If the Tri-Cities submarkets are in a race to outrun the down economy, entertainment heavy Burbank is definitely in the lead.
Burbank was the only submarket of the three to absorb space during the second quarter – 27,106 square feet of it. The submarket also ended the period with vacancies down to 17.3 percent, nearly two points below the Tri-Cities average of 19.2 percent, according to Grubb & Ellis Co.
“Burbank tends to weather the storm better than its Tri-City neighbors because of the entertainment industry.” said Nico Vilgiate, senior vice president, CB Richard Ellis Group.
Glendale and Pasadena saw vacancy levels rise more than a point each since the first quarter, to 21.8 percent and 18.4 percent, respectively.
“Glendale is the community really trying to bring new business into the community because it’s historically been an insurance town,” according to Vilgiate.
The plan might be working. The city is close to luring a professional service firm out of Hollywood and into a two-floor space in Glendale, he said.
“It’s an opportunity for a company to trade up from a Class B to Class A building as well as escape the onerous gross receipts taxes (in Los Angeles),” explained Vilgiate.
The Tri-Cities took a hit when several new large buildings came on the market last year without any tenants. But now that Maguire Properties’ 187,973-square-foot Glendale building is up for sale, as is the note on Walton Street Capital’s 2300 Empire, a 360,000-square-foot project in Burbank, things could be looking up.
Vilgiate said the new owners will have lower base costs that will allow them to price leases more competitively. “And they’re offering top-quality, LEED-certified buildings to tenants compared to most of the competing products, which are 10 to 20 years old.”
Tri-Cities’ Class A asking rents fell 2 cents since the first quarter to $2.90 per square foot; Class B rents decreased slightly to $2.25.
Office Market At a Glance
Inventory: 19.5 million square feet
Under Construction: 0
Class A Asking Rents: $2.90
- M. David Paul & Associates sold an 18,695-square-foot office building in Pasadena to Drora Shevy for $3.1 million. The Class B property is located at 41 S. Chester Ave. The buyer plans to occupy part of the building and lease out the rest.
- Health club chain 24 Hour Fitness inked a deal to rent a 47,000-square-foot corner retail building at 1903 Empire Ave. in Burbank for 15 years. The property, owned by 1903 Empire Avenue LLC, recently received a change-of-use permit to allow the space to be used as a gym and is undergoing renovations including the installation of a swimming pool.
- Pasadena’s City Council voted to preliminarily approve $11.1 million federal bond money for the restoration of the seven-story former Constance Hotel. The building would reopen as 156-room boutique hotel as part of Park Place Commercial’s $76 million mixed-use project on East Colorado Boulevard between South Lake Avenue and South Mentor Avenue.
- Financial services firm Merrill Lynch renewed its lease for 23,321 square feet of office space at 225 S. Lake Ave. in Pasadena. The building is part of the four-structure Corporate Center Pasadena complex, which totals 600,000 commercial square feet. Financial terms of the deal were not disclosed.