Vestar

By CHRISTOPHER WOODARD Staff Reporter Now that Vestar Development Co. has backed away from its plan to redevelop Lockheed Martin Co.’s 103-acre Burbank property, a half-dozen other developers are expressing interest in building a retail/office project there. Lockheed will continue to push the project through the Burbank planning process while seeking a new builder for the huge development, which has been designed to feature 585,000 square feet of big-box retail space, up to 600,000 square feet of office space, a 350-room hotel and a 28-acre auto row. “It’s a gorgeous piece of flat property right along the 5 (freeway),” said Ken Philbrick, executive vice president of LMC Property Inc., Lockheed’s real estate subsidiary. “We’ve been approached by a half-dozen developers, but I’d say three or four of them have the financial resources, the experience and the synergy to do the project.” Those who want in on the deal, however, can expect to pay 10 percent to 15 percent more than Vestar did two years ago, said Philbrick, who declined to reveal how much Vestar had agreed to pay. Burbank officials praised Lockheed for keeping the project on track. But Lockheed’s decision to turn the project over to a new developer has rankled some local auto dealers who had hoped to open new lots on the site. Guy Schmidt Automotive Group, which runs a GM dealership in Glendale and Community Chevrolet in Burbank, approached Lockheed with a proposal to spin off a portion of the property for a new auto center, but Lockheed declined. “We’re not developers, and we’d prefer to sell it all off (to one party),” Philbrick explained. Frustrated by the prospect of having to wait the weeks or months it will likely take to put a new developer in place, the car dealers said they might take their business to Glendale. “They’ve quite literally exhausted their patience,” said Michael Hastings, a former Burbank mayor who is serving as an advisor to the dealers. “My guys are burned out, and they want to move forward.” CarMax, which was looking to open a used-car superstore on the site, also will begin looking at its options. But Larry Kosmont, a CarMax advisor, conceded his client will have difficulty finding another freeway-visible site in the area. “My client is interested in any viable site in this part of the Valley, but there’s a limit of good sites,” he said. Jeanne Armstrong, director of development services for the city of Glendale, confirmed that Schmidt is among several dealers who have approached the city with preliminary plans to revamp the Brand Boulevard auto row, which stretches from Colorado Street to San Fernando Road. “We’d welcome it,” she said. “(Brand Boulevard) has been an auto row for almost 75 years. Although it doesn’t have freeway visibility, it has a proven track record.” Armstrong said her office is conducting a study of Brand Boulevard and its findings are expected to be presented to the City Council next month. Burbank City Manager Bud Ovrom said he is hopeful the dealers will stick with Burbank, given what he sees as the superiority of the Lockheed property and its visibility from the Golden State (5) Freeway. “I understand they have to keep their options open, but freeway sites are so rare, so hard to come by,” he said. Lockheed’s decision to proceed with the city planning process, meanwhile, will cut the time it takes to get the project going, said Ovrom. The Lockheed site, situated between the freeway and Buena Vista Street, south of Empire Avenue, is one of the largest developable parcels in Burbank and a priority for City Hall. Environmental studies are expected to be completed by late February or early March. The process of selecting a new developer, meanwhile, could take as long as several months. “I’m 100 percent confident that Lockheed will be able to find a good developer, whether it’s Vestar or somebody else,” said Ovrom. Vestar canceled its contract with Lockheed on Dec. 23 after the project hit several delays in the planning process. Escrow was scheduled to close Dec. 31, but Vestar decided it couldn’t risk closing the deal until all the city approvals were granted, said Rick Kuhle, senior vice president of the firm. “We were in escrow for two years, but worked on the project for eight,” said Kuhle. “We had considerable time and money involved, so it wasn’t a decision we took lightly.” Kuhle said the project hit its biggest snag when Burbank officials decided they wanted the office portion downsized from more than 1 million square feet on 30 acres to about 600,000 square feet on 18 acres. That decision, made in response to a cooling in the office market, resulted in a delay of the completion of the project’s environmental impact report. That delay, in turn, made it impossible to meet Vestar’s Dec. 31 deadline for city approval. “I don’t blame the city at all. There would have been no changes if the office market had stayed the same. But it changed, and the plans changed,” said Kuhle. The Vestar official declined to say how much his company invested in the planning process. But Kosmont of Kosmont Associates Inc. estimated the developer could have sunk a seven-figure sum into the proposed project. “Vestar spent a lot of money on the EIR. These projects tend to run $1 million or more (for entitlements),” he said. Kuhle believes his company could end up retaining the project after other interested developers calculate the costs involved, such as the $5 million it will take to provide an electrical substation or the millions more needed for off-site improvements. One cloud hanging over Vestar, though, is a recent lawsuit filed by Kilroy Realty Inc., a developer that had been brought on to handle the office portion of the project. After that portion was downsized, Kilroy filed suit against Vestar in L.A. County Superior Court, alleging Vestar breached its contract with Kilroy by not getting city approval for 30 acres of office development, as originally planned. Kuhle declined to discuss the case. Kilroy officials did not respond to a request for an interview.