SCOTTSDALE, AZ-Houston-based Hines has purchased a 17 1/2-acre site in north Scottsdale and plans to start construction on a the first phase of a 300,000-sf office project by yearend.

Known for its office projects, Hines bring a project out of the ground at the southwest corner of Bell Road and the Pima Freeway section of Loop 101. Based on market averages, the project’s development cost should exceed $40 million.

Hines’ Joseph Pitchford tells that the first phase is a 100,000-sf office building that will be fully leased to Regus Business Centers, one of the largest providers of executive office suites in the country. The United Kingdom-based company has leased space in no less than eight of Hines office projects in the US.

The other two buildings in the office campus will also be 100,000-sf structures tailored to single-tenant users. “We identified this as a good location for single-tenant buildings,” Pitchford says. “There are a lot of medium- and large-size companies that like the north Scottsdale area. There is a lot of demand for regional and corporate headquarters.”

Hines is eyeing a fourth-quarter start for the Regus building, Pitchford says, with move-in scheduled for sometime around the end of 2002. Houston-based Kendall-Heaton designed the site’s master plan. General contractors are being interviewed now.

The parcel where the three-story building will be built is fronted on three sides by the Tournament Players Club of Scottsdale where the Phoenix Open is held each January. The office tenants also will have unobstructed views of the surrounding McDowell Mountains.

“We have really terrific views,” Pitchford says. In addition to the scenic surroundings, Hines chose the site because of its proximity to the Pima Freeway, he says. “It gives the companies access to just about any part of greater Phoenix in a pretty efficient way,” he says.

The recent slump in demand for office space in north Scottsdale–and most other parts of the Valley–is of no great concern for Hines on this project, Pitchford says. “We are only to build these buildings as the tenants are identified,” he says. “I’m not worried about the lease-up risk.” Based on market averages, the office space in the Hines project should lease for between $27 per sf to $30 per sf gross.

Hines last year completed construction on a 300,000-sf, eight-story office building at thesouthwest corner of 24th Street and Camelback Road in Phoenix, considered to be the center of the Valley’s business world. That project is nearing 90% leased, Pitchford says, but just when the company will start on the 300,000-sf second phase hasn’t yet been determined. “The market will tell us when it’s time to go,” he says. “It is the last great site on Camelback Road. We feel good about the site and location and want to do it right.

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