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Saturday, Dec 2, 2023

NBC Universal Merger Puts Prime Property on Market

General Electric Co.’s bottom line orientation has put a prime piece of property on the real estate market. A year after the company acquired Universal Studios and paired it with its NBC division, NBC Universal is selling a 9-acre parcel that is part of NBC’s Burbank campus. Brokers said the parcel could fetch $45 million or more. The parcel, entitled for 875,000 square feet of media-related office space, has been relatively underutilized, and NBC Universal executives say that, with the acquisition of the Universal Studios facilities, it is no longer needed. “It goes with the theme of the whole NBC Universal get-together in terms of its being one company,” said Jack O’Neill, vice president, facilities management for NBC Universal. “We look at absolutely everything to see where we can find surplus whatever equipment, property anything we can do to make us as efficient as possible.” The property, which officials refer to as the Catalina site because it borders a street once called Catalina, is in the heart of Burbank’s media center, at what is now Bob Hope Drive and Alameda Street. It sits between NBC’s main campus and Providence St. Joseph Medical Center, close to the Walt Disney Studios. NBC’s 44-acre campus, acquired in 1950, was master planned in 1997 in a development agreement with the city of Burbank that runs through 2017. While the main campus of 35 acres has been fully occupied, the Catalina site has largely been reserved for future expansion needs. Only about 100,000 square feet of the site is currently being used in temporary facilities. “The master plan was something that we looked at very extensively once it was approved,” O’Neill said. “It was a corporate decision at that time that we would delay any implementation of the master plan because we had other strategic goals.” The acquisition of Universal Studios last May in a $14 billion deal further changed the expansion strategy for the company, at least where real estate is concerned. Universal property Universal Studios sits on some 430 acres of land, a large portion of it undeveloped after Universal scrapped its own master plan efforts about five years ago. Back in the 1990s, Universal Studios tried for a number of years to win approval for a $1 billion expansion of the complex. The company wanted to add to its theme park, build hotels and expand its studio and office facilities. Residents in the surrounding area mobilized in response to the application, first forcing Universal to scale back its plans to some 3.2 million square feet of development. Later, the company ditched its plans altogether as it began to focus its efforts on its international theme parks. It is not known how much space is currently available at the Universal complex, but some of NBC’s employees have already been relocated to the campus. “I’ve had extensive meetings with the city of Burbank to discuss whether we will implement the master plan on the main site or continue to try to see what synergies we can have and relocate people to Universal,” O’Neill said. “I would expect that process to continue for the indefinite future.” In talking about the merger, GE, the fourth owner of Universal in less than 15 years, has made clear its preference for seeking synergies in consolidation on many occasions. The company has said there would be staff cuts, albeit modest ones, and earlier this year, GE announced that it expected to save some $350 million from the merger. The company instituted a preferred vendor program, standardizing the suppliers used, cut out a number of perks once enjoyed by Universal executives and established more stringent accounting systems. The sale of the Burbank site promises additional financial opportunities. Interest in parcel With the huge success of several office developments in Burbank’s media district, particularly the Pinnacle, the parcel has drawn much interest. “We’re finding there’s very strong interest in development opportunities and a lot of that is due to the tremendous leasing activity that’s happening in the market,” said Tom Bohlinger, a broker with CB Richard Ellis, who is marketing the Catalina site along with CB’s Todd Doney and Sean Sullivan. “We’ve had an initial round and we’re in the process of determining who will go to the next round.” Bohlinger declined to elaborate on how many companies responded to the initial offer. “A lot,” he said. “We had a very strong showing. Neither he nor O’Neill would speculate on how much the property would bring. The parcel is entitled for 875,000 square feet of media office space, a size that takes into account the typically lower traffic usage during peak afternoon hours by media companies, said Joy Forbes, deputy city planner at Burbank. The development agreement between Burbank and NBC would carry over to the new buyer, Forbes added. “When they rezoned they sign a development agreement that says they can sell off all or part of the development agreement and the rights that go with it,” she said.

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