New Glendale Tower Signs Its 1st Tenant
Developers of the Los Angeles area’s first speculative high-rise office in nearly a decade have signed their first tenant, just weeks before the building is completed.
State Compensation Insurance Fund will relocate from Warner Center to 125,000 square feet of offices at Glendale Plaza, which rises 24 stories above the Ventura Freeway in downtown Glendale.
The 10-year lease for nearly one-fourth of the building’s rentable office space is valued by industry sources at more than $40 million. State Fund will move nearly 500 employees across the San Fernando Valley to six floors of the Glendale tower in May or June of 2000.
The commercial real estate community has kept a close eye on leasing progress at the $100-million development, which is widely regarded as a high-risk venture. Several other transactions are in the works, according to representatives of PacTen Partners, the firm developing the tower in partnership with Morgan Stanley Real Estate Fund II. PacTen’s principals are veteran local real estate figures Nyal Leslie, Pete Hillman and Dennis Fitzpatrick.
The team broke ground on Glendale Plaza in late 1997 without any tenant commitments, and hence became the first large “spec” high-rise development in the Southland since the last building boom ended in the early 1990s.
“The first deal is always the toughest,” said broker Brad Chelf of CB Richard Ellis, who represented the tenant. “But getting a tenant of State Fund’s caliber gives the Glendale Plaza project a lot of credibility,” he added. CB Richard Ellis also represented PacTen.
During the mid-1990s, vacancies among Glendale’s most prestigious towers dipped to a tight 5%--and rents rose--as media and entertainment companies filled up space in Burbank and neighboring markets. While the entertainment industry remains a key component of the city’s central business district, the State Fund move seems to reflect downtown Glendale’s more traditional role as home to large finance and insurance tenants.
Yet, entertainment and related fields have proven more buoyant than some analysts predicted, said Richard Ziman, chairman of Brentwood-based Arden Realty Inc., which has invested in downtown Glendale. “The projected slowdown in entertainment employment really hasn’t occurred.”
But while PacTen and a couple of other developers have gone forward anticipating continued escalation in Glendale rents, those rates have remained relatively stagnant over the last year or so, Ziman said.
