Tri-Cities Rents Grow For Third Straight Quarter
- Absorption recorded negative 86,000 square feet due to move-outs in Burbank and Glendale.
- The average monthly asking rate increased to $3.20 per square foot (PSF) full service gross (FSG), surpassing last quarter's current cycle high of $3.16.
- WeWork's continued expansion in the Tri-Cities market highlighted leasing activity of 469,100 square feet for the quarter.
- Progress on Lincoln Property Company's AMLI mixed-use project in Pasadena continued. Located at the north end of the Old Pasadena retail district, the project will feature 200,000 square feet of office space in its first phase.
- No properties within the Tri-Cities inventory traded in the second quarter.
The Tri-Cities market continues to be an attractive market for tenants from a variety of industries, particularly entertainment and technology, givens its history as an entertainment hub and its proximity to world-class engineering and science institutions. As such, spaces both new and old, have attracted interest amongst tenants looking to either expand or establish a presence. Warner Music Group's exit from Burbank will likely be backfilled sooner than later, while occupancies from the likes of WeWork and Service Titan, for example, will help boost demand as well.
Rents, which had flattened as of early 2018, have seen sustained growth for the last four quarters. While it was expected that any fluctuations in rent in the near future would center above or below the three-dollar mark, the Tri-Cities market may defy those expectations if rates continues to approach 5% in year-over-year growth.