Can confidence in Burbank's commercial market get any higher?
According to figures provided by Grubb & Ellis Co., the hottest zip code in the Tri-Cities finished the year with a 3.6 percent vacancy rate, the second lowest in all of Los Angeles County. Major developer M. David Paul & Associates cleared dirt for a spec development that would add almost half-a-million new square feet, while Walt Disney Co. inked the biggest Tri-Cities lease transaction of 2006: 20 full floors valued in excess of $50 million. Both events sent a clear message: Burbank's biggest players are here to stay.
At the other end of the pendulum was Glendale, where a 16.2 percent vacancy rate was the fourth highest in the county, and year-to-date net absorption ended firmly in the red. Brokers insist overflow tenancy from its red-hot neighbor markets will turn Glendale around. But movie firms such as Disney have reduced their space, while Pasadena firms insist it's too far from their employee base.
Even with corporate giant Nestl & #233; USA extending its lease on Brand Boulevard, the submarket accounted for two-thirds of the 1.5 million square feet of vacant space in the Tri-Cities.
Pasadena, on the other hand, was the frosting to Burbank's double-layer cake. A diversified tenant base, along with quality flex space, pushed rents in the Lake Avenue Business District to $4.10 per square foot, a historic high. "Pasadena appears bullet-proof," said Nico Vilgiate, senior vice president with CB Richard Ellis Group Inc.
Walt Disney Co. signed a new five-year lease extension for 340,639 square feet of Class A office space at the Tower, 3900 W. Alameda Avenue, in Burbank's media district. The building owner, a fund managed by BlackRock Realty, put the deal's value at roughly $2.45 per square foot.
Entertainment advertising and design firm Terry Hines & Associates extended its lease commitment at 2550 N. Hollywood Way, near the Burbank Airport. The 21,960 square feet of space will account for one and a half floors of the six-story Class A office building.
Nestl & #233; USA Inc. signed a five-year extension of its lease at 800 N. Brand Blvd. that begins in 2010, keeping the Swiss-owned subsidiary at its national headquarters in a reduced amount of space. Nestl & #233; committed to 297,130 square feet at the Class A building owned by Wells Real Estate Investment Trust. Terms were $3.33 per square foot, or roughly $60 million.
Hunt Ortmann Blasco Palffy and Rossell Inc., a construction law firm, extended its lease for six years at 301 N. Lake Ave. in Pasadena. The law firm renewed for an entire floor of about 20,000 square feet in the Class A high-rise. Landlord Operating Engineers Funds Inc. pegged the lease value at $3.7 million.
Developers M. David Paul & Associates broke ground on a site they acquired from NBC last year. The parcel is entitled for 900,000 square feet. The Phase 1 spec building, to be completed in 20 months, will add 450,000 square feet of office space to Burbank's core media district.
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