Developers of Burbank's newest major office building, the Pinnacle, have announced plans to build a second phase next summer even though they don't have any tenants lined up.
The first phase of the Pinnacle, at 3400 W. Olive Ave., is 95% leased, mostly to tenants in the entertainment industry, said Jeff Worthe of M. David Paul & Associates, a Santa Monica developer and co-owner of the project.
The company recorded a $143.5-million sale of the building Monday that replaced original financial partner Stockbridge Real Estate Fund of San Mateo with Deutsche Bank and RREEF America, a German-owned commercial real estate investment advisor.
"Now that the building is leased it was time to bring in a partner with a long-term ownership philosophy," Worthe said.
The six-story, 393,000-square-foot building was completed last year. Tenants include Warner Music Group, NBC Enterprises, Clear Channel Broadcasting, Sony Pictures and Bravo Cable Network.
M. David Paul & Associates plans to build a second 225,000-square-foot office building, betting it can sign tenants by the time the building is completed in fall 2005.
Speculative development has been rare in Los Angeles County since the early 1990s, when demand for office space collapsed with the economy. But Burbank's Media District is a popular office market hemmed in by movie studios, residential neighborhoods and the Ventura Freeway, said real estate broker Carl Muhlstein of Cushman & Wakefield.
Muhlstein represented the developer in Monday's transaction along with Secured Capital Corp., a West Los Angeles real estate investment banking firm.
Office vacancy in the Media District was 4.7% at the end of the third quarter, down from 20.5% a year ago, according to Cushman & Wakefield. Average rent rose to $2.76 per square foot per month from $2.49 in the same period last year.