Businesses Divide to Conquer High Rents : Move: As the flow to Glendale’s high-rise district continues, “back-shop” workers are being split off into cheaper quarters elsewhere.
Even as office space continues to multiply on North Brand Boulevard and Central Avenue, major Glendale employers already are looking for ways to move their huddled masses to less expensive quarters.
The exodus mirrors an emerging phenomenon in which more prestigious companies are moving to Glendale’s high-rise corridor as its reputation becomes more upscale.
Fidelity Federal Bank, which has its headquarters at 600 N. Brand, set the lead 18 months ago. Almost half of the bank’s 800 employees--the “back-shop workers” who handle the computer data processing and administrative services of the operation--moved to a handsome but simple building in an industrial section just outside of town, away from the public eye and the heavy transit corridors.
That has left more room in the bank’s downtown headquarters to corporate executives whose power is often evidenced by the amount of space they command.
Other major employers may follow suit.
City officials and development experts predict that as land values and the cost of office space rises in the downtown area, the mushrooming populace of back office workers will gradually be replaced by front office executives.
“It’s just barely happening, but it will get stronger,” said the city’s redevelopment consultant, Frank L. Fuller of ELS Design Group, at a recent meeting with the City Council.
He cited the Carnation Co., which will move its 40-year-old headquarters from the mid-Wilshire district to 800 N. Brand Blvd. this year, as an example. “We’re going to see more headquarters-type people moving to Glendale,” Fuller said.
Instead of the typical office space of 250 square feet per employee, companies will start allocating 500 to 600 square feet of space for their higher-ranked executives. The prestige of a Brand Boulevard address warrants the increased cost, Fuller and other experts agree.
Rental rates in the downtown area have jumped to about $25 per square foot, up from about $18 a square foot just five years ago, said Tony Maniscalchi, vice president of The Prudential Stevenson Real Estate, a specialist in commercial and industrial properties. In contrast, office space for back-shop workers can be obtained in industrialized zones for 30% to 35% less, he said.
Charles Braden, executive vice president of Fidelity Federal, said the decision to move back-office operations to an industrial zone was made almost three years ago to consolidate operations that were scattered at six smaller locations around Glendale.
The bank bought a former manufacturing plant adjacent to the Golden State Freeway, conveniently located at the Edenhurst Avenue on- and off-ramps to the Colorado Street freeway extension. The remodeled two-story complex--with its sprawling grounds, rolling lawns, picnic areas and even a basketball court--is a welcome haven for workers away from the bustle of downtown, Braden said.
In addition to saving costs, Braden said, the operation in the high-security building is more efficient by having employees clustered on only two floors, rather than spread out over several floors of a high rise. “Paper flow works better across rather than up and down in elevators,” Braden said.
Fidelity is not alone. Security Pacific National Bank, which employes about 1,800 workers at its technical services center at 611 N. Brand, “has no plans to relocate,” said Deborah K. Lewis, senior vice president of corporate communications. However, a portion of the employees in the credit card processing unit in Glendale will be moved early this year to Arizona, she said.
The subtle changes in the use of office space could have a dramatic effect on the future of Glendale’s redevelopment zone, city officials and their advisers say. For instance, employing fewer workers in higher-profile jobs in the downtown area could reduce the amount of parking spaces needed in high-rise office buildings and, consequently, the amount of traffic on the most heavily traveled corridors, said Jeanne Armstrong, redevelopment director.
While the city in the past has required developers to provide sufficient parking space to accommodate a maximum number of employees, officials now are considering limiting the amount of parking permitted in new buildings.
The policy could trigger greater use of buildings for executive offices or force employers to provide employee parking elsewhere, coupled with shuttle service to and from work, just as the Glendale Galleria transports workers, who must park at the Los Angeles Zoo during the busy holiday shopping season.
The shift toward more executives in downtown buildings is accompanied by the city’s effort to lure more upscale tenants to downtown. Twentieth Century Insurance, for instance, leases a full floor in the 550 N. Brand building where it operates a regional claims adjustment office. The site was chosen because “it is convenient and easily accessible to a large concentration of customers,” said Ric Hill, vice president of corporate relations.
The Universal City law firm of Knapp, Petersen & Clarke this year will move its cadre of 75 attorneys, backed by a 125-member support staff, to the 500 N. Brand building. Law firms typically demand greater floor space--in this case, 58,000 square feet--than other office users, according to the Glendale Development Council, a public-private group promoting the downtown area.
Richard L. Botti of Keyser Marston Associates, the city’s real estate and development consultant, recently told officials that North Brand “is more attractive today than it was five years and 10 years ago” to high-end tenants who are now moving to town because “they have seen that the value and character along Brand Boulevard is going to be maintained.”
