Movie, Television Production Give Burbank a Lift

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Name another Los Angeles County submarket where vacancy rates soared more than 13 percentage points in a single quarter and landlords didn’t even break a sweat.

That’s what happened in Burbank, where the combination of M. David Paul & Associates’ Phase 1, The Pointe, and Higgins Development Partners’ final phase of Empire Center came on line and raised the city’s inventory by more than 800,000 square feet. Yet rental rates spiked 46 cents to $3.42 per square foot, according to Grubb & Ellis Co.

“Burbank landlords are very confident the space will get leased up,” remarked one veteran tri-cities broker. “Entertainment production near and around the media district remains a strong driver, and there’s been a renewed emphasis on the lack of gross receipt taxes, when compared to the city of L.A.”

Unfortunately, Burbank’s blue skies have not drifted to Pasadena, which only last year topped the $4 rental bar. The market finished the quarter with a $2.79-per-square-foot Class A asking rate, while vacancies steady at roughly 15.5 percent. More disconcerting was talk that federally seized lender IndyMac (recently purchased and rechristened OneWest Bank) would terminate its entire 181,000-square-foot space at 155 S. Lake St. would become vacant.

Glendale, which has 22 full-floor vacancies, fared no better. Sources said several large tenancies at 655 N. Central Ave., including those of Union Bank and Great-West Life & Annuity, are due to expire. Predictions are the vacancy rate could hit 24 percent by year’s end as a new mid-rise building comes online.


Office Market At a Glance

Inventory: 19.3 million square feet

Under Construction: 188,082 square feet

Class A Asking Rents: $2.95


MAIN EVENTS

– Phase 1 of the Pointe, 2900 W. Alameda Ave., in Burbank opened its doors for tenants in the second quarter. The 14-story Class A office tower, on a parcel sold off by NBC Universal, adds 485,000 square feet of Class A space to the market and was developed by Burbank’s largest landlord, M. David Paul & Associates.

– A seven-story, 363,000-square-foot Burbank office tower, developed by Newport Beach-based Higgins Development Partners LLC but now owned by Chicago-based partner Walton Street Capital LLC, came on line in the second quarter with no preleasing. The site, 2300 W. Empire Blvd., is the last phase of Empire Center, a mixed-use retail, office and hotel development that was once a portion of a 106-acre Lockheed aerospace facility.

– 2 North Lake, an 11-story, 230,000-square-foot office tower in Pasadena at the corner of East Colorado Boulevard and South Lake Avenue, went under contract in the second quarter. Grosvenor International sold the tower for a reported $53 million to Singpoli Investment Inc.

– Dine Equity Inc., which owns IHOP and Applebee’s restaurants, renewed its 69,068-square-foot chunk of space at 450 N. Brand Blvd. MetLife Inc., which owns the building, offered Dine Equity terms of 15 years at $2.75 per foot full service gross.

– 101 S. Marengo in Pasadena changed hands in what brokers described as “not an arm’s length transaction,” given that buyer and seller are affiliated companies. The 345, 945-square-foot building was sold by Gramercy Capital Corp. to SL Green Realty Corp. for $55.5 million, or roughly $160 per square foot.

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