Burbank, Pasadena remain hot spots for office leasing.

WHEN it comes to office space in the Tri-Cities market, Burbank and Pasadena are hot and Glendale is not.

The Tri-Cities market continued to tighten in the fourth quarter of 2005. Class A vacancies dropped to 9.1 percent from 10 percent the previous quarter. Rents were up three cents to $2.60 per square foot from the previous quarter with about 159,600 square feet absorbed.

In Burbank, vacancies dropped to 7.5 percent with a net absorption of nearly 38,000 square feet, pushing rents up two cents to $2.77 per square foot. In Pasadena, vacancies dropped to 6 percent. The area absorbed almost 52,600 square feet and rents rose 6 cents per square foot to $2.65.

Once a fashionable location for an office, Glendale has fallen out of favor. The city is losing leases with The Walt Disney Co. and Warner Brothers Entertainment Inc., a total of 300,000 square feet in the first quarter of 2006, so vacancy rates will continue to climb. And while Glendale's proximity to Pasadena and Burbank still make it an attractive area, the losses will be tough to overcome, even in a good market.

"Unfortunately while Glendale will continue to do to more activity, it won't be able to outpace the space coming onto the market," said Bill Boyd, executive vice president and managing director at Grub & Ellis Co.

Glendale vacancies fell to 13.9 percent from 15 percent the previous quarter and absorbed more than 69,000 square feet, bumping Class A asking prices up three cents to $2.44 per square foot. Boyd projected that vacancy rates will rise from 13.9 percent to 18 percent soon.

Carl Muhlstein, senior director at Cushman & Wakefield Inc., said there's a perception that Glendale buildings have smaller floor plates, about 30,000 square feet, while Pasadena's may start at 40,000. The smaller spaces aren't attractive to large tenants, as are lower parking ratios.

"They're just too light for the way people occupy space today," Muhlstein said.

Burbank boom

In the late 1960s and early 1970s, Glendale was a haven for mid-Wilshire transplants, said Andrew Feola, director at Cushman. The area was attractive to businesses for its proximity to Pasadena, the Ventura Freeway and corporate housing.

Since then, Burbank's market has taken off, fueled by the entertainment industry. The mid-Wilshire businesses have relocated to other states, merged with other companies or simply not needed the space anymore, Feola said.

With Burbank and Pasadena vacancies in the single digits, Tri-Cities brokers say it's only a matter of time before rental business overflows back to Glendale.

Muhlstein suggested that the situation should quickly pick up for the Glendale market "now that Burbank and Pasadena are as tight as a drum." Neither Glendale nor Pasadena has any office space under construction. Burbank has 414,200 square feet under construction, but the entire project is committed, part of it to Disney, which is vacating Glendale.

EarthLink Inc. and NeoPets Inc. made two of the most significant fourth-quarter deals.

EarthLink Inc.'s renewed its lease of 110,000 square feet at 2947 Bradley St. in Pasadena. Glendale-based NeoPets, owned by Viacom Inc.'s MTV Networks Co., leased 20,000 square feet at 450 N. Brand Blvd. for five years.

Major Events:

* Glendale-based NeoPets, owned by Viacom Inc.'s MTV Networks Co., leased 20,000 square feet at 450 N. Brand Blvd. for five years.

* EarthLink Inc. renewed its lease of 110,000 square feet at 2947 Bradley St. in Pasadena.

* Glendale's Galleria Office Tower at 100 W. Broadway got two new tenants and renewed three: Cooperative Personnel Services, doing business as CPS Human Resource Services, and First Commerce Bancorp both signed new leases, and Glenwood Financial Group Inc., Optimax Home Loans and Maxson Young Associates Inc. renewed leases.