It’s amazing what one building can do to a market, and Burbank is a case in point. The Media City saw its vacancy rate rise to a historic high in the first quarter after Walt Disney Co. vacated 470,000 square feet of office space in Alameda Tower, at 3900 W. Alameda Ave. The Burbank company occupied 95 percent of the building, but has now moved employees to several company-owned buildings in Glendale and its 2 million-square-foot headquarters campus at 500 Buena Vista Ave. That move pushed Burbank’s vacancy rate up to 20.2 percent, nearly 8 points higher than in the fourth quarter, according to data from Colliers International. Brokers familiar with the area say that combined with expected departures later this year – including the move of NBCUniversal’s news operations to Universal City – means it could be years before the market recovers. “This sort of vacancy is really startling,” said William Boyd, senior managing director at the Glendale office of Charles Dunn Co. “To get back down to a 10 percent vacancy rate, you’d have to lease 200,000 square feet a year for four years and not have any other vacancies. The uneasy fact is that none of us know what’s going to happen.” Neighboring Glendale managed to eek out a positive absorption rate, taking 51,100 square feet off the market; but its vacancy rate stayed the highest in the Tri-Cities region, which includes Pasadena, at 20.8 percent. Long an insurance industry hub, Glendale added two leases by insurers. Woodland Hills firm Health Net Inc. signed a five-year lease for 23,400 square feet at 101 N. Brand Blvd. and New York Life Insurance Co. of New York took 31,700 square feet at 801 N. Brand Blvd. Boyd said the make-up of tenants in the two cities is unlikely to change, even as Burbank landlords seek new tenants. “The tenant mix is always the same: Burbank is media, media-related and production companies,” he said. “Glendale has law firms, accounting, title and insurance companies.” And as vacancies rose, landlords struggled to keep competitive market rates. The asking rents in both cities dipped. Glendale’s average asking rent fell two cents to $2.45 a square foot, while Burbank’s dropped 11 cents to $3.01. Meanwhile, many of the leases in both cities were signed by familiar faces, as tenants played a game of musical chairs in Glendale and Burbank. Disney signed a lease of 45,000 square feet at 655 Central Ave. in Glendale. FremantleMedia Ltd., a production company with credits that include “American Idol,” stayed in Burbank, but has opted to move into new offices at the Pointe, at 2900 Alameda Ave. Built in 2009 by Los Angeles developer M. David Paul & Associates and Worthe Real Estate Group, the Pointe has already attracted television station KCETLink and DC Comics Inc., among other media companies. And the movement may not be done yet. As existing buildings age and the markets seek to attract new media tenants, more moves to higher tech buildings may be on the way. “There are big differences in operations between old media companies and the new high-tech ones,” said Shadd Walker, a senior vice president at Colliers International’s Los Angeles office, who has worked in the Burbank office market for more than 20 years. “So they are looking for different things than the typical office. They want more open space.” And that may mean renovations. For Alameda Tower, which was constructed in the 1980s, becoming more high-tech and Internet-friendly have been add-ons. And that, some say, will be Burbank’s biggest challenge in finding new tenants for the open space. “These buildings weren’t constructed for high-tech uses,” said Walker. “And that may mean some upgrades or renovations before new media companies will be interested in taking the spots.” – Kelly Goff Main Events Walt Disney Co. vacated more than 470,000 square feet of space in Alameda Tower, at 3900 W. Alameda Ave. The Burbank company occupied 95 percent of the building, but has now moved employees to several company-owned buildings in Glendale and its 2 million-square-foot headquarters campus at 500 Buena Vista Ave. Owner BlackRock Inc. is now reportedly mulling a potential sale of the building. Production company FremantleMedia Ltd. signed a lease for 72,000 square feet at the Pointe, 2900 Alameda Ave., in Burbank. The company is a division of German entertainment company Bertlesmann RTL Group, and is the production firm behind “American Idol.” BRC Imagination Arts, which designs theme parks and cultural attractions, renewed its lease on 48,000 square feet at 2711 Winona Ave. in Burbank. Woodland Hills insurance company Health Net Inc. signed a five-year lease for a 23,400-square-foot office space at 101 N. Brand Blvd. in Glendale. Asking rent in the building is $2.75 a square foot, according to CoStar Group Inc. Cartoon Network renewed its lease on 34,600 square feet at 303 N. Glenoaks Blvd. in Burbank from landlord Kennedy-Wilson Holdings Inc. Average asking rent in the building is $2.50 a square foot, according to CoStar. The State of California also leased 35,265 square feet in the 101 N. Brand Blvd. building in Glendale from landlord Legacy Partners Inc., bringing its occupancy up to 89.4 percent.
Disney Pullout Leaves Burbank Market Wishing Upon a Star
