By SHELLY GARCIA Staff Reporter The owners of G2 Graphic Services Inc. searched Hollywood for two years trying to find a location to expand their business. Earlier this year, the family-owned company threw in the towel and moved its 60 employees to North Hollywood. “I think what landed us in North Hollywood was access to Burbank,” said John Beard, vice president of the graphic arts and multimedia production company that acquired a 25,000-square-foot building on Cleon Street. “And we’re still close enough to Beverly Hills,” G2 is finding itself in good company these days, as a growing number of entertainment and multimedia companies make the move to North Hollywood. The area, a short drive from the Burbank-based studios that fuel their businesses, meets their space and parking needs at rents company officials say they can afford. Major studios such as Walt Disney Co. have long used North Hollywood as a kind of branch office, setting up sites to accommodate the overflow of employees at their studio headquarters in Burbank. Thanks to those large employers, the area’s two centerpiece developments have been nearly fully leased for several years now. They are the Academy of Television Arts and Sciences complex and 5161 Lankershim Blvd. and a high-rise built but never occupied by Hewlett Packard at the intersection of Lankershim and Magnolia boulevards. But as other, smaller companies have made the move, a mini-media center is developing along the Lankershim Boulevard corridor north to Burbank Boulevard and south to the 134 Freeway. In addition to the three Academy tenants, Disney, Warner Bros. and Landmark Entertainment, animation houses like VirtualMagic Animation Inc., television production companies like Greystone Communications and multimedia companies like Tektronix and G2 are all calling North Hollywood home. In recent weeks, LA Digital signed a lease for 16,000 square feet of space at 11311 Camarillo Street to relocate a portion of its digital editing equipment and studio space business. In addition to convenient freeway access and rents that are sometimes half the going rate in Burbank, there is a growing perception that North Hollywood, with its playhouses and funky coffee shops, is becoming a creative center. “I don’t think the Arts District draws tenants to house their companies here, but what it does do is it creates a positive energy level,” said Scott Murphy, regional director of Prentiss Properties Inc., the company that acquired the Academy complex about one year ago. “Personally, I like the sense that there are creative people walking around the streets.” Whereas Burbank rates may range from $2.25 to $3 per square foot per month, North Hollywood rentals are $1.55 to $2.25. “And there were more incentives in terms of tenant improvements,” said Don Spielvogel, president of VirtualMagic Animation, which recently moved into 4640 Lankershim Blvd. Like a number of new tenants, VirtualMagic used its tenant improvement options to renovate, gutting the interior office space and rebuilding it to suit the company’s needs, both for form and function. “We took it to a shell and rebuilt it so it’s cool to us,” said Spielvogel. Another newcomer, Greystone Communications, spent over $1 million to build out its space, 20,000 square feet at 5161 Lankershim Blvd. with 14-foot ceilings, a film library and other amenities. “A lot of the facilities we use are right on this street,” said Rick Brookwell, chief financial officer for Greystone, which produces TV programming, home videos and runs a book publishing division. “This is a perfect location. We have a unique building and parking for 450 cars.” With 5161 Lankershim, which was acquired by Arden Realty Inc. in March, and the Academy buildings maintaining 96 percent and 95 percent occupancy rates respectively, restaurants are beginning to take an interest in the area as well. Pit Fire Pizza Co. opened to brisk business in January, according to David Sanfield, vice president. Sanfield and his partners have watched the area develop over the past eight years. As the office buildings began to fill up, Sanfield said, “We knew there was no place to go and eat.” Thanks to an agreement with the Community Redevelopment Agency, Pit Fire operates a 3,000-square-foot indoor restaurant that faces Lankershim, and the company has another 3,000 square feet of outdoor space in the adjacent Arts Park on Magnolia. “We would never have been able to afford to have this kind of high-profile company in another area our first time out,” Sanfield said. But while lunchtime business is booming for Pit Fire, it remains one of the few restaurants in the area, and retail activity has been light. The retail space on the ground floor of the Academy buildings has gone vacant, despite the fact that the office space is fully leased, according to Prentiss’ Murphy. “There really isn’t a concentration of business to support the retail,” he said. “Traditionally, buildings clustered together do better.” North Hollywood, for example, had an inventory of 1.1 million square feet of office space in 14 buildings as of the second quarter of 1998, compared with 4.1 million square feet in 41 office buildings in Burbank, according to Cushman & Wakefield Inc. The relative lack of a concentrated workforce in the area has many of those who run businesses hungering for further development, namely the office and studio complex proposed for a 43-square-foot area in the center of North Hollywood. As much as it may have enhanced the image of the community, these executives say that the Arts District alone will not provide the kind of impetus needed to renovate some of the oldest buildings, build new ones and encourage retailers to open shops of all kinds. “Something has to spark North Hollywood besides the Arts District,” said Spielvogel. “Something has to give it some meat and something has to bring clients here.” The studio project, which would be housed between Lankershim Boulevard and Vineland Avenue from Cumston Street to McCormick Street, would include a hotel, office and retail space along with sound-stage facilities, and provide the critical mass executives say is necessary to develop the area into a true media center. If it goes forward, the first offices and sound stages could open within two to three years. Indeed, until now, the anchor businesses for North Hollywood have essentially been the Burbank-based studios. Without an anchor in its own right, the neighborhood could be in a precarious position. “If Disney moves out, you’ll see a lot of empty buildings,” said Murphy at Prentiss. But tenants are optimistic that the development that has started in North Hollywood will continue. And while there may not be a large selection of restaurants, watering holes or retail shops to attract lunchtime browsers, many believe that day is not far off. Said Spielvogel at VirtualMagic, “I envision this wonderful corridor developing.” Snapshot North Hollywood Year Founded: 1871 Origins: The area now known as North Hollywood was created when Isaac Lankershim and Isaac Newton Van Nuys split the San Fernando Valley into north and south, the southern portion going to Lankershim. In 1923, Lankershim annexed itself to Los Angeles and Lankershim Boulevard became a major thoroughfare. Business Profile: Lankershim Boulevard cuts through the center of North Hollywood, stretching from Universal City at the south end to Sun Valley on the north. It is marked by a theater district, called the Noho Arts Center and the Academy of Television Arts and Sciences complex. Much of the area has been adversely affected by the construction of the Metrorail, which will run under Lankershim Boulevard.