-Walt Disney Co. signed an 11-year deal for 110,000 square feet at Burbank’s Buena Vista Plaza, 2411 W. Olive Ave., with landlord Tier REIT Inc. of Dallas.
-Alibaba Group Holding Ltd. signed a lease for 22,000 square feet at Pasadena Playhouse. Asking rates in the area are about $2.50 a square foot, potentially valuing the deal at $660,000 a year.
-Ikea bought a 22-acre site at 805 S. San Fernando Road near the 5 freeway for $46 million from Crown Realty and Development Inc. The home furnishing retailer has already begun demolition of the 19 buildings on the site to construct a 470,000-square-foot store, which will be its largest in the United States when it opens in 2017.
-Lincoln Property Co. bought three Burbank office buildings from Kennedy Wilson Holdings Inc. in June for $84.2 million, or $258 a square foot. The properties are at 303 and 333 N. Glenoaks Blvd., and 300 E. Magnolia Blvd. The deal included two parking garages.
-CBRE Group Inc.’s CBRE Global Investors bought a 74,391-square-foot Burbank shopping center from Invest West and Santa Barbara Capital in May for $48.6 million, or $650 a square foot, in one of the highest sales prices on a square-foot basis in the city. The average sale price in the submarket was $272 a square foot.
A large new office complex hitting the market in Pasadena made the Tri-Cities office submarket look depleted last quarter despite some significant lease deals.
The submarket, which includes Burbank, Glendale and Pasadena, saw its vacancy rate rise a half-point to 14.8 percent in the second quarter, according to Jones Lang LaSalle Inc. In all, the market reported negative net absorption of 123,636 square feet.
The bulk of that was attributable to Pasadena, which reported negative net absorption of 178,662 square feet and a vacancy rate of 15.9 percent – up 1.6 points from the previous quarter.
Pasadena Playhouse, a $75 million office project at 680 E. Colorado Blvd. under construction for years, was completed in April and added 155,000 square feet of vacant office space to the inventory.
“If you took out the Playhouse from our inventory, vacancy rates in the market would be right at or below 14 percent,” said John McAniff, managing director in JLL’s downtown L.A. office.
The Playhouse won’t be vacant for long. Developer IDS Real Estate Group signed deals with Charles Schwab Corp. for 9,300 square feet; co-working space Epic Spaces for 9,500 square feet; and, most notably, China’s Alibaba Group Holding Ltd. The e-commerce giant leased the entire 22,000-square-foot top floor at the project in June.
“In Pasadena, there’s optimism because, even something as small as a 22,000 square feet, when you see a group like Alibaba in a small market like Pasadena, where most tenants are homegrown, it can shift the market mentality,” said Scott Steuber, a principal at Avison Young’s downtown L.A. office who does deals in the area.
Class A asking rates there rose in the quarter 22 cents to $2.98 a square foot.
Neighboring Burbank had a whopper deal of its own.
Walt Disney Co. leased all but 8,000 square feet of the 118,000-square-foot Buena Vista Plaza, an office building at 2411 W. Olive Ave. two blocks from its studio headquarters.
In all, the city reported a vacancy rate decline of eight-tenths of a point to 15.4 percent as it absorbed 58,489 square feet. To keep deals flowing, landlords there lowered Class A asking rates 9 cents to $3.15 a square foot.
Investors continued to feel bullish about Burbank with a number of deals closing last quarter.
Among them, Lincoln Property Co. bought three buildings from Kennedy Wilson Holdings Inc. for $84.2 million, or $258 a square foot, in hopes of attracting businesses pushed or priced out of Hollywood.
In comparison, Glendale had a mediocre quarter. The vacancy rate remained flat at 14.1 percent as tenants gave back a negligible 3,461 square feet.
Landlords there dropped Class A asking rates 2 cents to $2.52 a square foot, likely hoping to attract price-conscious tenants.
In terms of the big picture, however, the city is performing well. In the year to date, it’s absorbed 84,598 square feet of office space and reported nearly 328,000 square feet of absorption last year.
“It’s over 20 percent less expensive in Glendale versus the other two markets, so I think it has absorbed a pretty healthy amount of vacancy,” said David Kluth, an executive managing director at Newmark Grubb Knight Frank.
– Jacquelyn Ryan
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