Clear Channel Communications Inc. will consolidate its eight Los Angeles-area radio stations in a new Burbank office building with a 95,000-square-foot lease that will drive the office vacancy rate in the city's popular Media District back into single digits.
San Antonio-based Clear Channel has signed a $45-million agreement with landlord M. David Paul Associates to rent space for more than 12 years at the Pinnacle, a recently completed office and retail complex at 3400 Olive Ave.
Clear Channel will build 40 radio studios there over the next year and a half as it prepares new digs for FM stations KIIS, KHHT, KBIG, KYSR and KOST, and for AM stations KFI, KXTA and KLAC. Each station will have its own broadcast facilities plus studios for production, commercials and other uses.
The stations now broadcast from four locations in central Los Angeles, Glendale, Sherman Oaks and Burbank, said Charlie Rahilly, who heads California radio operations for Clear Channel. Industry estimates value the Los Angeles-area radio stations consolidating in Burbank in the range of $2 billion.
The company had one obligatory requirement for its new headquarters: It had to have a line of sight to transmitters on Mt. Wilson and Briar Crest Peak in the San Gabriel Mountains, which will be used as backup studio-to-transmitter links. Another attraction of the Burbank building is its proximity to NBC and other entertainment studios.
"Jennifer Lopez can stop by KIIS studios on her way to doing 'The Tonight Show,' " Rahilly said.
The agreement with Clear Channel to move more than 400 employees means the Pinnacle, which opened in September, is 85% leased, said Jeff Worthe of M. David Paul & Associates. Other major tenants include Warner Music Group and NBC Enterprises.
The Burbank Media District, which is clustered around the Ventura Freeway near Warner Bros., Walt Disney Co., NBC and Universal Studios, has long been one of the region's tightest office markets. Vacancy there fell as low as 2% in the mid- to late-1990s, said Cushman & Wakefield broker Carl Muhlstein, who represented the landlord in the Clear Channel lease.
New buildings that were completed starting in 2001 lifted the vacancy rate to 16% last year. The Clear Channel deal and an expected agreement with Time Warner Entertainment Co. to lease all of the 400,000-square-foot Studio Plaza building at 3400 Riverside Drive should push the district's vacancy down to about 8%, Muhlstein predicted.
Burbank, he said, "is benefiting from re-engineering in the entertainment industry, with its focus on consolidation and long-term savings."