Efforts to reposition Pasadena as a technology hub to rival the Westside gained momentum as 2013 came to a close.
Add in the city’s first new spec construction project since the recession – under way on Colorado Boulevard in the Playhouse district – and it’s no wonder Pasadena was the leader in a submarket that showed some strength in the fourth quarter.
At 13.1 percent, Pasadena’s vacancy rate is the lowest in the area, according to data provided by Jones Lang LaSalle; it was also the only city in the Tri-Cities submarket to show overall positive net absorption in 2013. Rental rates in the city climbed during the fourth quarter, up 5 cents year over year to $2.47 a square foot per month. Rents also rose in Glendale, by 4 cents year over year, and in Burbank, by a nickel from fourth quarter 2012.
While more than 8,000 square feet was taken off the Pasadena office market in 2013, Glendale market gave back nearly 25,000 square feet and Burbank gave back nearly 450,000 square feet in 2013. The fourth quarter, however, offered glimmers of hope. Each of the submarkets posted positive net absorption, led by Glendale, which saw nearly 160,000 square feet come off the market in the October-December period.
As home to venerable institutions such as Caltech, the Jet Propulsion Laboratory and Art Center College of Design, Pasadena would seem to be a natural entrepreneurial hub. Tech incubator Idealab has been in Old Pasadena since 1996. But until recently, many local tech firms have been lured to Silicon Beach on the Westside or Silicon Valley up north.
Several investors plan to change that, starting with Legacy Partners Commercial Inc., a $9 billion Foster City real estate development firm. It is transforming 150 N. Orange Grove Blvd., the former headquarters of Avery Dennison Corp., into the open-floor-plan model favored by tech and creative firms. In the fourth quarter, Legacy Partners set up a sales office and began shopping the 115,000 square-feet to media, high-tech and entertainment companies, said Gregory Hall, a managing director. The extensive rehab is expected to take most of 2014.
In December, Rising Realty Partners and Internet entrepreneur David Sacks purchased three buildings in Pasadena for $10.9 million, or $149.76 per square foot. The 73,000-square-foot package, known as Old Pasadena Plaza, will be rebranded and transformed into creative office space, with extended Wi-Fi and powerful Internet connections.
Burbank had a less positive year, with nearly 450,000 square feet back on the market due to the move-out of Walt Disney Co. from the Alameda Tower, at 3900 W. Alameda Ave. In the fourth quarter, the market took back nearly 14,000 square feet, bringing its vacancy rate down one point to 19.8 percent. The positive swing could gain momentum if unconfirmed talk about converting Alameda Tower into multiunit residential comes to fruition.
Glendale’s vacancy rate dropped three points to 20.5 percent in the quarter, but it still remains the highest in the submarket.
Though there were multiple lease deals in the city’s commercial real estate market in 2013, much of it was a shuffling of the same tenants, looking to lock in better long-term lease deals, said William R. Boyd Jr., senior managing director of brokerage services at Charles Dunn Co.
“The dire news for landlords is that there is no immediate end in sight. For tenants, 2013 was another outstanding year for them to take advantage of deals in the marketplace,” he said.
– Karen E. Klein
Health care insurer Cigna Corp. has agreed to a six-year extension of its lease in Glendale in a deal with an estimated value of $11.5 million. The Bloomfield, Conn., firm renewed its 78,000-square-foot lease at 400 N. Brand Ave in December.
Nestle USA renewed a 400,892-square-foot lease at 800 N. Brand Blvd., its corporate headquarters. The move extends its lease until 2021.
In Pasadena, Bluebeam Software renewed its existing lease at 800 E. Colorado Blvd. and expanded into 39,458 square feet total.
Investors DivcoWest and Edgewood Realty Partners purchased the Pasadena Business Center, 465 N. Halstead St., for $36.25 million, or $151.77 per square foot.
Two properties near Old Pasadena, the AT&T building at 177 E. Colorado Blvd., and the Ameron building, 245 S. Las Robles Ave., were reportedly in negotiation for sale to investors at the close of the fourth quarter. No details have been announced.
Office Market At a Glance
Inventory 23 million square feet
Under Construction 155,000
Class A Asking Rents $2.64
For reprint and licensing requests for this article, CLICK HERE.