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Vacancies up in Glendale, down in Burbank

Growth in the entertainment field seems to be the difference for cities' commercial sites.

February 04, 2011|By Bill Kisliuk, bill.kisliuk@latimes.com

Glendale and Burbank are going different directions when it comes to commercial real estate.

The vacancy rate in prime Glendale commercial buildings climbed to 23.6% in the fourth quarter of 2010, up 4.5% from a year earlier, according to Grubb & Ellis Research Services. Vacancies rose 0.6% from the 23% vacancy rate in the third quarter of 2010.

At the same time, commercial vacancies in Burbank dropped from 19% to 17.7% in the fourth quarter. Occupancy is now nearly the same as it was in December 2009, when the vacancy rate was 17.8%.

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Brokers and others say Burbank is benefiting from a boost in the entertainment industry, while Glendale continues to suffer from its reliance on financial firms and government tenants, which have been shedding jobs.

“The Glendale market has been challenging, to say the least, for the last decade,” said Linda Lee, a broker with Charles Dunn Co..

She mentioned a list of firms that have pulled out of Glendale over the years — Fremont Compensation Insurance Group, Baxter Healthcare Corp., and most recently the State Compensation Insurance Fund, which announced last month that it will move 500 jobs and abandon six floors of space at the 25-story Unum building by fall 2012.

“We will continue to experience negative absorption as those bodies are moving out,” she said.

The market stalled a few years after a spurt of office construction on Brand Boulevard and near the Ventura (134) Freeway.

Paul Habibi, a real estate professor at the UCLA Anderson School of Management, said Glendale had a strong development cycle in the last decade, “so there is a natural influx of supply that is yet to be absorbed.”

Mark Miller of Glendale’s Stevenson Real Estate Services said he saw interest from potential commercial tenants pick up toward the end of 2010, but he is expecting a long year.

“I think we’re going to see owners become more aggressive in trying to make deals,” Miller said.

In Glendale, asking rents dropped from $2.75 per square foot at the end of 2009 to $2.64 per square foot at the end of 2010, according to Grubb & Ellis.

“As unemployment drops a little bit, we might see some movement. But I think we are going to remain flat for the next year,” Miller said.

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