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REAL ESTATE QUARTERLY: Price-Conscious Media Players Find East Valley Attractive

-Walt Disney Co. renewed its 110,000-square-foot lease at Buena Vista Plaza, 2411 W. Olive Ave., with landlord Tier REIT Inc. of Dallas. The 11-year deal valued at $51.5 million keeps the entertainment company in the 118,000-square-foot office building instead of consolidating at its studio headquarters. -Lincoln Property Co. bought three buildings and two parking garages at 303 and 333 N. Glenoaks Blvd. and 300 E. Magnolia Blvd. from Kennedy Wilson Holdings Inc. in Beverly Hills for $84.2 million, or $258 a square foot. -Ikea bought a 22-acre site where it is underway with plans to build its largest U.S. store for $46 million from Crown Realty and Development Inc. The property, at 805 S. San Fernando Road, will house the 470,000-square-foot home furnishing store. -A 74,391-square-foot Burbank shopping center traded hands for one of the highest sales prices on a square-foot basis in the city in May. CBRE Global Investors bought the center for $48.6 million, or $650 a square foot, from Invest West and Santa Barbara Capital. -Amazon Prime, the rapid delivery service operated by Amazon.com Inc., leased 40,000 square feet at 3334 N. San Fernando Road in Glendale from landlord Rexford Industrial Realty Inc. Terms were not disclosed but asking rates at the building are 77 cents a square foot. A number of deals last quarter helped the Burbank and Glendale office markets continue on the road to recovery. Burbank’s vacancy rate dropped 1 point to 15.7 percent in the second quarter over the first quarter as tenants took 184,100 square feet off the market, according to data from Colliers International. “Burbank has had a flurry of activity and will be one of the more active submarkets in the San Fernando Valley,” Jonathan Larsen, a principal and managing director at brokerage Avison Young, said. The largest lease in Burbank last quarter was easily the renewal by Walt Disney Co. for 110,000 square feet at Buena Vista Plaza, 2411 W. Olive Ave., with landlord Tier REIT Inc. of Dallas. The entertainment giant has occupied all but 8,000 square feet of the 118,000 square-foot-building, located about two blocks from its studio headquarters, for a decade. The lease was a boon to the Burbank market because after consolidating about half a million square feet of its office space into its studio campus last year, many wondered whether Disney would further shrink its footprint in the office market. In another deal, STX Financing LLC moved into 18,580 square feet at the Tower, a 487,000-square-foot Class A office building at 3900 W. Alameda Ave. in Burbank. Worthe Real Estate Group bought the property vacant last year for $109 million. Worthe renovated the lobbies, common areas and parking, and began leasing the property this year. Despite the activity, asking rates dropped 3 cents to $3.04 during the quarter as landlords tried to stay competitive. David Kluth, executive managing director at real estate service firm Newmark Grubb Knight Frank, said companies are exploring markets such Studio City, Hollywood and Burbank, and finding more space and better prices in Burbank. ”I think the tenants that are in Universal City and Studio City are finding lack of inventory there and going to Burbank,” Kluth said. “You can choose to go to Hollywood and pay over $4 a square foot or go to the (Burbank) Media District and pay under $4. So that’s helping the Media District.” The quarter also brought more investment into Burbank. Lincoln Property Co. bought three buildings outside the Media District from Kennedy Wilson Holdings Inc. for $84.2 million. In Glendale, the market remained in demand for price-conscious tenants. Vacancy dropped 1.1 points to 14.7 percent as it posted positive net absorption of 6,000 square feet, according to Colliers. It follows a strong first quarter in which the area saw 47,600 square feet taken off the market. The declining vacancy allowed landlords to raise asking rates 3 pennies to $2.50 a square foot. Still, Glendale remains the economic alternative for price-conscious tenants, at a more than a 50-cent discount per square foot compared to Burbank. “Glendale rents are going up and it’s a general sign of the times,” said Scott Steuber, principal at Avison Young. “There’s not much on the market. You can’t get any space so you have to pay close to asking in the mid- to high-$2 range for the nice product.” During the quarter, personal injury law firm Glauber/Berenson leased 8,000 square feet at 350 W. Arden Ave. from landlord Coldwell Banker Commercial Alliance. – Jacquelyn Ryan

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