NBC Plaza next up for the Burbank media district.

Cushman Investment and Development Corp., after signing NBC to a 15-year, 100,000-square foot lease, expects to snag another 150,000 square feet of pre-leased tenants and break ground on the NBC Plaza in the heart of Burbank's booming media district next May.

Charles M. Peck, the development company president, said he is currently in negotiations with several prospective tenants ranging in need from 30,000 to 300,000 square feet. Cushman is shooting to pre-lease 70 percent on phase one of the two-tower project before obtaining financing for the $60 million construction job, Peck said.

"The reason we are targeting 70 percent is to allow us to get financing that makes the project sounder and more effective," Peck said. "We might be able to quote, 'get financing' with less leasing, but the terms and conditions of that financing would not be terribly attractive," Peck said.

In the current real estate financing environment, Peck said that in order to build an office project in downtown Los Angeles, where vacancies are expected to tip the 30 percent range in the next year, a developer would need to have the project 100 percent pre-leased in order to convince a financial institution to lend to the project.

The situation, however, is different in Burbank, where expanding entertainment companies have driven vacancy rates to perhaps the lowest in the county and where tenants are unable to find large chunks of contiguous office space, Peck noted.

The Burbank office market got even tighter in the third quarter, as the vacancy rate dropped from 6.1 to 5.5 percent, according to Brian Stott, research director for the San Fernando Valley office of Grubb & Ellis Co., a commercial real estate brokerage. Burbank has the lowest office vacancy rate in the Valley and is widely believed to have the lowest rate in the county, Stott said.

The countywide vacancy rate in the second quarter was 18.3 percent, according to Grubb & Ellis.

"The story here is you have nothing coming on line and you have a low vacancy rate and (leasing) rates are going to go up," Stott predicted.

Commercial real estate brokers complain Burbank's office market has gotten so tight that there is virtually no Class A space to be found in order to make deals.

"I have a tenant I'm representing, a tenant who needs 20,000 square feet of space, and I have one place I can show (in Burbank)," said Stuart Taylor, a vice president with Cushman Realty Corp. "We would probably have to look elsewhere for this tenant. There are no alternatives out there," he said.

The plans for NBC Plaza are for 15-story and 17-story office towers to be built overlooking the freeway, Peck said. Cushman will be accepting bids from construction companies to build phase one, which is scheduled for a 1993 completion date, Peck said.

"Every construction company in the world is interested in this project, literally. The volume of construction of commercial office buildings is dried up to zero," he said. "This project is the premier office project in Southern California."

The NBC Plaza concept has been around for about 20 years, but Cushman Investment and Development Corp. has only been involved since 1985, Peck said.

Originally planned to be towers of 21 and 18 stories, the buildings height was slashed by the Burbank City Council in April to 17 and 15 stories, Peck said. In August, Cushman was finally able to assemble the 4.2-acre plot of land, which was previously held by different owners, Peck said. In September, Cushman obtained final approvals from the Burbank City Council and a signed lease from NBC in which the network transferred density rights to Cushman which will allow the developer to build the towers, he said.

"By Oct. 1, 1991, we had basically concluded six years worth of work," Peck said. "We have a planned construction date as close to May 1, 1992 as we can get."

Meanwhile, the Burbank residential real estate market has shown some signs that it is rebounding from the recession, but it is still below what it was at the same time last year.

Homes sales in Burbank were down by $20 million in the first eight months of this year over the same time period last year, according to Moe Jones, executive vice president of the Burbank Board of Realtors.

Members of the board closed sales totaling $188 million from January through August of this year as compared to $208 million for the same time period last year, Jones said.

But sales of homes were up this spring and summer over the winter and last fall, according to data provided by TRW Data Services.

There were about $20 million more new mortgages on home sales and resales in Burbank in the last six months ending in August 1991, than the six months preceding. From the period of March through August 1991, mortgages totaled $136.1 million, as compared to $113.9 million for the period of September 1990 through February of 1991.

Mortgages in Burbank were up in August 1991 at $15.4 million from August 1990 at $12.6 million, but down from the month before, when mortgages totaled $17.2 million, according to TRW data services.

Lower priced homes are selling faster than mid-range and high-end homes, Jones said. About 68 percent of all homes sold were priced under $300,000, Jones said.

"I have to think the home sales prices are down approximately 10 percent," Jones said. "Obviously where we're down is at the high end. We're seeing some hefty price adjustments in the $400,000 to $600,000 price range," he said.

Jones said that he thinks the Burbank residential real estate market is beginning a slow recovery. But he admits "it's based on a hunch, more than anything else."