Main events in Los Angeles County’s submarkets.
Slow and steady growth characterized the Tri-Cities real estate market in the third quarter, but increased activity might be on the near horizon.
At 18.5 percent, the vacancy rate in the Tri-Cities market has risen a full percentage point from a year earlier. Glendale, with a vacancy rate of 23.1 percent, trails both Burbank and Pasadena. At 14.5 percent, the Pasadena market is the clear leader, with Burbank’s 19.8 percent down nine-tenths of a point from its high of 20.7 percent one year ago.
Not surprisingly, the average asking rent in Burbank has dropped 3 cents from last quarter to $3.33 per square foot; Pasadena rents have increased by 4 cents to $2.60. Glendale rents have stabilized at $2.54, down 1 cent from a year ago.
The mix of sales and leasing activity was reasonably balanced in the third quarter, with the $420 million sale of 10 Universal City Plaza, at 35 stories the tallest office building in the San Fernando Valley, expected to shake things up next year in the Burbank Media District.
Comcast purchased the building for its NBCUniversal division, the largest tenant at the property, in one of the biggest real estate deals in Los Angeles County this year. Smaller entertainment tenants are likely to relocate with the change in ownership, and many are expected to move into Burbank.
That submarket suffered with the move-out of Walt Disney Co. from nearly 500,000 square feet at Alameda Tower in the first quarter; year to date, Burbank has given back 446,000 square feet. However in the third quarter, the Burbank submarket absorbed 68,000 square feet and saw its vacancy rate drop by nearly 1 percent, according to data provided by Jones Lang LaSalle Inc.
Activity in Burbank was driven by strong leasing momentum at the Pointe, 2900 W. Alameda Ave., which opened in 2009 and until recently had been nearly vacant. Just about 100,000 square feet out of 480,000 square feet is available at the 14-story, Class A office tower, said Patrick Church, managing director at Jones Lang LaSalle.
In Pasadena, Foster City developer Legacy Partners has plans for a significant rehab of the three-story Avery Corporate Center at 150 N. Orange Grove Blvd. once Avery Dennison Corp. consolidates its 250 Pasadena- and Brea-based employees in 54,488 square feet of newly leased space at 207 Goode Ave. in Glendale early next year. The label maker has been renting back its 115,000-square-foot headquarters near Old Pasadena since selling the property to Legacy earlier this year.
“Construction will begin in January on the kind of creative campus environment that is nonexistent in the Tri-Cities area,” said Anneke Greco, a Jones Lang LaSalle vice president.
Although vacancy rates in Glendale are still the highest in the region, there were a number of new leases representing back-office users in the quarter. With rents ticking up 4 cents in Pasadena this period, more leasing interest is expected in Glendale, where rates have been falling for several years. For the past year, Glendale rent rates have stabilized, making it the cheapest city in the submarket.
– Karen E. Klein
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