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Thursday, Mar 28, 2024

Quick Turnaround Spins Heads of Tri-Cities Real Estate Insiders

Last quarter capped a banner year for the Burbank and Glendale office markets. After being hit hard by the economic downturn, the two cities made a comeback with each seeing significant declines in vacancy. Bill Boyd, senior managing director at Charles Dunn Co. Inc. who has handled deals in these markets for decades, said the activity reminds him of volume record highs in the late 1980s and early 1990s when the cities were just establishing themselves. “It’s an absolutely remarkable and significant turnaround,” Boyd said. In their heyday, “each city would usually absorb 250,000 to 300,000 square feet and last year, Burbank absorbed 280,000 square feet and Glendale absorbed 330,000 square feet (year­to­date).” Perhaps Glendale tells the more compelling story between the two cities. The office market, which has traditionally been seen as a sleepier back-office community, has been attracting media and creative companies from nearby Pasadena and Burbank, where many entertainment studios are located. “They (the companies) don’t need to be near Disney or Warner Bros. necessarily and can look at lower-cost alternative like Glendale,” said Patrick Church, managing director in Los Angeles at Jones Lang LaSalle Inc. Glendale’s vacancy rate fell 1.7 points to 16.6 percent in the third quarter as tenants took 109,700 square feet off the market. That’s down nearly 5 points from a year ago, according to data compiled by Colliers International. Despite the action, landlords remained relatively conservative with their monthly Class A asking rates, raising them only 3 cents over the quarter to $2.41 a square foot. That’s still 59 cents below Burbank’s asking rate. The once vacant office tower at 207 Goode Ave. in Glendale saw its third lease in two years with Equinox Fitness signing a deal for 30,000 square feet. It follows leases by Whole Foods Market Inc. and Avery Dennison Corp., the first two tenants in the six­year­old, 189,000­square­foot building. To take stock of how investors value the market, look no further than 505 N. Brand Blvd. Principal Real Estate Investors in West Des Moines, Iowa bought the building from LaSalle Investment Management in Chicago for a noteworthy $83.2 million – the top sale in the market last quarter and among the top sales in the county. “Glendale has had good momentum,” said Church. “Through 2015, it should remain stable and you’ll see upward pressure on rents.” Burbank performed strongly as well. The market absorbed 56,500 square feet, lowering the vacancy rate eight tenths of a point to 16.5 percent. Monthly Class A asking rates shot up 8 cents to $3 a square foot. Among the deals in the quarter, Cast and Crew Entertainment Services signed a deal to expanded by 20,000 square feet for a total of 70,000 square feet in Burbank’s 2300 W. Empire Ave., where KDSM LLC, a reality TV company, also signed for 12,000 square feet to relocate from downtown Burbank. Developer Jeff Worthe continues to make improvements to his Alameda Tower property at 3900 W. Alameda Ave., which he bought after Walt Disney Co. vacated the nearly half-million-square-foot building two years ago. Church expects that the leasing velocity will continue in Burbank and Glendale during 2015. “In first quarter, I think we’ll see a number of significant transitions announced,” he said. “There are a handful of entertainment and creative, media-related deals in negotiation that will have a new effect on the market. I’m pretty upbeat.” – Jacquelyn Ryan Main Events Entertainment payroll company Cast and Crew Entertainment Services expanded by 20,000 square feet for a total of 70,000 square feet at 2300 W. Empire Ave. in Burbank. Terms were not disclosed but asking rates are about $3.05 a square foot. Principal Real Estate Investors bought 505 N. Brand Blvd. for $83.2 million, or $260 a square foot, from LaSalle Investment Management. The 320,000-square-foot Glendale building was the top sale of the market last quarter and among the top in Los Angeles County. Gamblit Gaming LLC leased 17,888 square feet at 700 N. Central Ave. with landlord Blackstone Group LP in New York. The company, which creates technology for online gambling, moved its headquarters from a nearby Glendale building. Equinox Fitness inked a deal for 27,000 square feet at 207 N. Goode Ave. with landlord Lincoln Property Co. of Dallas and New York’s Morgan Stanley. The high-end gym is the third company to sign a lease at the 189,000 square-foot Glendale building that had been vacant for four of the six years since it was built. Burbank Office Market At a Glance Inventory 6.8 million square feet Under Construction 0 Class A Asking Rents $3.00 Glendale Office Market At a Glance Inventory 6.2 million square feet Under Construction 0 Class A Asking Rents $2.41

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