Office Is Thriving In This Market

Tom Bohlinger is an EVP at JLL.

LOS ANGELES—The office market in Glendale is booming. The Tri-Cities submarket has more corporate headquarters than the other Tri-Cities markets, Pasadena and Burbank, combined, according to Tom Bohlinger , EVP of JLL . The vacancy rate is down to 11.8% and forecasts from JLL predict the market will hit single-digit rates by 2017. The boom has attracted multifamily developers, which have built 3,500 units in the last three years, with another 900 in the pipeline. The growth is centered in Downtown Glendale, which has become a true urban hub. To find out more about the evolving market and its drivers, we sat down with Bohlinger to talk exclusively. GlobeSt.com: How is the Glendale market evolving and changing? How does it compare to the other cities to the Tri-Cities market?  Tom Bohlinger: Glendale over the past decade has metamorphosed from a financial services and back office market to a dynamic headquarters market attracting such company headquarters as Avery International, YP, Dine Equity, Legal Zoom, and Age of learning, Whole Foods Western regional headquarters, Public Storage, DreamWorks, and Nestle. Glendale has more corporate headquarters than all the other Tri City markets combined. Glendale also has over 70 entertainment companies and WeWork will soon open on Brand Blvd. GlobeSt.com: What is driving this revitalization? Bohlinger: Glendale is a retail juggernaut with the combination of the Americana and Glendale Galleria as well as vibrant street retail. In recent years Bloomingdales opened, Nordstrom expanded and Shake shack will soon open. It is also located in the center of one of the strongest demographics in Los Angeles and is accessible by three freeways and Amtrak. All of this has just recently been supplemented by the addition, since 2013, of over 3,500 urban housing units, 75% of which are in the CBD bringing a young, educated and creative demographic to the City. This is further augmented by the rapid gentrification of the communities to the south including Highland Park, Atwater Village and Silverlake. GlobeSt.com: Which product type is seeing the most activity in the Glendale market, and why? Bohlinger: The two strongest properties are Multi-family and Office. In the past five years, Glendale representing only 25% of the Tri Cites office base, has accounted for 62% of the entire market’s net absorption. Multi-Family demand is reported to be over 700 Du per year. In addition to Multi-family investors, major institutional investors are actively pursuing Office properties. Now is the time to enter that market as prices are still below 2005 levels and yet fundamentals have never been better. GlobeSt.com: What about the tenant side? What types of tenants are coming to the market, and what types of tenants are landlords looking for? Bohlinger: The Glendale commercial real estate market contains a diverse group of tenants including entertainment, tech, government, legal, consumer goods and financial services. The industry balance is just what landlords desire as a diverse tenant base provides market resilience. GlobeSt.com: What is your 12-month outlook for the market?  Bohlinger: My 12-month outlook is vacancies will be dropping to single digits and rents spiking. As all development sites have been gobbled up by residential developers, there is a very low probability of any new competitive office product coming to the market in the next three years   Rents would need to reach $4 per square foot or more to justify new construction