IndyMac Bancorp wasn't seized by federal regulators until July 11, but rumors about the Pasadena thrift's impending demise in addition to the ongoing credit crisis did their damage to the Tri-Cities real estate market in the second quarter.
"We're seeing companies acting more like individuals," said Nico Vilgiate, senior vice president, CB Richard Ellis Group Inc. "They're spending money very frugally."
Even a drop in Pasadena vacancies to 10 percent from 12 percent couldn't generate much excitement, given how it entirely stemmed from another mortgage industry casualty: Countrywide Financial Corp. The lender, acquired this month by Bank of America, back-filled roughly 70,000 square feet of sublease space at 35 N. Lake Ave. that it had placed on the market.
With Glendale giving back 57,267 square feet of space during the quarter and its vacancy rate ticking up a point to 14.8 percent, it was left to Burbank, the region's most dynamic submarket, to pick up the slack.
Health care giant Kaiser Permanente executed a part sublease, part-direct deal for 194,145 square feet at 3100 Thornton Ave. The building is phase one of developer M. David Paul & Associates' 19-acre Media Studios North. Subprime lender WMC Mortgage had moved into the Burbank space from Woodland Hills late in 2004 in a splashy 10-year, $60 million deal but later moved out.
"There were no other opportunities, close to Kaiser's base in Pasadena, that offered such massive floor plates and 6-per-1,000 parking," said Vilgiate. "And moving bodies into a large self-contained campus in Burbank was too good a play to pass up."
In fact, with Burbank vacancies dropping to 5.1 percent from 5.7 percent in the first quarter, and Class A asking rents up 1 cent to $3.27 cents per foot, the sentiment for most firms was stay put and renew, rather than relocate. Or, just sit tight and do nothing.
"The only industries that seem to be immune (from the economic downturn) have been health care and entertainment," Vilgiate said.
Office Market At a Glance
Inventory: 18.6 million square feet
Under Construction: 817,400 square feet
Class A Asking Rents: $3.20
- Kaiser Permanente's Southern California operations inked a part-sublease, part-direct deal in Burbank for 194,145 square feet of developer M. David Paul's Media Studios North Phase 1 building. The space had been occupied by troubled subprime lender WMC Mortgage, a subsidiary of General Electric Co. Sources said the 10-year "as-is" deal at 3100 Thornton Ave. is worth $65 million.
- Fallout from the nation's home mortgage crisis engulfed Pasadena-based lender IndyMac Bancorp Inc. Seized by the Federal Deposit Insurance Corp. on July 11 after more than $1.3 billion in withdrawls since June, IndyMac had recently announced job cutbacks of more than half its workforce. Tri-Cities brokers were still evaluating the impact of the nation's second largest bank collapse on the Tri-Cities market.
- An entity of Point.360 purchased a 31,000-square-foot facility it currently occupies at 1133 Hollywood Way in Burbank for about $8 million. The high-definition postproduction and audio facility for the film, TV and advertising industries has locations in West Los Angeles, Hollywood and Burbank's Media Center District.
- First Capital Equities LLC, which specializes in short-sale mortgage payoffs, foreclosures and property liens, sold off its roughly 33,356-square-foot Class A office building at 2727 Alameda Ave. in the heart of Burbank's Media Center District. The buyer, an undisclosed limited-liability company said to be an Armenian TV station, paid $10.8 million.
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