Glendale Gets First Major Creative Office Hub

Glendale’s office market is on the verge of a boom. Multifamily and retail have grown tremendously in recent years, and demand is growing for quality creative office space; however, there is a problem: it doesn’t exist. Goldman Sachs Private Real Estate, in a joint venture with Cruzan, is filling the void for creative office in Glendale. The firm has acquired 505 N. Brand, a 320,000-square-foot office building in Glendale, and plans to overhaul it into a premium creative office property—the first, it says, to come to Glendale.

“We have been targeting Glendale. We have been searching for the last few years for the right type of property that could be transformed into a high-end, creative building with efficient floor plates and good parking to cater to the tenants trying to find office space to fit their culture and brand,” Joseph Sumberg, Co-Head of GSAM PRE, tells GlobeSt.com. “Our opportunity here is to take an asset that has great bones, great immediate location, great parking and turn it into an open floor creative asset with a great brand. Our goal is going to be to transform the asset and make it into what we believe the office tenants desire in the market and what we think the market is lacking.”

Like Hollywood, Santa Monica and Downtown Los Angeles, Glendale has become a 24-7 live-work-play environment, and that was extremely attractive to GSAM PRE. Rising office rents and office property values has also made Glendale an attractive investment market. The growth of multifamily and retail has been a catalyst for the office growth. “Since 2013, more than 1,000 apartment units in about nine different communities have been delivered,” says Sumberg. “That is a 10% increase in inventory. There is an additional 2,400 units planned or under construction. Altogether, that is a 21% increase in current inventory. When you combined the multifamily development with the fact that Glendale has more than 2.5 million square feet of high-end shops and restaurants, really anchored by the Americana at Brand, we believe the third leg of the stool is the work aspect. That has been the slowest to come. Now, because of the retail and multifamily is there, more front-office businesses want to be there.”

Tech, media and entertainment tenants have driven office growth in other Los Angeles markets, but Sumberg says that Glendale has more diversity. “Our view is that there will be more creative-type tenants that will be attracted to differentiated product in Glendale if we create it,” he says. “But, the trend that we have seen throughout the US is that it isn’t only tech tenants that like creative, open floor plans and high-quality brands. It is law firms and software companies and some of the current major tenants in Glendale. All of these people are in a fight for talent and want this kind of space.”

With the limited supply of quality office space in Glendale, the firm is expecting strong demand for premium office space—and as a result, healthy pricing. ‘We feel that people are willing to pay the rents associated with this type of office space, but it currently doesn’t exist,” Sumberg explains. “There have been buildings that have made strides toward that effort, but we don’t believe they are all of the way there. In a market with an unemployment rate at an all-time low and the war for talent is one of the biggest concerns of thriving companies, that office space and location and brand is one of the ways that people are able to retain and attract talent.”

This is the firm’s first acquisition in Glendale, but it is bullish on the market and will continue to look for opportunities. “We are definitely looking to increase our exposure to the L.A. MSA,” says Sumberg. “We have specifically focused on Glendale, and it isn’t a surprise to me that our first investment in the tri-cities is in Glendale. This is the first of hopefully many.”