New Projects Reflect Wave Of Demand in Hot Market.

THE Tri-Cities of Burbank, Glendale and Pasadena hummed with development activity in the first quarter of 2000, after a burst of new leases late last year reaffirmed the need for more office space in the market.

At least two major new projects emerged in the first three months of the year, with the potential to add more than 600,000 square feet of office space to the market. Combined with several other projects already in the pipeline or under construction, the three-city market is on pace to grow by more than 2 million square feet of office space over the next two to three years.

The wave of new development is being driven by strong tenant demand amid some of the lowest vacancy rates in L.A. County. At the end of March, the Tri-Cities office vacancy rate stood at 8.2 percent, up slightly from 7.8. percent in December, according to preliminary figures from Grubb & Ellis Co.

Among the three submarkets, Pasadena posted the lowest office vacancy rate, 5.3 percent, followed closely by Burbank at 5.9 percent. Glendale remains considerably softer, with 16.7 percent of its office space vacant.

Both of the quarter's major new developments are taking place in Burbank, where large blocks of available office space are virtually nonexistent.

In the most significant development, M. David Paul and Associates purchased a prime piece of land in Burbank's Media District for about $20 million, and announced plans to build 585,000 square feet of office space in two buildings on the site. The parcel - bounded by Olive Avenue, California Street and the Ventura (134) Freeway - has changed owners several times in recent years and was the subject of a number of development plans that failed to materialize. But M. David Paul has secured financing for the project and hopes to start construction by the fourth quarter, said company spokesman Jeff Worthe.

He added that M. David Paul broke ground in the first quarter on the third phase of its office campus in north Burbank, near the airport, and plans to bring the 95,000-square-foot building to market by the end of this year. The company also plans to break ground on the campus' fourth phase - a 200,000-square-foot building - in June. If all those projects are completed, M. David Paul would become one of Burbank's biggest landlords, with about 1.4 million square feet of office space.

In the first quarter's other major news, a "big developer" is trying to assemble a four-acre parcel of land now owned by 11 different companies in Burbank's Media District, said Paul Krueger, economic development manager for the city of Burbank. The land - bounded by Alameda and Olive avenues and the 134 Freeway - is now home to a mix of office, retail and residential properties, which would all be demolished to make way for a major new project if the parcel can be assembled, Krueger said.

Elsewhere in Burbank, two other office projects on land near the Burbank Airport made progress during the quarter. In one, Trammell Crow Co. is nearly finished clearing a site where it plans to construct a 158,000-square-foot office building, Krueger said. Work on the building at 2940 N. Hollywood Way is expected to begin in the second quarter, with completion set for sometime near the end of this year.

In another project near the airport, Zelman Development Co. released an environmental impact report for a planned mixed-use complex on 102 acres of land bounded by Buena Vista Street, Empire Avenue, Victory Place and Victory Boulevard. Burbank Empire Center, which is designed to include 450,000 square feet of office space and 750,000 square feet of retail, could get Burbank City Council approval as soon as May, and construction could begin a short time later, Krueger said.

In Pasadena, meanwhile, work is nearly complete on the first of a pair of buildings undergoing a major renovation in the east part of the city, said Todd Doney, executive managing director at Insignia/ESG Inc. No pre-leases have been signed for the 140,000-square-foot building, which is expected to be ready for occupancy next month, Doney said.

Also in Pasadena, work continued on a 170,000-square-foot office building under construction by Koll Development at 1055 E. Colorado Blvd., with completion expected around the first quarter of next year, said Kevin Duffy, a senior manager at CB Richard Ellis Co. No pre-leases have been signed for the building yet, but Duffy said about 220,000 square feet of proposals "are on the table right now."

In Glendale, two major new leases - one by Great West Life for 90,000 square feet at 655 N. Central Ave., and the other by IHOP Corp. for 70,000. square feet at 450 N. Brand Blvd. - breathed new life into a market previously bloated with an excess of new office space.

The market's apparent finning could potentially resurrect a plan by the Ohio State Teachers Retirement System to build Glendale City Center Phase II, a proposed 385,000-square-foot office building at 111 N. Brand Blvd., said Patrick Church, a senior associate at CB Richard Ellis.

"They're in the process of moving forward on it," Church said.

Major Events:

* M. David Paul and Associates purchased land bounded by Olive Avenue, California Street and the 134 Freeway, with plans to build 585,000 square feet of office space on the site.

* Zelman Development Co. released an environmental impact report for a mixed-use project containing 450,000 square feet of office and 750,000 square feet of retail space in north Burbank.

* Great West Life leased 90,000 square feet of space at 655 N. Central Ave. in Glendale. The building, Glendale Plaza, is now about 85 percent leased.

* IHOP leased 70,000 square feet of space at 450 N. Brand Blvd.