Giant ‘Hole in the Ground’ Blows Apart Burbank Office Space

The Burbank office market sputtered in the second quarter, still reeling from the giant hole left by a vacancy earlier this year. The 470,000-square-foot Alameda Tower at 3900 W. Alameda Ave. remains vacant after Walt Disney Co. pulled out of the building, and owner BlackRock Inc. is still trying to figure out what to do with the aging space, with a layout typical of its 1980s-era construction. “It is a big building with smaller floor plates, which is more traditionally leased to smaller companies, so it may take a little while to fill up,” said Craig Stevens, senior vice president at the Los Angeles office of Colliers International. There has also been some chatter in the market that BlackRock, a New York money manager, is exploring a hotel or condo conversion of the building, though nothing has been decided. Far from making up for the loss, the rest of the market was relatively flat. The vacancy rate rose two-tenths of a percentage point, to 20.4 percent since the first quarter. Asking rents rose 1 cent to $3.02, according to data from Colliers. The highest-profile lease in the quarter was inked by production company Freemantle Media Ltd., which took 70,615 square feet in a 10-year lease at The Pointe, 2900 W. Alameda Ave. But even with the lease, the 14-story Class A building next to the former NBC studios complex is just 54 percent occupied, according to data from CoStar Group Inc. “The market is still an A market,” said Stevens. “The studios aren’t going anywhere, and there are going to be entertainment companies that want to be close to them.” The office market in neighboring Glendale didn’t fare much better, although rents managed to edge up one cent from the first quarter to $2.46. After three consecutive quarters of improvement, 83,200 square feet came back on the market, pushing the vacancy rate up 1.3 percentage points to 22.1 percent. “Unfortunately, there’s been some back-sliding,” said William R. Boyd Sr., senior managing director at the Glendale office of Charles Dunn Co. “The real unknown is when the rebound is going to take place in Glendale. Even under the mildest projections, it may be 10 years before the market gets to a 10 percent vacancy rate.” But, Boyd points to several smaller leases as a sign the market is still active. Insurance adjustment firm Carl Warren & Co. is moving into 14,000 square feet at 701 N. Brand Blvd. later this year, adding a few thousand feet to its Glendale footprint. Accounting company Hutchinson & Bloodgood LLP is moving into 18,000 square feet at 550 N. Brand Blvd. in September, when it will leave 12,000 square feet at 101 N. Brand Blvd. The leases are similar to many others across the Valley, with companies making modest expansions that could add up in the aggregate. “I would say that the blockbuster leases don’t matter as much as lots of movement,” said Boyd. “There could be hundreds of smaller leases that really make a difference together.” The biggest deal of the quarter in the city was a sale, when 500 N. Brand Blvd. changed hands for $96 million or $228 a square foot, in June. The 422,500-square-foot Class A office property was acquired by Dallas firm Granite Properties Inc. from an affiliate of CBRE Group Inc. “It’s still a good area, and there is interest,” said Boyd. “It’s just a matter of when.” – Kelly Goff Main Events – In May, discount clothing retailer Marshalls inked a lease for nearly 30,000 square feet at 100 S. Brand Blvd. in Glendale, which had sat vacant since April 2011 when a Borders bookstore went out of business. Terms were not disclosed, but typical retail lease rates in the submarket range from $3 to $3.50 a square foot. – Freemantle Media Ltd., the production company behind “America’s Got Talent,” “American Idol” and “The X Factor,” signed a 10-year lease on 70,615 square feet at The Pointe in Burbank. The company will occupy two floors of the building and plans to take occupancy in September. – In April, Los Angeles real estate investment firm Rexford Industrial LLC acquired a 473,345-square-foot industrial property of seven buildings at 3332-3424 North San Fernando Road and 3550 Tyburn St. Known as the Glendale Commerce Center, the property was sold by Australian real estate investment company Dexus Property Group for $56.2 million. Tenants include Staples Inc. and Anderson Printing. – In June, a trophy office building at 500 N. Brand Blvd. in Glendale sold for $96 million, or $228 a square foot, making it the highest price paid for a Class A office property in the city this year. The 422,500-square-foot high rise was acquired by Granite Properties Inc. of Dallas from an affiliate of CBRE Group Inc. of Los Angeles.