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Brokers Face Tall Order in Marketing Spacious New Building

Tenants: Besides using an in-house expert, developers of the 24-story Glendale Plaza have hired CB Richard Ellis team to fill its remaining 370,000 square feet.

April 13, 1999|BOB HOWARD | SPECIAL TO THE TIMES

GLENDALE — Building the first new skyscraper in post-recession L.A. County took a little bit of nerve. Leasing it out is proving to be a lot of hard work.

The new 24-story Glendale Plaza at 655 N. Central Ave. was built as a "speculative" project, without most leasing commitments in advance.

The developers have rented almost 160,000 square feet of space since the building opened March 18. That leaves them another 370,000 square feet--roughly 17 stories--to fill. Commercial brokers estimate it will take them a year to 18 months to complete the job.

"It's a daunting task," acknowledged broker Doug Marlow, who leads a CB Richard Ellis team hired by developer PacTen Partners to market the building. There is also an in-house team headed by John Barganski, vice president of marketing and leasing at PacTen.

"An old broker told me once that our job representing a property is to convince someone to do the thing they least want to do--which is to pick up and move their business," Barganski said.

In this case, however, Barganski and Marlow are faced with arguably the biggest space-filling task in the San Fernando Valley since the 585,000-square-foot Warner Center III skyscraper opened in Woodland Hills in 1991.

How do they do it? By knocking on doors, phoning fellow brokers, mailing out stacks of brochures and leading prospective tenants on daily tours of the gleaming new building at 655 N. Central Ave.

But even those efforts are sometimes not enough. Besides the natural tendency of businesses to stay put unless they have to move, Glendale Plaza also faces competition from older buildings offering cheaper rent, plus a number of smaller new projects in the area.

These include 165,000 square feet each at 400 and 450 N. Brand Blvd. and 225,000 square feet at 2255 Ontario Ave. in Burbank.

In addition, about 30,000 square feet in the Glendale Federal Building at 700 N. Brand Blvd. remains empty as a result of downsizing by Glendale Fed, whose parent company merged with First Nationwide Holdings of San Francisco. Even before the merger, Glendale Fed had vacated 70,000 square feet at 700 N. Brand Blvd., said broker Bill Boyd of Grubb & Ellis.

Still, commercial real estate sources say PacTen's new building enjoys some distinct advantages.

"For many, many years the brokerage community has been showing its clients nothing but previously occupied space because there was nothing new being built," said Paul Stockwell, a broker with Julien J. Studley Inc. "This is the first new building of its type, and for someone looking for a large amount of space with a central location, Glendale is a good choice."

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Marlow and Barganski describe three distinct groups they must reach to fill Glendale Plaza: the existing tenant community in Glendale, the Greater L.A. Basin business community, and the broker community.

Although tenants make the ultimate decision on where they're going to locate, Barganski pointed out, brokers are extremely influential because "probably 90% of our leases have a broker representing the tenant."

According to Barganski, there's much more than meets the eye in convincing brokers that a particular building is the right choice for their clients, especially when that building is asking some of the highest rents in the market.

Rates run about $30 per square foot per year at Glendale Plaza, compared with what Studley says is an average asking rate of just under $27 per square foot per year throughout Glendale.

Brokers are well aware that the building exists, Barganski explained, but the marketing team's job is to remind them constantly about the myriad details that can make or break a deal. These include how much the landlord is willing to negotiate on rent, whether the landlord will sign a five-year lease or is insisting on 10-year deals, which floors have spaces to accommodate smaller tenants, what future expansion rights within the building can be negotiated in a lease and how much parking is available.

Plus, there are other nuts and bolts issues like the building's fiber-optic telecommunications system, fire safety system, heating, air conducting and other practical matters.

Barganski said a chief concern of some tenants, for example, is having an office that's immediately visible to anyone coming out of an elevator.

"A broker might want to know if we're willing to offer 'elevator identity' to a 5,000-square-foot tenant, and how much of a premium we might ask for that location," he explained.

According to Marlow, one of the chief jobs of the brokers is "to make sure the building sees every deal that's out there." In other words, to make sure that any prospective tenant in the L.A. area who might be looking for space is contacted by someone representing Glendale Plaza.

Marlow said the process is a collaborative effort involving advertising, direct mail, personal meetings, building tours, the building's Web page (www.glendaleplaza.com) and "road shows" where Marlow and Wilson promote the building to groups at brokerage houses.

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