Is it possible that the commercial real estate market is already on its way back up? If you’re talking about the Tri-Cities, it sure looks like it.
For the second quarter in a row, Burbank, Glendale and Pasadena absorbed space, taking a combined 177,372 square feet off line, according to Grubb & Ellis Co. The pace is increasing compared with the fourth quarter, when a minuscule 1,745 square feet was absorbed.
While tenants taking larger pockets of space helped drive vacancies down nearly one point last quarter to 18.8 percent, smaller businesses’ activity might be the best indicator of market health, according to John McAniff, managing director at Jones Lang LaSalle.
“It’s always a good sign in the marketplace when the smaller tenants are looking to expand and commit because those are the tenants that will be the first to hire new employees,” McAniff said.
Burbank experienced a spike in vacancies after the Pointe, a 479,000-square-foot project, and the 351,300-square-foot Burbank Empire Center were delivered empty in 2009. Recently, however, the submarket has received a boost from leasing interest at Empire Center since the property’s ownership entity has been restructured, and two media and entertainment tenants struck deals during the fourth quarter to move in. Burbank’s vacancy rate fell more than 2 points last quarter to 15.6 percent, more than 1 percent below the county average.
Glendale’s and Pasadena’s vacancies also decreased, albeit slightly, during the quarter, to 23.1 percent and 17.8 percent, respectively. Pasadena is benefitting from the return of tenants in the financial industry, but Glendale is still struggling a bit with its attempt to add businesses to its tenant roster, which has historically been heavy on insurance-related companies.
The Glendale submarket also is home to a 187,973-square-foot building that has been sitting vacant for a year and a half. Dallas-based Lincoln Property Co. bought the structure at 207 Goode Ave. in a distressed short sale last year and has said it hopes to get the building 90 percent occupied by the end of next year.
Class A asking rents in Glendale fell a nickel to $2.59, while Pasadena’s asking rates were off 9 cents to $2.51. In Burbank, Class A asking rents have remained steady at $3.36 for the last six months.
“Rents have clearly bottomed out in Burbank and clearly bottomed out in Pasadena,” said McAniff. “I think they are going to stay relatively soft where they are in Glendale until there’s some meaningful leasing activity.”
- Insurance broker Bolton & Co. signed a 10-year lease to occupy 30,884 square feet of office space at Pasadena Corporate Park, a 265,000-square-foot, Class A complex at 3475 E. Foothill Blvd. The company vacated its offices at 245 S. Los Robles Ave., also in Pasadena, and will use the Foothill location as its company headquarters.
- Bank of America renewed 68,000 square feet of office space at 35 N. Lake St. in Pasadena for five years. Equity Office Properties is the landlord.
- Kinetic Lighting, an event lighting and rental company, inked a deal with landlord K-Sons Investment Inc. to take 22,000 square feet for five years in two buildings at 722 Thompson Ave. in Glendale. The company moved from North Hollywood.
- ProMax Systems Inc., a digital media technology company, has opened an office at 4011 W. Magnolia Blvd. in Burbank. The new outpost is ProMax’s only other office besides its Irvine headquarters.
- LeisureLink, a provider of online marketing tools for specialty lodging properties, leased 6,667 square feet for 38 months at 70 Lake St. in Pasadena with landlord Legacy Partners. At the same property, an undisclosed private wealth management firm took 2,346 square feet for five years.
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