With slow-growth sentiment rising and strong tenant demand persisting, the Tri-Cities office market is getting tighter.

The cities of Burbank, Glendale and Pasadena saw their combined office vacancy rate drop to 7.5 percent in the third quarter, down from 8.5 percent in the second quarter, according to Grubb & Ellis Co.

The decline was due to steep vacancy drops in both Burbank and Pasadena, while Glendale softened up a bit during the quarter.

Burbank's office vacancy rate plummeted to 2.8 percent, down from 7.3 percent in the second quarter. Net absorption was 99,259 square feet. With just 3.6 million square feet of rentable space, Burbank's vacancy rate shifts more dramatically than the rates in other areas.

In Pasadena, net absorption was 106,749 square feet, with a vacancy rate of 4.3 percent in the third quarter, down from 6.1 percent in the second quarter.

Meanwhile, Glendale performed poorly in the quarter, posting a negative net absorption of 110,300 square feet, with vacancy rising to 13.6 percent, up from 11.7 percent in the second quarter.

Paul Stockwell, corporate managing director with brokerage Julien J. Studley Inc., blamed the third-quarter rise in the Glendale vacancy rate on companies moving out of old space and into new space.

"I don't believe it's a big trend," Stockwell said. "It's a matter of the market settling out with the new buildings finished."

In the last year, Glendale has absorbed more than 1 million square feet of new space, which points to the market's strength, Stockwell said.

A far greater indicator of the market's strength was the deal struck earlier this month in which J.P. Morgan Investment Management Inc. agreed to buy the Glendale Plaza office tower at 655 N. Central Ave. for $260 per square foot. It is believed to be a record per-square-foot price for Glendale. Selling the 533,000-square-foot tower is a partnership between Morgan Stanley Real Estate Fund II and PacTen Partners.

Despite such bullish indications, the third-quarter Tri-Cities lease deals were all relatively small, with even the most significant ones being under 100,000 square feet.

Union Bank leased 30,000 square feet at Glendale Plaza, making that high-rise 100 percent full. (Glendale Plaza had initially struggled to find office tenants when it opened in April 1999.) Nearby, IHOP Corp. leased an additional 40,000 square feet of space at 450 N. Brand Blvd., bringing its total space at the building to 107,000 square feet.

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