If the current Tri-Cities office market were a pyramid of winners and losers, Pasadena would occupy the bottom, Burbank would be on top and Glendale would be right in the middle. That’s how the three radically different submarkets finished up the first quarter of 2009.
Pasadena ended the period with 146,484 square feet of additional space available, pushing its vacancy rate up more than four points to 15.5 percent. That was nearly a dozen points higher than Burbank’s.
“Pasadena rents have come down significantly in the last six to nine months, and there’s not much activity,” noted Patrick Church, senior vice president at CB Richard Ellis Inc.
Glendale ended the quarter with a 16.3 percent vacancy rate, but it was the only Tri-Cities office market to see its rate decrease since the fourth quarter, driven mainly by out-of-market tenants looking to duck city of Los Angeles sales taxes.
“I’m getting phone calls every week on the sales side, and a number of tenants whose leases expire next year are active trying to get deals done now,” Church said.
Glendale’s strength was reflected in average Class A asking rents of $2.73 per foot, just 9 cents lower than the same time last year. The biggest shot in the arm came from Nestle, which renewed for 76,607 square feet at 800 N. Brand Blvd.
Burbank is one of only two county submarkets with a single-digit vacancy rate. However, that could change when Higgins Development Partners completed its office tower at 2300 Empire Center, and M. David Paul & Associates finishes up the Pointe at 2900 W. Alameda Ave.
Office Market At a Glance
Inventory: 18.5 million square feet
Under Construction: 997,468 square feet
Class A Asking Rents: $2.88
MAIN EVENTS
– Nestle USA renewed for 76,607 square feet at its 800 N. Brand Blvd. tower in Glendale. Terms inside the 540,516-square-foot high-rise, owned by Wells Real Estate Funds, run through November 2015, and include three months of free rent. The consumer products giant already occupies 500,000 square feet in the Class A parcel.
– IMB Management Holdings closed its $13.9 billion purchase of Federal Deposit Insurance Corp.-seized lender IndyMac Bank, and announced it would not be vacating IndyMac’s 190,000-square-foot site, at 888 East Walnut St., in Pasadena.
– U.K. real estate titan Grosvenor placed its 230,000-square-foot, 11-story Pasadena office tower at the corner of East Colorado Boulevard and South Lake Avenue, on the market.
– Warner Bros. signed a 27, 000-square-foot, six-and-a-half-year lease that both extends and expands the entertainment firm’s presence at 3601 W. Olive Ave., across from its main studio. Screen Actors Guild Administrative Corp. owns the 152,000-square-foot site, and the pension fund, managed by JPMorgan Chase & Co., set terms at an average rate of $3.35 per foot, or roughly $7.5 million in consideration.
– Two chunks of sublease space came on line in Burbank in the first quarter: 60,000 square feet in the Allianz Building, 2350 Empire Ave., and Yahoo Inc.’s 165,000 square feet at Media Studios North, Phase 5, 3355 Empire Ave. The asking rates reportedly are $2.50 and $2.95 per square foot.
