Going strictly by Grubb & Ellis Co.’s numbers, Burbank’s 17.7 percent vacancy rate is smack in the middle of overall Tri-Cities vacancies. That would appear to be a dramatic change, even in a recession, given that Burbank had the lowest vacancy rate, 3.5 percent, in the county in the same quarter last year. But numbers don’t tell the whole story.
In fact, if not for two buildings – at 2900 W. Alameda Ave. and 2300 W. Empire Blvd. – that came on line last quarter adding 850,000 square feet of space, the market is surprisingly stable.
“Take that away and you have a 1.9 percent rate in Class A vacancies, and continued demand from the entertainment sector,” observed Patrick Church, senior vice president at CB Richard Ellis Group Inc. “In fact, there is currently 300,000 square feet of active requirements – tenants who must lock up occupancy before year’s end.”
Glendale also experienced rising vacancies, from 17.2 percent to 19.4 percent. But brokers said plenty of paper work got pushed, foreshadowing positive net absorption at year’s end. Childrens Hospital Los Angeles converting its 22,638-square-foot lease from sub- to direct tenancy inside the Nestle branded building at 800 N. Brand Blvd. CIBA Insurance Services renewed a comparable space at 655 N. Central Ave.
Pasadena, on the other hand, barely moved off last quarter’s 15.4 percent vacancy rate, and asking rentals were down 78 cents from a year ago.
“The smart ownership is locking (tenants) in now and chasing increases five years down the line with renewals,” Church said.
Office Market At a Glance
Inventory: 19.5 million square feet
Under Construction: 0
Class A Asking Rents: $3
Former subtenant Childrens Hospital Los Angeles struck a five-year deal with landlord Wells Real Estate Funds inside the 540,000-square-foot Nestle-branded building at 800 N. Brand Blvd. in Glendale. The direct lease covers 22,638 square feet of space and includes three months of free rent.
CBRE Investors signed the largest renewal of the year in Burbank at 2400 Empire Ave. Motion picture processing giant Deluxe Digital Studios, one of the original tenants in the four-story building built in 2005, had its deal extended by two full floors to 65,235 square feet for six years. Terms included free rent and a rate reported to be close to $3 per square feet.
CIBA Insurance Co. renewed its 22, 613-square-foot commitment at Glendale Plaza at 655 N. Central Avenue with Prudential Real Estate Investors. Exact terms were not disclosed, but the deal included five months of free rent inside the 532,815-square-foot building. Prudential paid more than $400 per square foot for the nine-story high-rise in 2006.
Express Video Supply paid $3.18 million for a 15,680-square-foot site at 1819 Victory Blvd. in Glendale from New York-based sellers Greystone Business Credit LLC in an REO sale. The new owner-user is a supplier of blank media and audiovisual equipment rentals and sales.
Grosvenor USA Ltd. sold an 11-story tower and two adjacent buildings at 2 N. Lake Ave. to an entity of Arcadia-based developer and investor Singpoli Group for $52 million in the year’s biggest. The buyers included investors from Hong Kong and Taiwan.
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