DISNEY SETS SIGHTS ON SITE IN BURBANK.

Byline: Russ Britt and Lee Condon Daily News Staff Writers

Walt Disney Co. is negotiating to buy a 103-acre vacant parcel from Lockheed Martin Corp. in Burbank that would be the centerpiece for a new city-backed Media District, officials from the aerospace company said Tuesday.

Faced with increasing demand for entertainment-related office space, Burbank is trying to create a new ``Media District North,'' an extension of the existing Media District, which includes Disney and Warner Bros. The 103-acre parcel makes up the bulk of the new northern district.

``We are in negotiations with Disney. I couldn't tell you how close we are,'' said James Buckley, chief environmental counsel for Lockheed. He said he expects Disney to occupy the entire 103 acres.

Disney officials would not discuss their plans.

``I'm not able to comment on anything to do with speculation or rumors in the marketplace,'' said Disney spokesman Michael Johnson.

But commercial brokers said Disney is close to completing a deal to buy nearly all the 103 acres.

``Disney's just about taken it down,'' said Seth Dudley, executive vice president at the Julien J. Studley Inc. brokerage in Los Angeles. ``That's sort of been broker talk over the last couple of weeks.''

Buckley said a large amount of cleanup work has yet to be performed at the site.

Since pulling out of Burbank in 1990, Lockheed has been working out details with the federal government for a plan to clean up toxins at the site. In January, Lockheed Martin received approval of its plan to clean up the site and is now free to sell the property.

At one point, city officials wanted to see a sports arena or discount retail center built at the site. But now they have their hopes pinned on seeing the land developed as a northern extension of the Media District.

``We have numerous media-related companies who desperately need space. They're going to go to Glendale or North Hollywood because there's no space left in Burbank,'' said City Manager Robert ``Bud'' Ovrom.

City officials see Media District North as the solution to prevent such flight. But the proposed area would have a decidedly different character than the current district, which features high-rise, high-rent office space.

The northern district would be targeted more toward the need for ``back room'' office space, for accountants, production and post-production, said Chris Foss, an economic development specialist in the city's Community Development Department.

The new district would have the same boundaries as the city's Golden State Redevelopment Area, which is bounded by Valley Place and San Fernando Boulevard on the east, Winona Avenue on the north, Hollywood Way on the west and the Southern Pacific railroad tracks on the south.

While the Lockheed land is envisioned as the linchpin, there are other, smaller sites around the proposed district that also are being targeted for media development.

Local developer M. David Paul has struck a deal to renovate an old 100,000-square-foot Lockheed structure for office space for Disney, Foss said. Warner Bros. also recently leased a building in the proposed district.

``Warner Bros. and Disney are chewing up every space that comes available in town,'' Ovrom said.

Since Lockheed announced its pullout from Burbank, the city has been scrambling to come up with a suitable use for the massive site.

First, Warner Bros. proposed building a sports arena. When that idea fizzled, city officials started lining up discount retailers for a shopping mega-center. But with overwhelming demand for entertainment office space, Ovrom said, city officials would rather get more high-paying entertainment jobs in the city as opposed to lower-paying retail positions.

Still, just who buys the land is largely up to Lockheed, and spokeswoman Maureen Curow said the company is talking to people interested in commercial office space development as well as retail development.

One potential buyer was DreamWorks SKG, the company created by media giants Stephen Spielberg, Jeffrey Katzenberg and David Geffen. But DreamWorks decided instead to buy a site in Playa Vista, near Marina del Rey.

Lockheed has been ordered by the Environmental Protection Agency to clean up asbestos, mercury and ground water contamination at the site. According to Curow, starting this summer a vapor extraction system will ``vacuum'' the soil at the site to clean out contaminants. The system will be in place for about eight years. However, the process will not hinder new development, she said.

With Lockheed scheduled to start the first phase of the soil cleanup program in July, Ovrom predicted that the company will close a deal with someone in the next six months.

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Map: Proposed Media District North