Glendale Project Finally Begins : Ground Lease Proposal Delayed Development
False starts are common in construction. No sooner is the beginning of work announced than it can be delayed, and then--before anyone realizes it--the project is off and running.
Such is the case with a $65-million office/retail center in downtown Glendale.
Six months ago, it was ready to get under way, subject only to approval by the Glendale City Council and Redevelopment Agency. The approval was slow in coming. Then, without fanfare, construction began in September with demolition of a one-story structure on the site, at North Brand and Milford Street. Now the 15-story office tower that will be the keystone of the project is 43% leased but the official ground breaking will take place Oct. 23.
What happened before the project was approved was a major shift in plans. Susan F. Shick, deputy executive director of the Glendale Redevelopment Agency, said:
“The original transaction involved a ground lease. That concept was troublesome to the redevelopment agency. So we took it back and wrote down the land, and Reliance could buy it at less cost. Then we did an industrial development bond on the parking structure, secured by Reliance with a letter of credit.”
Complicated stuff, but what it amounted to was help from the city to make the project possible. The city issued $12 million in industrial development bonds, and the redevelopment agency will maintain an equity interest in the property. The arrangement will entitle the agency to “a share of the profits” after the developer has achieved “certain occupancy milestones” and received “a specified return on the investment.”
Asked for more details, Henry A. Lambert, president of Reliance Development, said that the data is contained in legal documents “probably 50 pages long,” but in essence, the agreement means that “after the building is up for awhile, we will determine return on equity, and the city will participate in the profits.”
Lambert described the development as “a landmark complex” and “a major step forward in the Glendale Redevelopment Agency’s Brand Boulevard redevelopment program.” He gave credit for the strong leasing activity to freeway access and building design, which was dramatically changed even during the past few months. With the delay in getting city approval, “there was an opportunity to improve the design, so it was improved,” Lambert said.
Designed by Maris Peika of Skidmore, Owings & Merrill, the 330,000-square-foot 505 North Brand building will be clad in sand-colored, precast concrete with polished, red granite accent panels and bronze glass. The building will have 15-foot setbacks on all four corners and even deeper setbacks on the 14th and 15th floors. The first level, facing North Brand, will also be set back 15 feet, and it will have a covered walkway and a retail arcade. A typical floor will have 22,600 square feet of rentable space.
The complex will also have a three-story office and retail building and a 1,200-car, six-level parking facility. The low-rise building, with 45,000 square feet of leasable space, will be built after completion of the tower.
The building that was demolished had housed American Savings & Loan Assn., which moved temporarily to 527 N. Brand. American Savings will relocate to the ground floor of the tower, when the tower is completed in December, 1986.
The tenant that has leased the most space so far is CIGNA Healthplans of California, which has signed up for 100,000 square feet for its new corporate headquarters. United Pacific Insurance Co. leased 20,000 square feet, and American Savings leased 10,350 square feet.
Reliance Development Group, a subsidiary of New York City-based Reliance Group Holdings (which has $4.2 billion in assets), is also developing projects in Los Angeles. Among them are a 22-story office building at 1000 Wilshire Blvd. and a complete renovation of the Los Angeles Hilton Hotel. The firm is investing an estimated $230 million in the downtown Los Angeles area.
