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SPECIAL REPORT: Entertainment Tenants Shrink Vacancy in Burbank

Both Burbank and Glendale saw an uptick in office investments in the first quarter. Vacancy rates decreased and asking rents rose as small firms and large production companies continued to migrate to the markets. Berg Senior Services, an assisted living company in Lafayette, made a large purchase this January when it acquired the 36,000-square-foot Brookdale office building in Glendale. The company acquired the space for $5.6 million, or $154 a square foot. Burbank Media West Studios in Beverly Hills purchased the 7,500-square-foot Golden State Professional Building at 903 N. San Fernando Blvd. in Burbank. The production company was represented by Corey Spound, executive vice president at Jones Lang La Salle. The building changed hands for $4.2 million on Jan. 5. The 56,500-square-foot Victory Studios in Glendale at 1840 Victory Blvd. was acquired by Hileman Cowley Partners, a real estate firm in Culver City, for $15.4 million. The seller was REIT Victory Partners and Mason Trust. The building is occupied by Telepictures Production, a division of Warner Bros. Entertainment that produces television shows such as “The Ellen DeGeneres Show” and “TMZ.” Vubiquity Inc., a company formerly based in Sherman Oaks that provides information technology and content monetization for the entertainment industry, relocated to a 56,000-square-foot building in Burbank in January. The deal was brokered by Doug Marlow and Todd Doney of CBRE. Gerinet Hospice Touch leased 5,730 square feet of office space in Burbank. The care provider, located at 2025 N. Glenoaks Blvd., offers at-home care for dying patients. The Burbank market, predominantly occupied by entertainment companies, continued to improve, with a 3 percent decrease in office vacancy rates compared with the year-ago quarter, according to data from Colliers International. In the first quarter, the rate declined to 13.7 percent. However, Glendale actually led the way. With the economy on the mend, brokers noted an increase in small insurance, law and medical firms leasing and acquiring office space in the area. The city’s vacancy rate dropped to 12.1 percent in the first quarter, according to Colliers. “There has been an increase in rents over the past year in the Glendale market,” said Steven Baker, vice president of Glendale-based Stevenson Real Estate Services. “I’ve been seeing a lot of investors, especially doctors, buying businesses. Glendale is a great community for mom-and-pop investors.” Glendale showed a 3.5 percent decrease in vacancy rates compared with the year-ago quarter, according to Colliers. “We look to reposition buildings. If you can park it and convert it to office, then there are a lot of opportunities,” Baker said. Celina Marciano, owner of Healing Crossroads, a therapeutic center that offers psychological services, acquired an 8,500-square-foot office in Burbank for $2 million. The psychologist acquired the space in late March and was represented by Fred Tsarukyan, a broker at Encino-based Supra Realty. The tightening in vacancy rates led to increased asking rents. Burbank ratcheted up to $3.10 a square foot, an 8-cent increase compared with the year-ago quarter, according to Colliers data. Glendale followed closely behind with a $2.57 average lease rate, an increase of 2 cents compared with the year-ago quarter. “What we expect to see is that because the entertainment industry is expected to accelerate its need for more office space, the market expects that Burbank should leave single-digit vacancy before Glendale,” said Bill Boyd, senior managing director at brokerage Charles Dunn Co.’s Tri-City office in Glendale. One large entertainment deal that took place last quarter was the 56,500-square-foot Victory Studios sale in Glendale. Hileman Cowley Partners, a real estate firm in Culver City, acquired the building at 1840 Victory Blvd. from REIT Victory Partners and Mason Trust in March for $15.4 million. The building is occupied by Telepictures Production, a division of Warner Bros. Entertainment that produces television shows such as “The Ellen DeGeneres Show” and “TMZ.” “Usually you’d find that Burbank would have rents in line with Glendale because it has more vacancy, but it doesn’t,” Boyd explained. “Historically, Burbank is more popular and the studios have wanted to be there. That’s why there is a higher rental rate even though there’s more vacancy.” – Champaign Williams

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