A Glimmer amid a dim market

Commercial real estate in downtown Glendale had a rough year in 2009, with vacancy rates soaring close to 20% and demand for space almost nonexistent, but a small sale at year’s end may offer validation that the city’s commercial core remains desirable, brokers said. A private real estate investment firm, MO&M Investment, bought the $2.5-million two-story brick building at 344 N. Central Ave. in December. While the sale of a small property during a slow real estate market was not unique, the price — at about $510 a square foot — caught some by surprise. “That seems like a lofty price for office in that area,” said Paul Habibi, professor of real estate at the UCLA Anderson School of Management, who added that the buyer could have intended to redevelop the lot as an investment property. But MO&M intended to occupy the 4,900-square-foot site and submitted the highest of multiple offers for a site two blocks away from the city’s corridor of downtown towers, said Scott Unger, an associated with The Charles Dunn Company in Glendale, which brokered the sale. Another so-called owner-user property, which is purchased by an owner that intends to occupy and use it, was sold in December for about $240 per square foot, said Mark Miller, vice president of Stevenson Real Estate in Glendale, which brokered that sale. That building, at 401 W. Colorado St., and another at 515 N. Central Ave. that sold for about $260 per square foot, did not come close to the value of the former Glendale office of Dorn Platz, a Pasadena real estate firm. “It was just a well-located, unique piece of property,” Miller said of MO&M’s purchase, which was built in 1934 and will need some improvements, he added. The sale reflected the value of having a permanent location adjacent to the downtown core, said Bill Boyd, a senior managing director for Charles Dunn. “It is so unique to have such a modest-sized building in the central business district where a company can have its own building just two blocks away from the city’s biggest buildings, which is part of the reason why the price-per-foot was so strong,” Boyd said. The building is also located on a two-lot parcel that includes 49 parking spaces and measures more than 18,000 square feet, he said. But while the sale value was strong and involved multiple offers at a time when few sales are occurring, the nature of interested parties was indicative of the weak commercial real estate market, Boyd said. Few prospective buyers who intended to lease or redevelop the property submitted bids, Boyd said. “The offers we received from those that would not be owner-users was well below the successful offer as there is just no leasing market at this time,” he said. And while there was no recent comparable sale price for the building, which was occupied by Dorn Platz for 30 years, other recent sales involved losses, including the property at 401 W. Colorado St., which sold at about $1 million, down from its value of $1.4 million when it traded hands in 2007, Miller said. While that drop-off was significant, it matched trends for most properties in the current economy that do not have unique benefits, like the MO&M building’s proximity to other downtown offices, Miller said. Source: Glendale News Press, 1-25-2010