CITY HANGS OUT VACANCY SIGN NOT MANY TAKERS FOR EXCESS OF OFFICE SPACE.

Byline: Alex Dobuzinskis Staff Writer

GLENDALE - Office vacancies in Glendale could rise to nearly 1 million square feet - a record - by the end of the year because of major relocations, officials said.

Glendale has a total of 6.1 million square feet of office space, and the latest vacancy rate was pegged at the end of June at 14.4 percent, about 880,000 square feet. That compares with an average vacancy rate of 12.9 percent for Los Angeles County overall, 8.4 percent in neighboring Burbank and 5.6 percent for Pasadena.

``With close to a million square feet of space available at the end of the year, I don't see the market getting better,'' said Linda Lee, associate vice president at the real estate firm Grubb & Ellis Co.

``Glendale has never had this much space available on the market ever in its history,'' she said.

Unlike many other Los Angeles County cities, Glendale, in an attempt to be friendly to business, does not tax companies based on their work-force size or sales. It also does not tax companies to pay to mitigate the effects of new development.

``We used to build office buildings so I'm very, very surprised that we're having this much vacancy,'' said City Councilman Bob Yousefian. ``We used to have vacancies, but they used to come in and sell out. But nothing like this.''

Officials said the high vacancy rate is due to the normal ebb and flow of the market and some major relocations.

By the end of the year, the part of the Warner Bros. entertainment division that was located in Glendale will move to a new Burbank office tower in the Pinnacle complex, freeing up 150,000 square feet, Lee said.

An additional 120,000 square feet of office space is leaving Glendale as a result of last year's purchase by a New Jersey-based company of the Disney Store, which had its administrative office near the Glendale Galleria but will now be moving to Pasadena.

And Nestle USA, which has its headquarters in Glendale at Brand Boulevard and Monterey Road, recently vacated six floors at its 21-story building and marketed four floors, or nearly 100,000 square feet, for rent, Lee said. Fidelity Financial is expected to sublease 26,000 square feet of that space in October.

``Burbank has come on very, very strongly with some construction of new office space,'' said Jack Kyser, chief economist with the Los Angeles County Economic Development Corporation.

But Glendale still has a strong economy, as well as several factors going for it, including proximity to the Bob Hope Airport and freeways and rail lines; no business license tax; and various attractions for the lunch-hour crowd, Kyser said.

Burbank taxes businesses less than other cities in the county, especially Los Angeles, officials said. But it does charge businesses annually between $4.30 and $8.75 per employee, depending on the type of business, with a cap at 3,000 employees.

Yousefian said Glendale's recent vacancies suggest the city should consider abandoning its no-business-tax stance and raise more funds from businesses for libraries, parks and traffic improvements.

``I don't see them flocking to Glendale; as a matter of fact, they are moving,'' he said.

Lee, however, said a business tax would further increase office vacancies.

And Kyser said too much should not be read into the vacancies.

``It's an annoyance,'' he said. ``Sometimes people use it as an indicator that the city's economy is struggling. In the case of Glendale, it's not.''

Alex Dobuzinskis, [phone]

alex.dobuzinskis(at)dailynews.com