PGP, Rreef Plan 500,000 SF

ONTARIO, CA-Lake Forest-based PGP Partners Inc. and Rreef have formed a joint venture to develop a 500,000-sf class A office project called Ontario Airport Towers. The project will occupy a 28-acre parcel of vacant land between Turner and Archibald avenues south of the 10 freeway that the JV purchased in April. The developers have named the CB Richard Ellis team of Natalie Bazarevitsch, Taylor Ing, David Waggoner and Michael Day to market the project. The PGP-Rreef venture expects to break ground on the first phase in the first quarter of 2006, which will include two buildings totaling 250,000 sf. Ontario Airport Towers will be built in two phases, each with multiple mid-rise, steel frame buildings, as well as a retail/restaurant component designed to serve tenants of the buildings. In addition, the project will include a green space celebrating some of the City of Ontario’s history, as well as what the developers describe as “high-end decor and amenities throughout the project.” The first phase is expected to be complete in the fourth quarter of 2006. The developers cite the growth and 10% vacancy rate of the greater Ontario office market, which has been one of the best performing office markets in the country in recent years. JR Wetzel, managing partner of PGP, calls the Ontario market “ripe for a development of this size and scope, given the growing population and changing demographics of the region.” Ashley Powell, director of development for Rreef, points out that an influx of white collar tenants in the Inland Empire has created a demand for class A office space “that didn’t exist even a couple of years ago.” Bazarevitsch adds that population growth in the area is driving further demands from employees to require their employers to establish locations in the Inland Empire. “As a result, we are seeing average leases of 11,000 sf where only a couple years ago the average office lease was about 3,000 sf from local, regional and national firms,” she says. Wetzel tells GlobeSt.com that the JV partners haven’t decided specifically if the project will be a long-term hold or a shorter hold. “We’re going to develop this for lease and, when we complete it, we will look at the market and decide then,” Wetzel says. “We might sell it relatively quickly after it has been completed, or it might end up being a five- to seven- year hold, but it’s probably not going to be anything over 10 years.” PGP Partners, founded in 2000, leases and manages approximately one million sf of industrial and office space for CalWest, a joint venture between Rreef Funds and CalPers. PGP, which develops primarily in Southern California, also buys existing office and industrial properties that are “usually something that needs some type of work or a turnaround before we return it to the market,” according to Wetzel. He says that although PGP’s focus is on Southern California, it has acquired some assets in Northern California and is looking at Phoenix and Las Vegas.