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Thursday, Mar 28, 2024

LAND—Ford Motors Left With Land to Spare

Developers may be salivating soon over a now-vacant 8.14-acre swath of land in Burbank, available ever since Galpin Ford backed out of plans to place a new car dealership there, essentially leaving Ford Motor Co. holding the bag and the property it paid $12 million for. Ford bought the land at 777 Front St., known as the former Zero Corp. property, about three years ago. The company had hoped to lure Galpin, its largest dealer, to the prime location near a freeway exit just off the Golden State (5) Freeway. The property is next to a 3.8-acre parcel owned by the city, land Burbank was willing to throw in to sweeten the deal for Galpin. And, naturally, Burbank was ready to do whatever it could to put it all together including offering Galpin as much as $12 million toward construction costs and tax rebates in order to boost its auto sales tax revenue. Galpin owner Burt Boeckmann said Ford proposed the establishment of a Galpin network that would have put linked dealerships in several locations across the Valley, including Burbank. They also proposed an initial public offering to finance the network with an option for Boeckmann to buy out other investors sometime down the road. But, according to Boeckmann, Ford later took that element out of the mix and, because the move would have also meant his family members working in different locations, he backed out. Ford now hopes to find a buyer for the land who has a project so magnificent in scope, size and economic potential that it would induce the Burbank City Council to change zoning on the property to allow for something other than an auto dealership. But that process isn’t likely to be awalk in the park. In the meantime, Ford is paying roughly $35,000 a month in carrying charges on the land. Ford has listed the property for sale at $15.5 million and, according to Ovrom, is courting backers for two kinds of potential projects: an un-identified, media-related studio concept and a 400,000-square-foot high-rise, with Citibank as a possible tenant. John Clinard, regional communications manager for Ford, would not identify potential buyers. He conceded, however, that the company is aware it faces a loss on its investment if it doesn’t find a buyer for the property within a reasonable amount of time. Dealers don’t have top dollar Ford has had offers from automotive competitors who would like to put their own dealerships there, a good reason to keep looking for buyers elsewhere. And, at $15.5 million, or roughly $40 a square foot, auto dealers, who typically pay about $15 a square foot for land, can’t afford the property. “We know there is a risk there, but we have simply put the land up for sale and we are open to hearing from any potential buyers at this time,” Clinard said. CB Richard Ellis, Inc., the broker for the property, received an offer earlier this year from Glendale-based Guy Schmidt Automotive Group owner M. J. Vaughn and Burbank-based Community Chevrolet owner Fred Bell. The two had hoped to collaborate on a deal to bring in a Chevrolet dealership and a GM satellite dealership, according to Michael Hastings, of Los Angeles-based Direct Point Advisors, their representative. But Hastings said Ford’s asking price has likely put any auto dealership out of the running. He also added that it probably makes good sense for Ford to hold out for a zoning change. “We offered them $15 a square foot,” said Hastings. “But if (Ford) can sell property in an auto zone for $38 or $40 a square foot, good for them. The question now is, how serious is the city about wanting to put an (auto dealership) in there? Right now, I think Ford has done what it has to do. So if the city decides to have a zone change, then we are out of this game, because auto dealers cannot afford to go in at this price.” Ditto, said Vaughn. “Are we a serious player at those numbers? Absolutely not,” he said. In fact, Vaughn has formally withdrawn his proposal and will now focus on expanding his business in Glendale. To answer Hastings’ question about how serious the city is in wanting an auto dealership on the property: “We are willing to wait for a very, very long time,” Ovrom said. That may give Ford some breathing room to line up potential projects, but it by no means should be taken as an indicator that the city has given up on having a dealer on the property. Burbank’s retail sales tax revenues are about three times the state average, but its auto sales tax revenues hover at roughly 25 percent of the state average. And, compared to Glendale, which has roughly 15 auto dealers on the “Brand Boulevard of Cars,” Burbank has one in the entire city: Bell’s Community Chevrolet. “We changed the zoning of that property from manufacturing (Zero Corp.) to automotive, so we can undo that,” Ovrom said. “But there’s no question we would love to have an auto dealership here because that’s the one niche we don’t have right now. It’s just a question of how long Ford is willing to twist in the wind.” GM still interested Ovrom said GM remains “very, very interested in buying the property,” and could be willing to wait just as long as the city is for Ford to either hit a home run, develop the property itself, or decide to cut its losses and sell out to a competitor. GM has been down this road before. Last year, the company’s plans for an auto superstore on a chunk of property owned by the former Lockheed Corp. were dashed when the city opted instead for a 103-acre mixed-use commercial/retail project. “That was the same situation, where GM could only afford to pay so much a foot for the property as automotive, and so it had to back out,” Ovrom said. As a result, Sears Great Indoors and Costco will open this fall as part of Burbank Empire Center. Dave Harding, vice president for CB Richard Ellis, would not confirm the two proposed projects Ovrom mentioned. He did say the company has “one firm offer” on the table. “We are out in the market and looking for a buyer and we are in discussions with a couple of entities and we will continue to be until we find the right one and the right one for the city of Burbank,” Harding said. Harding came under fire from city officials last month when his company circulated a sale brochure for the property which, from the city’s point of view, appeared to include Burbank’s 3.83-acre parcel as part of any potential deal. “As if the city would just give that property away,” Ovrom said.

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