Burbank to Get Much-Needed Office Space
Burbank stands poised to finally start delivering something it has lacked for years: enough office space.
Somewhere between 1 million and 2 million square feet of office space is scheduled to be built in the next couple of years in the city, which has about 5 million square feet of existing office buildings.
Those buildings have remained mostly full for a long time, making Burbank one of Southern California’s strongest markets in terms of occupancy.
But by another measure of office market performance, absorption (the increase in the amount of occupied space), Burbank has lagged because “there hasn’t been any new space to be absorbed,” said broker Bill Boyd of Grubb & Ellis.
The lack of new construction means the Burbank office market has missed out on the opportunity to grow, Boyd said, because demand has remained strong and the city surely could have filled more space if it had been built.
Burbank is part of a regional office market that includes Glendale and Pasadena and is referred to by commercial brokerage firms as the Tri-Cities. With little development on tap in Glendale or Pasadena over the next 18 to 24 months, Burbank will be providing the combined market with much of its space, Boyd said. Burbank has been a leader for years in terms of occupancy, with the amount of empty office space falling under 5% in 2000, including space available to sublet. Real estate researcher CoStar Group Inc. reports Burbank vacancy has climbed to more than 9% with sublet space, but 10% or less is still considered healthy.
Much of the city’s office space is occupied by entertainment industry companies, including major studios and scores of firms providing ancillary services, many of whom are in the city’s Media District. The district is about six square blocks roughly bounded by Olive Avenue, Buena Vista Street, Warner Bros. Studios and Pass Avenue.
One reason for the recent development surge, said broker Matt Hargrove of Cushman & Wakefield, is that aerospace facilities formerly occupied by Lockheed Corp. have been sold to builders.
The former Lockheed land includes a 103-acre site at Empire Avenue and Interstate 5 where Los Angeles-based Zelman Development Co. began construction in February on 900,000 square feet of retail space at a project called Burbank Empire Center. The center will include 390,000 square feet of office space under construction by Palo Alto-based Menlo Equities.
Among the biggest developers of Burbank office space is M. David Paul Co., which owns 800,000 square feet of existing space, has 585,000 square feet under construction and has approvals for 700,000 more, according to Jeff Worthe, a principal of the Santa Monica firm.
A little more than half of the office space M. David Paul owns is in Burbank and most of what the company is developing is there as well, Worthe said. The company also owns property throughout the San Fernando Valley and in Santa Monica.
The company recently completed a 190,000-square-foot project at 2233 N. Ontario St. in Burbank called Media Studios North that is more than half leased. It has started construction on a development at 3300-3400 Olive Ave. called the Pinnacle and has two leases out for negotiations on that property, Worthe said.
The Pinnacle includes a six-story, 395,000-square-foot first phase scheduled to be completed in early 2002, followed by a six-story, 235,000-square-foot second and final phase.
The company expects Burbank to remain a healthy market despite the slowing economy, Worthe said. “When things slow down, the better markets still do OK.”
M. David Paul favors Burbank as a development site, Worthe said, for some of the same reasons that make it popular with office occupants: easy access to shopping and restaurants, its own airport, the fact that the city doesn’t have a gross receipts tax as Los Angeles does, and proximity to major studios.
In addition, the city generates its own electrical power, which has become a big plus of late, Worthe added.
M. David Paul builds with entertainment industry tenants in mind, Worthe said. Entertainment companies tend to prefer large floor plates--as opposed to being spread out on several smaller floors and having to ride up and down elevators or walk up and down stairs--and the open feel of high ceilings.
