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By JOYZELLE DAVIS Staff Reporter The Los Angeles Community Redevelopment Agency has labored for almost two decades to shake North Hollywood’s image as a seedy area. But as adjacent office submarkets flourish, some hope that market forces might be able to do what the government so far hasn’t. North Hollywood seems like a logical and economical location for companies that can’t find or afford space in popular Burbank and Glendale: it’s close to the same labor pool and clients as the Media District, annual per-square-foot rents for Class A office space are $3 to $7 less, and the CRA offers tax incentives to entertainment companies that relocate their headquarters to the North Hollywood redevelopment project area. So far, though, most companies aren’t biting. Walt Disney Co. made the biggest splash when it moved its online division into the 5161 Lankershim Building in October, but no other major media companies have followed. Andrew Feola, a broker with commercial brokerage Ramsey-Shilling Commercial Real Estate Services Inc. in Toluca Lake, said many of his entertainment industry clients are increasingly asking him to look for office space in North Hollywood but they ultimately decide against moving. “No one’s really taken the plunge,” Feola said. “A lot of clients are still holding out that something good will open in Burbank.” Burbank has been one of the tightest office markets in the county for years; its vacancy rate as of the end of the second quarter stood at 3.8 percent. Glendale isn’t far behind, with an 8 percent office vacancy rate. North Hollywood posted a 13 percent vacancy rate, even though its inventory of Class A and B office space is much smaller, with 978,435 square feet of rentable space spread over 10 buildings. By comparison, Glendale has more than 4 million square feet of Class A and B office space and Burbank has almost 3 million square feet. With such scant quality office space limiting the size of the business community, North Hollywood has trouble generating the critical mass of restaurants, banks and dry cleaners needed to attract new office tenants, said Walter Beaumont, assistant project manager for the CRA’s site office in North Hollywood. “It’s the chicken and the egg problem,” he said. “If we had additional office space, we could support the amenities that would help us attract more companies.” As it is, North Hollywood still has a ways to go before it can be considered a rival to Burbank and Glendale. Aside from the building that houses Disney’s online division, the only major entertainment site in North Hollywood is the Academy of Television Arts and Sciences building, home to a division of Warner Bros., Landmark Entertainment and a division of Disney. Most of those tenants have been in the Academy building since it opened six years ago. The 160,000-square-foot building is actually the first phase of what is planned to be a six-phase, $144 million project. The first-phase building and the second phase, consisting of 248 housing units, were completed in 1991. Phase three is planned to be a 200,000-square-foot office building on Lankershim Boulevard, for which the CRA plans to issue a request for proposals this month. As with almost all CRA projects, the agency is seeking a developer willing to buy the site and develop the project, with certain assistance from the agency. Phases four through six have been designed to add another 750,000 square feet of office space and 75,000 square feet of retail space. Development of phases three through six had been stalled by a lawsuit filed by several nearby property owners. That lawsuit was settled in the CRA’s favor in July, although as part of the ruling the CRA will have to conduct the public hearing component for the remaining phases of the redevelopment project again this month. Once that’s complete, the CRA will adopt a plan amendment to increase its eminent domain powers and the amount of money it can raise through the bond market. Those amendments are subject to City Council approval. For now, the project has “no developer, no plan amendment and no eminent domain,” Beaumont said. But he added that the CRA hopes to have all six phases of the project complete by 2013, when the agency’s ability to raise funds through bond issues expires according to the CRA plan. Even if plenty of premium office space is built in North Hollywood, the community will have another battle to wage: its reputation as a crime-ridden and desolate area. “Entertainment companies are often perceived as having a funky image,” said Todd Doney, senior vice president with Cushman Realty Corp. “But when it comes down to it, they’ve got the same concerns as an institutional company like AT & T; such as employee safety and efficiency. North Hollywood still has a number of issues as far as crime and the quality of amenities.” Beaumont counters that the district’s crime rate has steadily dropped, and that new coffee shops and restaurants such as the upscale Pit-Fire Pizza Company will open in North Hollywood’s redevelopment district within the next few months. Beaumont isn’t alone in his optimistic assessment of North Hollywood’s potential. Prentiss Properties Trust, a Dallas-based office and industrial real estate investment trust, purchased the 194,000-square-foot Academy building from The Academy Venture, a limited partnership, in late July. David Robertson, Prentiss’ director for the Western region, said he and other Prentiss officials feel North Hollywood “provides a natural corridor for the entertainment industry from Burbank, and we feel that the market will continue to grow.” North Hollywood has attracted a number of smaller, entrepreneurial media companies in recent years. The Los Angeles Recording Workshop a recording, engineering and film production school converted a bank building into a studio when it moved from Studio City to North Hollywood two years ago. The school recently purchased an adjacent 30,000-square-foot lot to expand the school. Christopher Knight, director of the school, said the decision was made to move to North Hollywood because it was “millions of dollars cheaper” than a Santa Monica location and the CRA provided loans and assistance in securing building permits. The school has since decided to expand its North Hollywood presence because “we see it as the next big place (for the industry),” he said. “We’re expecting the commercial value of our investment to go up” as more companies move into North Hollywood, he said. That will ultimately depend on whether the overall commercial real estate market continues to improve as well as on the preferences of entertainment companies, said Bill Boyd, senior vice president with CB Commercial Real Estate Group Inc. in Glendale. “North Hollywood is not a player with the (entertainment industry) right now, but it will be in the next three to five years only if there’s a continued lack of space” in adjacent markets, he said. But with more than 2 million square feet in proposed office projects in the early stages of development in both Glendale and Burbank and the 500,000-square-foot Glendale office tower currently under construction by PacTen Partners and Morgan Stanley & Co. entertainment companies might not have a need to look outside of those two cities for new office space. But in real estate as in most businesses it’s tough to predict future trends. “Only in the last three years with the growth of the entertainment industry has Burbank and Glendale become this magical office area,” Doney said. “It wasn’t long ago that Burbank was best known as the butt of Johnny Carson jokes.”

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