Glendale Plaza Adds Five More Tenants
One of Los Angeles County’s most closely watched commercial real estate developments has signed another anchor-sized tenant and other smaller occupants to fill an additional 140,000 square feet of office space. And developers of 24-story Glendale Plaza say they’ll announce another major tenant within the next few weeks.
The completed deals with UnumProvident Corp., Van Deventer & Hoch, CalPERS, Unilab and First World Communications mean nearly 65% of Glendale Plaza’s offices are spoken for, nine months after the 530,000-square-foot tower opened. The pending deal would boost occupancy to beyond 80%, according to developers PacTen Partners and the Morgan Stanley Real Estate Funds.
The commercial real estate community has viewed Glendale Plaza--the region’s first speculative high-rise in nearly a decade--as a barometer of office demand within the market stretching from Burbank through Pasadena. Some observers expressed concern for the project’s financial health when entertainment businesses didn’t flock to the $100-million project as had been expected when the developers broke ground.
The latest deals indicate that traditional corporate tenants will pay higher rents than the developers had initially anticipated. PacTen principal Nyal Leslie said the latest Glendale Plaza leases average “well beyond” the $28.50 to $29 per square foot annually cited as typical for downtown Glendale offices. Although Leslie declined to disclose specifics, he said the new tenants will pay rent totaling about $40 million over their respective leases.
The biggest tenant among the latest batch, UnumProvident, is the successor to the mid-1999 merger of insurance companies Unum Corp. and Provident Cos., and now the nation’s biggest disability insurer.
UnumProvident’s real estate broker, Brad Feld of Cushman & Wakefield, said his client will initially occupy three floors totaling about 66,000 square feet as an expanded claims-benefit office. The company will probably exercise options to take one or two more floors sometime next year, upping the total commitment to more than 111,000 square feet.
UnumProvident will also keep a sales office within the two floors the company now occupies at the nearby Glendale City Center tower, Feld said. As with all the Glendale Plaza transactions, CB Richard Ellis’ Doug Marlow and Nicole Wilson brokered the deals on the developers’ behalf along with PacTen’s John Barganski.
Longtime downtown Glendale money manager Van Deventer & Hoch, represented by CB Richard Ellis’ Kevin Duffy, will move from the nearby Nestle headquarters building into 15,000 square feet at Glendale Plaza. CalPERS (the state employee pension fund), represented by Seeley Co.’s Wayne Saldana, will relocate from Brentwood into 15,000 square feet.
Tech companies Unilab and First World Communications are opening new offices of 5,300 and 3,100 square feet. Their brokers are Grubb & Ellis’ Chris Baer and Christian Hayes, and Travers Realty’s Reynolds McCabe and Griffin Hoover, respectively. State Fund and Regus Business Centre, the tower’s first tenants, have also recently agreed to expand by a total of about 22,000 square feet.
The deals with UnumProvident and Van Deventer & Hoch “substantiate that Glendale isn’t dependent on the entertainment and media sectors,” said longtime Glendale office broker Bill Boyd of Grubb & Ellis. Like Glendale Plaza’s first big occupant, State Fund, those tenants reflect Glendale’s “historic roots” in insurance and financial services, he added.
“Regardless of the actual rental rates, the fact that the Glendale Plaza team captured these tenants should quiet some of the criticism that greeted the project earlier,” Boyd said.
Boyd noted that part of Glendale’s attraction is the availability of large blocks of contiguous space. Researcher CoStar Group Inc. reports that Glendale’s office vacancy rate was just over 10% at the end of the third quarter--and just over 12.5% including available sublease space. By contrast, Burbank’s Media District west of downtown Glendale remains ultra-tight with a vacancy rate of less than 1%. Pasadena office vacancies are now below 10%.
With Walt Disney and Warner Bros. not gobbling up space as they had a couple years back, downtown Glendale is temporarily burdened with “some excess space the market has to work through,” said Hugh Greenup, executive vice president at Kilroy Realty, which owns the International House of Pancakes headquarters building on Brand Boulevard.
But even if the studios aren’t expanding in downtown Glendale, they’ve invested heavily in the area and remain a strong magnet for properties in both Burbank and Glendale, Greenup said.
