Surprise Hit : Glendale Rapidly Becoming a Show Biz Boomtown

The burgeoning entertainment industry is transforming Glendale, once known mostly as the home of Forest Lawn Memorial Park, into one of the hottest office markets in Southern California.

With studios and other media-related firms flocking to town, the demand for office space has soared, with Glendale now boasting among the lowest vacancy rates and highest rental rates in the region. The trend, which began in 1991, was in evidence again last month with the news that Walt Disney Co. plans to lease seven floors in a Glendale office building for corporate administrative operations.

For many years, Disney was the only entertainment concern with a presence in Glendale. Its huge Imagineering theme-park design unit encompasses about 1 million square feet and employs more than 1,000 people.

But until five years ago, Glendale’s central business district had been ignored by most in the entertainment industry. “We had entertainment companies telling us they out-and-out wouldn’t go to Glendale because it was too far away,” said William Boyd, an office market specialist with CB Commercial Real Estate Group Inc.

That changed in 1991 when the Disney Stores division headquarters moved to Glendale, followed in 1993 by Warner Bros.’ animation operations.

Turner Feature Animation recently signed a lease for 70,000 square feet. And the new DreamWorks SKG studio plans to build a $50-million complex for its feature animation unit there.

“We think it’s a big boom,” said Jeanne Armstrong, Glendale’s director of development services. “We have eight or nine major media companies.”

Its newfound popularity comes as welcome news to this city of 192,000, which three years ago started an advertising campaign that included magazine and radio spots. The campaign focused on the city’s top-quality office buildings in walking distance of restaurants, shops and theaters.

The city has also benefited as the rapidly expanding entertainment businesses in Burbank have found it increasingly difficult to find space in its media district, and thus have turned to nearby Glendale.

The payoff, Armstrong said, is that the entertainment industry is now the city’s largest employer. What’s more, the media and entertainment jobs are relatively high-paying, and industry workers tend to spend more money on food and recreation than employees in other businesses, she said. The local housing market has also benefited as studio employees look for homes nearby.

The growth has also encompassed a host of smaller entertainment and media-related companies that have moved here in recent years, including CD-ROM design firm 7th Level Inc.; ASI Entertainment, an entertainment market research company; Knowledge Adventure; and Rough Draft Studios.

In all, entertainment companies occupy more than 2 million square feet of office space in Glendale, the city estimates.

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The office vacancy rate in Glendale is a tight 7%, compared with 19% in downtown Los Angeles, Boyd said. And top rental rates have climbed to a princely $26 per square foot, the same as in Burbank and the highest in Southern California. Office space is even scarcer and rents higher in Glendale’s central business district and Burbank’s media district.

“We think between Burbank and Glendale, you might have the strongest business district in the immediate region,” said Tim Walker, a partner with developer Maguire Thomas Partners. Maguire Thomas has entered a joint venture with Bank of America to market the 14-story Glendale Center building at the Ventura Freeway and Brand Boulevard, where Disney just signed the lease.

Maguire Thomas is better known for its plans to develop the high-profile Playa Vista Studios near Marina del Rey, where the DreamWorks studio will be housed. But Walker said the company also has high hopes for Glendale, where it plans to build a low-rise, campus-style complex around the Glendale Center building--complete with amenities such as tennis and racquetball courts that might appeal to entertainment tenants.

The strong Glendale office market has also attracted a large South Korean developer, K. Young Development Inc., which will break ground within the next three months on a 24-story office tower at 655 N. Central Ave.

Perhaps the biggest concern for Glendale now, Boyd said, is that the commercial real estate market has become so tight that entertainment companies with immediate needs might have to look elsewhere.

When approached by entertainment firms looking for Glendale office space, Boyd said: “We have to politely point out that there isn’t the square footage that these companies are looking for. For our little part of the world, it is a topical concern.”

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Hot Market

The booming entertainment industry has turned once-sleepy Glendale into one of the hottest office markets in the Southland. Office vacancy and rental rates for the fourth quarter of 1995:

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Vacancy rate Rental rate* Glendale 7% $26 Burbank 7 26 Irvine 9 19 Santa Monica 12 23 Downtown Los Angeles 19 16 Santa Ana 21 15 Ontario 23 17 Downtown Long Beach 26 20 LAX area 36 13

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*Average asking rate for one square foot per year

Source: CBS Commercial Real Estate Group Inc.