Tri-Cities Closes 2018 With Momentum
- Overall vacancy in the Tri-Cities office market tightened from 14.3% to 12.9% to end the year. Absorption recorded positive 330,100 square feet due to move-ins in Pasadena, Glendale and Burbank.
- The average monthly asking rate increased to $3.10 per square foot (PSF) full service gross (FSG), a high the market had not seen since mid-2018.
- Leasing activity in the Tri-Cities recorded 409,000 square feet, the majority of which came from Pasadena and Burbank.
- Lincoln Property Company's AMLI mixed-use project broke ground in Pasadena. The project will feature 200,000 square feet of office space in its first phase.
- Investment activity was highlighted by Beacon Partners purchasing 800 N. Brand Boulevard for $160 million ($303 PSF) from Piedmont Office Realty.
Demand in the Tri-Cities market recorded positive (330,100 square feet) for the second time in four quarters, pushing yearly absorption positive at 89,800 square feet. Substantial gains in Glendale, Pasadena and to a lesser extent, Burbank, created momentum for the market as the quarter closed. After four quarters of declining year-over-year rental rate growth, positive movement of 1.5% reversed the trend. True to form for the market as of late, mid-size and smaller leases dominated leasing activity.
The Tri-Cities market continues to be an attractive market for tenants from a variety of industries. Large blocks of space remain in some of the core submarkets, such as Glendale and Burbank, at a discounted price relative to other markets in the Greater Los Angeles region. While there are larger tenants exploring those space options, small and medium spaces will continue to constitute the majority of demand in the near future.