Broker Sees ‘Creative’ Tag as Industrial Strength

The popularity of creative office space is old news, but broker David Harding hopes a recently sold business park in Burbank will epitomize the next trend: creative industrial space. Harding, vice president at CBRE Group Inc. in Glendale, and his team handled the sale of Burbank Industrial Park, a 14-building complex near the Burbank Bob Hope Airport, for $56 million. The new co-owners are Shubin & Nadal Realty Investors in Newport Beach and Penwood Real Estate Investment Management of West Hartford, Conn. The park consists of one-story red-brick buildings constructed in the 1960s. The original tenants were aerospace companies, but gradually the mix has shifted to entertainment firms. The current tenant lineup includes lighting equipment suppliers and special effects houses. Those companies want a combination of office and warehouse space, Harding said. “In the greater Burbank area, it’s hard to find this kind of product,” he said. “The buildings are brick, which tenants like, and the new owners are putting in skylights, edgy finishes and landscaping, and the units already are freestanding buildings with yards. … It’s a pretty unique asset.” The property, located in the 4400 block of Vanowen Street, measures 300,650 square feet. Harding said the new co-owners are still penciling out the costs for improvements and he couldn’t discuss lease rates yet. According to data from Colliers International, the East Valley had an industrial vacancy rate of 1 percent in the third quarter. Average asking rates were 72 cents a square foot in that period, up from 68 cents from a year earlier. To become a trend, creative industrial will need room to grow, and Harding noted that industrial infill space is limited in the Valley. However, he pointed to two projects that could capitalize on the need for creative industrial. One is a joint venture of Xebec Realty Partners of Seal Beach and Cornerstone Real Estate Advisers of Hartford, Conn. The venture acquired 15 acres of land in Sun Valley last month to build a $48 million industrial park. The Sun Valley Industrial Park, at 11063 Pendleton St., will include two warehouses totaling more than 360,000 square feet. Another possible venue for creative industrial, Harding said, was the 59-acre parcel of land that Burbank Bob Hope Airport put on the market in June. The Burbank-Glendale-Pasadena Airport Authority is working with CBRE to find a developer interested in an office or industrial project. “A lot of these tenants want to be in Burbank. The city offers benefits, such as no gross receipts tax, but more than that, closeness to the studios,” he said. “A lot of them don’t want to leave the area. Some may move to Santa Clarita, where there are new buildings, but in reality there just are not a lot of options.” Valley UPREIT A San Diego real estate investment trust has purchased the Warner Plaza shopping center in a noncash deal worth $76.3 million. Plaza International, which owned the Woodland Hills center for 41 years, actually exchanged the property for shares of the publicly traded buyer, Retail Opportunity Investment Corp. The deal, known as an UPREIT or umbrella partnership real estate investment trust, meant no cash out of pocket for the buyer and tax benefits for the seller. “This allowed the seller to defer capital gains taxes and benefit from the growth of a stable and well-positioned real estate company that pays a healthy dividend,” Kyle Miller, a senior managing director at the downtown Los Angeles office of brokerage Savills Studley who arranged the sale, said in a statement. Warner Plaza, at 21841 Ventura Blvd., is anchored by Sprouts Farmers Market. Other tenants at the 115,000-square-foot property include Coffee Bean & Tea Leaf, Dickey’s BBQ and Jerry’s Famous Deli. Car Warehouse MDK International, an online used-car dealer, has purchased two industrial buildings in Burbank for $5.6 million to enlarge its brick-and-mortar presence. The buildings, on the 2400 block of North Ontario Street, total 25,700 square feet. Brett Warner, a broker at Lee & Associates-LA North/Ventura, and Jeff Bischofberger, vice president at Lee & Associates-Irvine, represented the co-sellers, MHB Investments and Arrow Equities. David Issaians with Coldwell Banker Commercial represented the buyer. MDK International sells cars but doesn’t have a showroom. Potential buyers see cars on the Internet and make an appointment to come to its warehouse. The company, which is moving from a smaller location in Burbank, will use its expanded space to store cars and for administrative offices.