Glendale High-Rise Opens With 70% of Space Unleased
Glendale Plaza, one of the region’s first office towers in nearly a decade to be built on speculation, celebrated its grand opening last week with just 30% of its space leased.
Seemingly undaunted by the slower-than-expected pace of leasing, one of the project’s developers predicted Monday that the 24-story building will be at least 80% leased by year’s end.
“There’s quite a bit of stuff in the works that would remedy” the dearth of tenants, said Pete Hillman, a partner with West Los Angeles-based developer PacTen Partners, which developed the building.
Hillman said his company is in serious talks with half a dozen potential tenants for the unleased space. “We’re bullish,” said Hillman, whose firm developed the property with Morgan Stanley Real Estate Fund II. “We think this is quite a project.”
Over the last several months, some Southern California real estate industry observers have made the $100-million project at 655 N. Central Ave. a symbol of the slowing office market in the Burbank-Glendale-Pasadena corridor.
Indeed, PacTen Partners did not announce its first tenant until the 529,000-square-foot structure was near completion. State Compensation Insurance Fund is expected to occupy 125,000 square feet of space in the high-rise next year.
Last week, PacTen announced a second tenant: London-based Regus Business Center will take over 33,000 square feet in a lease agreement valued by industry sources at about $11 million.
Hillman, although denying that he is disappointed over the pace of leasing, said he had anticipated that the building would be half-leased by now. But he said rents, which are about $30 per square foot per year, were not lowered to attract tenants.
Timothy Walker, a partner with Los Angeles-based Maguire Partners, said that in the 1980s, a 30% lease rate for a new speculative building would have been respectable. Today, with the market slowing and funding sources getting tighter, lenders are more comfortable backing a building that’s about 40% pre-leased, he said.
