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Office space getting emptier

Vacancy rate rises to 21.8%, compared with 17.2% a year ago.

August 04, 2010|By Bill Kisliuk, bill.kisliuk@latimes.com

That empty feeling is growing in Glendale office buildings, as the vacancy rate in commercial office space rose in the last three months.

Nearly 83,000 square feet of office space was vacated in Glendale in the second quarter of the year, according to Grubb & Ellis Research Services. That brings the city's vacancy rate to 21.8%, with nearly 1.4 million square feet of space empty in a city with 6.3 million square feet of premium and moderate office space.

The rate was 17.2% a year ago and 20.5% at the end of the first quarter of 2010.

The market is better in Burbank, where the vacancy rate fell from 17.7% from 17.3%. The figure was 17.2% a year ago.

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Still, Burbank has more than 1.07 million square feet of unused moderate and premium office space with an overall inventory of 6.2 million square feet, according to Grubb & Ellis.

In Los Angeles County, the vacancy rate is 16.6%, the same as last quarter but higher than the 14.8% a year ago.

Bill Boyd, a commercial broker with Charles Dunn Co. in Glendale, cited the closure of Imperial Thrift & Loan Assn. at 700 Central Ave., the lack of tenants at the new 207 Goode Ave. building and contraction in the financial sector as leading the decline in Glendale.

"If this is a patient on the operating table, we are not going in the right direction," he said. "What is concerning most of us locally is the impact it is having on the Glendale economy, because 1,000 square feet of space typically represents four to five employees in the city's daytime population."

More than a year after 207 Goode was completed, the 188,000-square-foot structure overlooking the Ventura (134) Freeway remains empty, Boyd said. Representatives of 207 Goode developer MPG Office Trust could not be reached for comment.

Despite the wide-open vacancies, Boyd said there were signs of improvement. Nationwide Insurance just completed a lease to move into the Glendale Galleria office tower, making that building fully leased, he said.

In Burbank, two newer buildings are key sources of the high vacancy rates, city officials there said.

A seven-story building at 2300 Empire, owned by Clarius Partners, and M. David Paul & Associates' 15-story structure on Alameda Avenue, the Pointe, remain empty or nearly empty more than a year after being completed.

Burbank City Manager Mike Flad said the owners of those buildings are doing the right thing in the long term by seeking strong tenants to fill the space.

"They have a lot of money stranded out there in an asset," Flad said. "For them to have the patience to get the right tenant in here is credit to them as property owners."

City officials are also actively trying to connect "media-related, high-dollar job generators" with the developers, Flad said.

And he noted that Burbank represents the rare case where vacancies dropped in the last quarter.

"You have two very visible vacancies," Flad said. "In terms of our other commercial real estate, we're doing fantastic."

The vacancy numbers for the county were flat compared with the first quarter of 2010, with the office leasing market generally trailing other economic indicators by 12 to 18 months, Boyd said.

"We're still bleeding, but the bleeding is slowed," he said. "We think we're nearing the bottom of this. We just need to get through the next six months."

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