If you see any Tri-Cities office landlords smiling, chances are they own property in Burbank.
Of the three submarkets – Burbank, Glendale and Pasadena – only the media city experienced a dip in vacancies during the quarter, according to Grubb & Ellis. The submarket ended the year with 17.7 percent of its office space vacant, a drop of more than 1 point from the prior quarter, and slightly lower than the vacancy rate of a year earlier.
Burbank’s solid performance was significant enough to push the Tri-Cities’ overall net absorption rate out of the red for the first time since 2009, albeit only to 1,745 square feet. The submarket also helped narrow the Tri-Cities’ vacancy rate two-tenths of a point to 19.7 percent.
“Entertainment is driving Burbank right now, and there are some large (tenant) requirements of anywhere between 40,000 and 70,000 square feet,” according to Patrick Church, senior vice president, CB Richard Ellis. “The activity is just now starting to heat up.”
Indeed, Burbank got a boost last quarter from a few long-term leases signed by entertainment-related firms Cast and Crew Entertainment and Modern VideoFilm at Burbank Empire Center, Walton Street Capital’s seven-story, 351,300-square-foot office building that was delivered empty in 2009.
Pasadena’s vacancy rate inched up slightly to 17.9 percent, while Glendale’s climbed by more than a half-point to 23.6 percent, much higher than the county’s 17 percent average.
Despite the fact LegalZoom.com signed a 10-year lease to move its headquarters from Los Angeles to two full floors at Legacy Partners’ Glendale City Center, the Glendale submarket still ended the quarter with its net absorption rate in the red, giving back 39,474 during the period.
“Will we get to the point where Glendale starts to benefit from (Burbank’s activity)? That remains to be seen. But I still think the entertainment groups would prefer to be in Burbank, whether it’s to be close to their main campus or their competition,” said Church.
Class A asking rates fell 9 cents overall in the Tri-Cities during the quarter to $2.78 per square foot. Burbank saw its Class A asking rates fall a nickel to $3.36, while Pasadena’s rose 3 cents to $2.60; Glendale’s rates came down slightly to $2.64.
- Two tenants signed up at Walton Street Capital’s Burbank Empire Center at 2300 W. Empire Ave. Modern VideoFilm, a media company that had been based in another Burbank location for the last three decades, leased the building’s entire first and second floors for 11 years. Cast & Crew Entertainment, a provider of payroll services to the entertainment industry, inked a deal to take 51,000 square feet for 10 years beginning in March. Financial terms were not disclosed. The 351,300-square-foot building is 42 percent leased with those deals.
- LegalZoom.com inked a 49,008-square-foot lease for 10 years to move its headquarters from Los Angeles to Glendale. It will occupy the 10th and 11th floors of Legacy Partners’ Glendale City Center beginning this month. The 19-story building totals 347,867 square feet.
- Yahoo Inc. subleased 57,000 square feet of office space at 3355 W. Empire Blvd. in Burbank to Stereo D, a 3-D conversion company. The sublease is for five years.
- MTV leased 11,063 square feet of space at the Burbank Executive Plaza at 300 E. Magnolia Blvd. from Kennedy Wilson, a Beverly Hills real estate investment firm.
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