corp., and it is also working on securing building permits for the 80-acre Marina project at the Port of Los Angeles. The development company is also in the process of renovating a 50,000-square-foot office building in Century City.