Glendale Matures Post Meltdown

Only two years ago, Nestlé USA announced that it would leave its longtime base at 800 N. Brand Ave. in Glendale for Rosslyn, Va., taking with it a chunk of its 1,200 employees and vacating some 375,000 square feet of office space. As a result of this single exodus, Glendale saw overall vacancies in its submarket increase from 6.5 percent to 10.9 percent in 2018’s third quarter. However, according to CoStar data, vacancies soared from 10.3 to 21.9 percent during the same period among Glendale’s higher-end properties that primarily cater to corporate tenants. The community’s lower-quality and mid-tier assets can often serve smaller, local tenants. Cut to the end of 2019, and Glendale’s occupancy rate has improved. Market vacancy now stands at 9.5 percent, even as the vacancy rate for the high-end office segment has dropped to 16.7 percent. With rental rates, the greater Los Angeles market averages an annual growth of 4.3 percent. Glendale lags when it comes to aggregate rent growth, as technology and media entities have not flocked to lease space given that the market, like Warner Center, is home to a more traditional tenancy. Looking at investment sales, the past few quarters have proved quiet. Volume in 2019 dipped from the peak stretch in 2017 and 2018, during which time investing giants such as Beacon Capital Partners, Goldman Sachs, Divco West, Onni Group, Kennedy Wilson and CBRE Global Investors purchased Glendale towers. Overall, big moves by hometown tech giant ServiceTitan, which leased up several of the floors abandoned by Nestlé USA, and the robust turnout of such local players DishDivvy, DeepRoot, Green Infrastructure, Scylla, Abrupt Collective, PickTrace and Appear Me at September’s Glendale Tech Week event, bode well for the office submarket’s eventual pivot from traditional to tech tenancy.