By DOUGLAS YOUNG
The first wave of commercial construction to hit L.A. in the 1990s is on the horizon in Burbank and Glendale.
A number of major building projects in the Tri-Cities market of Burbank, Glendale and Pasadena moved closer to groundbreaking during the first quarter. The activity is being driven by the chronic shortage of office space in the market, where the office vacancy rate had declined to 7.6 percent as of the end of the first quarter, according to Grubb & Ellis Co.
That rate is a full percentage point below the market’s fourth-quarter 1996 rate and two percentage points below the year-earlier rate.
As vacancies continue to drop, leasing activity has come to a virtual standstill in Burbank, where the first-quarter vacancy rate stood at 5.0 percent. Likewise, virtually no major leases were signed in the tight Glendale market during the first quarter, where the vacancy rate is 7.0 percent.
Even Pasadena is beginning to suffer a slowdown in leasing activity, as the office vacancy rate approaches single digits and big blocks of vacant space continue to dwindle.
At least four developers are rushing to capitalize on the shortage of space in Burbank. The two closest to breaking ground are being developed by M. David Paul and Associates and J.H. Snyder Co.
M. David Paul is in the process of buying 10 acres of land in north Burbank from the City of Burbank for about $5.4 million, according to Jim O’Neil, special assistant to the director of the Burbank Community Development Department. The site is located at the corner of Empire Avenue and Ontario Street.
The land sale was approved by the Burbank City Council earlier this month, and the deal is expected to close escrow within the next 90 days, O’Neil said. After that, M. David Paul could begin the planning and development process for a business campus entitled for up to 650,000 square feet of new office space.
Also on the fast track is a 585,000-square-foot, three-building office complex being developed by J.H. Snyder on land at the corner of Alameda Avenue and Buena Vista Street.
Snyder is still talking with several potential investors about financing for the $130 million project, and a deal could be finalized in the next 60 to 90 days, said J.H. Snyder partner Cliff Goldstein.
If the project continues on schedule and breaks ground this summer, he said, the buildings could be completed and ready for occupancy by the first quarter of 1999.
Another major project to emerge is being developed by Chandler Partners of Burbank. Chandler is working on plans for a proposed office building with up to 120,000 square feet of space at the corner of Hollywood Way and Magnolia Boulevard, said O’Neil. Plans for the project are expected to be presented to Burbank City officials in the weeks ahead.
Dan Chandler of Chandler Partners declined to comment on the development.
Also moving ahead is a mixed-use retail/office project on 102 acres of north Burbank land. Phoenix-based developer Vestar Development Co. owns the land and is working with Burbank officials on specific plans for the site, said O’Neil, adding that those plans should be ready within the next 60 days.
The next step would be an environmental impact report, which would take about 10 months to complete, O’Neil said.
In Glendale, the biggest first-quarter news came in mid-March, when a partnership between PacTen Partners and Morgan Stanley & Co. purchased a piece of downtown land from K. Young Inc. for an undisclosed price.
K Young had planned to build a 500,000-square-foot office tower on the site at 655 N. Central Ave., but the project fizzled when K. Young’s parent company ran into financial difficulties.
The PacTen partnership plans to break ground on the 24-story office tower as early as this summer.
Also making progress was the proposed second phase of Glendale City Center, a project of downtown L.A.-based institutional investment advisor Westmark Realty Advisors LLC.
Westmark recently completed design plans for a 340,000-square-foot office tower on the site at 111 N. Brand Blvd. and expects to make them public in the next 60 to 90 days, said Ron Azad, who is directing Westmark’s development efforts.
The project could break ground as early as the first quarter of 1998, with construction completed by year-end 1999, Azad said, adding that the development cost will be between $58 million and $65 million.
Also moving along is the proposed Glendale Town Center project adjacent to the Glendale Galleria. Developer Donahue Schriber, which also developed the Galleria, received the exclusive right to negotiate with the City of Glendale to develop the Town Center project, said Mark McGaughey, a first vice president at CB Commercial Group Inc., which is handling pre-leasing for the project.
Under present plans, the Town Center would contain a 500,000-square-foot retail/entertainment complex, two office towers with a combined 500,000 square feet of space, and a hotel. The retail complex would be developed first, with a scheduled completion date in the fall of 1999, said McGaughey.
Meanwhile, development of the office component would depend on market conditions, he added, estimating the office and hotel components could be completed by the year 2001 if current market trends continue.
– Developer M. David Paul and Associates’ acquisition of 10 acres of land entitled for 650,000 square feet of office space in north Burbank is approved by the Burbank City Council.
– Burbank officials disclose that Chandler Partners is planning to build a 120,000-square-foot office building in Burbank at the corner of Hollywood Way and Magnolia Boulevard.
– Vestar Development Co. moves closer to breaking ground on its proposed retail/office project on 102 acres in north Burbank.
– PacTen/Morgan Stanley partnership purchases the former K. Young Inc. site at 655 N. Central Ave. in Glendale and plans to begin construction on a new 500,000-square-foot office tower there by summer.
– Westmark Realty Advisors LLC completes design plans for 340,000-square-foot Glendale City Center office tower at 111 N. Brand Blvd., and constuction of the project could begin as early as the first quarter of 1998.