PHOENIX DEVELOPER TO BUY LOCKHEED SITE.

Byline: Shops, offices, hotel planned By Lee Condon Daily News Staff Writer

A Phoenix-based company has struck a deal to buy a 103-acre site in Burbank from Lockheed Martin Corp. and develop a mixed-use project that would include large retail shops, a hotel, offices and industrial space.

``It's a great location. It's probably the only parcel that large next to a major freeway in the area,'' said Richard Kuhle, a senior vice president for Vestar Development Co.

The company has been negotiating to buy the property from Lockheed for the last six years.

Kuhle declined to discuss the sale price. Lockheed officials could not be reached for comment.

Burbank City Manager Robert ``Bud'' Ovrom said the development would be a boost to the local economy.

``I think it goes a long way to replacing the aerospace jobs we lost,'' Ovrom said. ``We'll probably collect more property taxes on the site than Lockheed generated.''

Ovrom said several companies have expressed interest in moving to Burbank if land became available, including Target, Wal-Mart, Home Depot, Ralphs and Best Buy.

Known as Lockheed's B-1 site, the property for six decades supported one of the aerospace giant's most prolific aircraft manufacturing plants, running 'round the clock during World War II.

After Lockheed shifted its operations to Palmdale and Marietta, Ga., in 1990, the plant was demolished, and the lot has been vacant ever since.

Decades of manufacturing, however, resulted in toxic contamination to the soil, which the company is planning to clean up using a vapor extraction system.

The company this summer reached a $60 million settlement with 1,357 residents who claimed their health and property were damaged as a result of the company's historical operations. Lockheed settled without admitting any liability.

Since then residents left out of that settlement have filed suits in federal court alleging property damage, and in state court alleging property and health damage.

For the city of Burbank, the deal brings to an end years of speculation over the property's future. Vestar has been one of the players since the beginning, but others have also been interested.

In 1992 Wal-Mart was given an exclusive right to develop part of the Lockheed land as a retail complex, which would have included one of its stores and up to 1 million square feet for other discount retailers.

Also that year, developer Lew Wolff and actor Wayne Rogers put together plans to build a sports arena at the site.

And earlier this year, Lockheed officials confirmed Disney was one of the parties negotiating to buy the land.

The city of Burbank was not involved in negotiations between Lockheed and Vestar, but city officials say they would like the property to be developed as part of Media District North, a spin-off of the city's growing Media District, which includes Disney, Warner Bros. and NBC.

``We anticipate Vestar will be building 40 to 50 percent media-related office space on that site,'' said Bob Tague, the director of the city of Burbank's Community Development Department. ``We have a shortage of space for media companies.''

Vestar officials declined to discuss any media-related options.

Burbank officials have some say over what goes on the site, since Vestar must secure a zoning change from the city to build the retail outlets it wants. The property is currently zoned for industrial use.

Tague said he expects the company will build between 600,000 and 800,000 square feet of retail structures at the site.

Lockheed Martin is planning to construct its vapor extraction system at the site this fall to clean up the last 40 acres at the property. While the vapor extraction system will be in place for several years, it will not impede development of the site, Tague said.

While Disney officials declined to comment on negotiations with Lockheed, Tague said that Disney has been interested in other, smaller sites. He said he expects the company might be interested in leasing some of the office space that will be part of the Vestar development.

Vestar has two other development proposals in the area.

In October 1995, Vestar proposed developing a $125 million, 700,000-square-foot open-air retail and entertainment center on a 12-acre property near the Glendale Galleria.

The site is south of the Galleria, bordered by Brand Boulevard to the east, Colorado Street to the south and Central Avenue to the west. The company plans retail stores, restaurants, movie theaters and other forms of entertainment, Kuhle said. However, the developers of the Galleria are also competing to buy the property, which is owned mostly by the Glendale Redevelopment Agency.

Vestar also recently struck a deal to buy the old May Co. building, which it plans to demolish and transform into the Glendale Fashion Square, Kuhle said.

Among the projects Vestar has undertaken in the past is the Scottsdale Pavilion, a million-square-foot retail center in Scottsdale, Ariz., that includes a Home Depot, Target, Mervyn's, Circuit City and Ross stores.

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MAP: Lockheed B-1 site to be purchased by Vestar DevelopmentCo.