Something unusual happened in the Tri-Cities office market last quarter. Typically sleepy Glendale saw booming absorption while tonier Pasadena saw a third consecutive quarter of negative absorption.
Overall, it meant that the Tri-Cities market, which comprises Burbank, Glendale and Pasadena, saw vacancy decline to 16.4 percent in the third quarter, a full point lower than the prior period and 2.1 points below a year ago, according to data from Jones Lang LaSalle Inc.
Overall, tenants took more than 220,000 square feet off the market, leading landlords to increase Class A asking rates to $2.82. Rents were up a nickel from the prior quarter and 21 cents from a year earlier.
“The market is healthier today than any time it has been in the last 12 to 18 moths,” said Tim Miller, a senior vice president at JLL.
Glendale drove most of the positive absorption as tenants took more than 168,000 square feet and pushed its vacancy rate down 2.6 points from second-quarter levels to 16.9 percent.
“Glendale has made a startlingly very significant reduction in its vacancy,” said Bill Boyd, a senior managing director at Charles Dunn Co. “That is a huge number for one quarter. It is an even higher number than most quarters in the late ’80s and early ’90s when the city was at its fastest growth.”
Glendale has avoided the kind of downsizing that has afflicted other submarkets. In fact, noteworthy tenants such as DreamWorks Animation SKG Inc. have been expanding and the city has been successful in attracting companies, such as Avery Dennison Corp., which moved from Pasadena earlier this year.
Miller said the area’s ample residential options, amenities such as the Americana at Brand mall and lower lease rates make it more attractive to companies. Glendale’s asking rates were up 11 cents from a year earlier to $2.53 a square foot, though they are still 18 cents a foot below Pasadena’s and 69 cents less than Burbank’s.
Meanwhile, Pasadena gave back 7,000 square feet in the third quarter, following a loss of 179,000 square feet in the first and 66,000 square feet in the second. Tenants there have been reducing in size or moving out to other less costly locations.
Boyd said that’s noteworthy.
“While the good news is at least the bleeding has slowed down, three straight quarters of negative absorption is something I can’t recall ever seeing in Pasadena,” he said.
Still, 7,000 square feet is a small amount in a market of 9 million square feet. The market’s vacancy rate remained flat from the previous quarter at 15.7 percent.
Developers still feel bullish on Pasadena, which has some 155,000 square feet under construction.
As for Burbank, the Tri-Cities sister market’s vacancy rate has fallen 2.9 points over the course of the last year to 16.9 percent as it absorbed 59,000 more square feet in the last quarter.
That’s a good sign in a market facing a half-million vacant square feet at 3900 W. Alameda Ave., the tower Walt Disney Co. vacated last year. Developer Jeff Worthe bought the building and is updating it in hopes of attracting a large tenant.
– Jacquelyn Ryan
Tri-Cities
Plano, Texas-based Granite Properties Inc. bought 2600 W. Olive Ave. in Burbank for $49 million, or $325 a square foot, from Legacy Partners Commercial Inc. in an effort to beef up its L.A. portfolio.
A partnership of private foreign investors bought the Glendale Financial Square building from Cambra Realty and Angelo Gordon & Co. The 122,000-square-foot building, at 225 W. Broadway, was 95 percent occupied.
A Pasadena beaux-arts building, at 234 E. Colorado Blvd., traded hands for $36.4 million in September. Chinese investment group 21st Century Tech Banq Pasadena bought the 123,000-square-foot, 90-year-old property from Embarcadero Capital Partners.
NuvoTV, a Spanish-language cable channel, renewed and expanded at 700 N. Central Ave. The company added 4,000 square feet, bringing its total to 21,000 square feet at the property.
Children’s Hospital Los Angeles took an additional 15,000 square feet at 800 N. Brand Blvd., bringing its leased space there to nearly 43,000 square feet. The building is owned by Piedmont Office Realty Trust Inc.
