Major events in Los Angeles County commercial and industrial submarkets in the second quarter.
Entertainment companies moving into Burbank helped the Tri-Cities market just about hold its own in the second quarter, raising optimism for the rest of the year.
Vacancies inched up one-tenth of a point to 18.9 percent in the market, but that was still a lower than the second quarter of 2010, when the rate topped 19 percent, according to Grubb & Ellis Co. Asking rents rose a penny to $2.73.
John McAniff, managing director at Jones Lang LaSalle’s downtown L.A. office, said that several leases in Burbank’s Media District indicate that entertainment firms are getting more comfortable with making deals.
A prime example is what happened at the Pointe, a 14-story office building next to NBC studios at 2900 Alameda Ave. in Burbank. The 445,000-square-foot project was completed in 2009 by M. David Paul Ventures but has sat largely vacant until this quarter. Then, suddenly, successive deals were announced.
Public station KCET-TV sold its Hollywood studios and announced it was leasing 55,000 square feet of office and studio space. In addition, Warner Bros. Entertainment moved its comic book studio DC Entertainment into 35,000 square feet in a 10-year lease valued at roughly $16 million.
“These deals are demonstrative that the Burbank market is seeing an increase in leasing velocity,” McAniff said.
Glendale, which had the third highest office vacancy rate in Los Angeles County at 23.1 percent, actually absorbed 4,895 square feet. However, the market continued to struggle as financial and insurance firms, its historical strength, continued to pull back. For example, Farmers Insurance stayed in the city at a new location, 655 N. Central Ave., but downsized by 9,000 square feet.
Stacy Vierheilig-Fraser, senior managing director at Charles Dunn Co. in Sherman Oaks, said Glendale is by far the softest of the three markets. However, sales have picked up throughout the Tri-Cities.
“There’s decent traffic in sales and it look better this year than last year,” she said.
In one notable sale, California Credit Union repurchased its headquarters building at 701 N. Brand Blvd. for about $34.4 million. In 2006, the thrift sold the Glendale building to Maguire Properties Inc., now called MPG Office Trust.
In Pasadena, McAniff said larger tenants were shrinking their leased space during the quarter, creating opportunities for smaller professional firms to move into high-quality buildings.
However, the net result of the shrinkage was that 30,505 square feet were put back on the market, according to Grubb & Ellis.
- Swick Family Trust in La Canada Flintridge acquired a 21,640-square-foot office building at 217 E. Alameda Ave. in Burbank for $3.25 million. The seller was Aziz Molai, owner of Molai Insurance, which no longer has offices in the building.
- Farmers Insurance signed a five-year lease to occupy 25,000 square feet at 655 N. Central Ave. in Glendale. The company is downsizing from 34,000 square feet at 701 N. Brand Ave. in Glendale.
- California Credit Union repurchased its headquarters building at 701 N. Brand Blvd. in Glendale for about $34.4 million. The eight-story structure contains 138,000 square feet. The credit union occupies three floors in addition to a retail branch on the ground floor. In 2006, California Credit sold the building to MPG Office Trust for $45 million.
- A medical office building at 1540 E. Colorado Blvd. in Glendale was sold by the attorneys for Verdugo Mental Health Center, a low-income counseling provider that declared bankruptcy this year. Didi Hirsch Community Mental Health Center, a non-profit based in Culver City that runs 10 clinics in Southern California, purchased the 30,000-square-foot building for $5 million. The new owner runs a clinic in the building.
- Engineering firm Parsons Corp. sold its Pasadena headquarters for $320 million to Morgan Stanley Real Estate Investing and Lincoln Property Co. The transaction involved three buildings totaling 950,000 square feet at 100 W. Walnut St. Parsons, which signed a 15-year lease back with the new owners, said the sale will generate capital.
- Cogent Communications leased 48,000 square feet at 2947 Bradley St. in Pasadena. The space will be used almost entirely for computers and data storage. The building was formerly occupied by Internet service provider EarthLink
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