Corporate Tenants Seek Burbank Space

With its ample supply of speculative office buildings and its strategic location between Glendale and the western San Fernando Valley, Burbank’s so-called “Media District” is emerging as a place where corporate clients outside the entertainment industry can find a home.

“Burbank has always been an ideal location for the entertainment industry, but until recently, it hasn’t been a contender for corporate America,” according to Richard Schnell, senior vice president of Cushman Realty Corp., a brokerage firm that has been very active in the Burbank office market.

All this may change when a specific plan is adopted in the Media District, where more than 3 million square feet of speculative office space has been built, is under construction or planned in the area where the Ventura (134) Freeway, Olive and Alameda avenues and Riverside Drive come together.

Development that has transformed the area since the first speculative buildings were constructed in the early 1980s is certain to be altered when the specific plan--which will effectively eliminate the construction of large buildings on relatively small sites--is adopted next year.

Ironically, the plan was conceived about 3 years ago by Larry Kosmont, the city’s former community development director who is now a private consultant.

Kosmont said that most of the successful projects in the Media District--so called because of the long-time presence of such entertainment industry heavyweights as Disney, Columbia, NBC, Warner Elektra Atlantic and the Burbank Studio complex--have been outside the boundaries of Burbank’s West Olive Redevelopment area.

The only exceptions he could list are the 90,000-square-foot Compact Video Building, 2813 W. Alameda Ave., and the 144,000-square-foot Business Arts Plaza, 3601 W. Olive Ave.

Perhaps the biggest building in the Media District will be the Cushman Investment & Development Corp.’s twin-tower, 880,000-square-foot California Media Plaza at Olive Avenue, California Street and the 134 Freeway in the heart of the redevelopment area, Kosmont said. The development will feature 23- and 16-story office towers, a restaurant and 15,000 square feet of retail space.

“This would be the centerpiece of the redevelopment area and would solidify the diversification away from entertainment industry tenants,” Kosmont said. He is a consultant to Cushman.

Steven A. Somers, project manager for the Burbank Redevelopment Agency, said the developers of the Cushman Media Plaza project originally planned to build a luxury hotel in the 16-story tower. Action on the project has been delayed until Jan. 10, to allow input from the community, he said. He added that a specific plan for the Media District will probably be adopted in “early to mid-1989.”

Somers said that the specific plan will contain many elements designed to reduce traffic congestion in the Media District, along with a general 1:1 floor-to-area ratio (FAR) that would require developers of high-rise buildings to assemble larger sites than are currently allowed.

He added that Burbank currently has no FAR; the proposed one would be based on general speculative offices, while a medical office building--which generates more traffic--would permit a smaller building and a sound stage--which has less traffic--could be built larger.

Burbank’s proposed 1:1 FAR means that one square foot of gross building area could be built for each square foot of site, he said.

David A. DeFore of the Sherman Oaks office of Coldwell Banker Commercial Real Estate Services said that “favorable long-term growth expectations” should result in the absorption of 350,000-400,000 square feet of office space per year in 1988-1992.

Entertainment Firms Dominant

“Recent construction of major office space in Burbank (including the 477,000-square-foot, 32-story The Tower/Burbank where Coldwell Banker is handling the leasing), coupled with the various slow growth initiatives in Los Angeles and a general scarcity of good building sites, suggest that Burbank’s future office tenant mix and demand level will expand in the future,” DeFore said.

He added that, since the area began to see extensive development in the early 1980s, more than 25% of the speculative office space in the Media District has been occupied by entertainment-related tenants.

This is not an accident, according to Craig Stevens of Beitler Commercial Realty Services, Sherman Oaks. In the past 5 years, Beitler has assembled about 1 million square feet of land for many of the major office projects in the Media District, as well as several apartment projects that have been developed not far from the offices, he said.

“The goal of the city has been to attract entertainment-related businesses and the policy seems to be one of indifference to non-entertainment tenants,” Stevens said. “While Glendale to a great extent and Pasadena to a lesser degree have extended a welcome to new businesses, Burbank has been less than enthusiastic about attracting new companies,” he said.

Jeffrey M. Woolf, executive vice president of Beitler, estimates that there is a 2-year supply of Class A office space in the Media District, including the 32-story Tower/Burbank and Olive Vista Place by CMS Development Co., and the 7-story, 115,000-square-foot building at Olive Avenue and Buena Vista Street. The latter structure may be the last major speculative building to be constructed in or near the district, he believes.

‘Anti-Development Attitudes’

“I’d like to see the Cushman twin-tower project built because I think it would be good for the area, but I’m not optimistic, given the anti-development attitudes of the city,” Woolf said. He based the 2-year supply on absorption of about 300,000 square feet a year, with a mix of about 60% entertainment and 40% non-entertainment tenants.

“Insurance companies, in particular, like to locate in Burbank from the mid-Wilshire area and other parts of Los Angeles because Burbank has no gross receipts tax and L.A. does,” he added.

Designed by the Nadel Partnership and scheduled for completion early next year, the Tower/Burbank project at 3900 W. Alameda is a development of Kumagai-Gumi Land Inc. and Christiansen/Geiger.

Coldwell Banker’s DeFore said that the importance of the proposed 1:1 FAR ratio as a major constraint on future development of the Media District cannot be exaggerated. This measure would restrict major speculative high-rise office growth to such large landowners as NBC and Disney, “which have an abundance of developable land for combined owner/user and speculative mixed-use projects.”

Corporations Like Area

Cushman Realty’s Schnell said that the 21-story, 390,000-square-foot Disney Channel Building has attracted such non-entertainment-industry tenants as Mobil Oil Corp., Lockheed and Dean Witter Reynolds Inc. Developed by Cushman Development and originally called Burbank Centre, the building at 3800 W. Alameda was completed in 1985 and is 84% leased, Schnell said. It is the headquarters of the Disney Channel.

DeFore, Schnell and Larry Daniels of the Woodland Hills office of Cushman & Wakefield of California Inc. agreed that Burbank is attracting corporate clients. Daniels said that the 8-story, 144,000-square-foot Business Arts Plaza--the Screen Actors Guild Pension & Welfare Plan building--at 3601 W. Olive is 96% leased.

Since 1985, office vacancy rates in the Media District have fallen from about 35% to current levels of less than 8%, Schnell said.

Woolf agreed with the 8% level, if the 32-story Tower/Burbank is not included; if it is, the vacancy rate is 29%.