Intercontinental Real Estate Corp. Buys Connexion Burbank for $123.5M
The real estate investment firm has purchased a creative office campus for $123.5 million
Boston-based Intercontinental Real Estate Corporation, a national real estate investment, development and management firm, acquired Connexion Burbank for $123.5 million in mid-February, according to an official release.
Intercontinental’s purchase—on behalf of its managed fund U.S. Real Estate Investment Fund—includes a three-building urban campus totaling 337,904 square feet in downtown Burbank. It marks the fourth office investment and sixth overall investment for Intercontinental in the Los Angeles area. Previous office deals for Intercontinental were the Apollo at Rosecrans in El Segundo, Bristol 61 in Culver City and 6300 Wilshire in Miracle Mile.
Jessica Levin represented Intercontinental in-house. NKF Capital Markets’ Kevin Shannon, Rob Hannan, Michael Moll and Laura Stumm represented the seller—a joint venture between Lincoln Property Company and Angelo Gordon—along with Kent Handleman of Lincoln Property Company and Doug Marlow of CBRE.
Shannon told Commercial Observer that the property was attractive to Intercontinental Real Estate corporation because it provided newly renovated creative office product—a hot property type in Los Angeles—and the likelihood that it will benefit from the “Blackstone Effect” from Blackstone’s 2017 recapitalization of Jeff Worthe’s extensive Burbank portfolio. Between Blackstone’s “mini-monopoly” and a vacancy rate at less than 10 percent in the area (9.4 percent), Shannon said he expects market rents in Burbank to increase.
According to CBRE’s Greater Los Angeles office report from the fourth quarter 2017, asking rents in the Tri-Cities market, which includes Burbank, Pasadena and Glendale, average $3.04 a square foot.
The Connexion sale comes four months after Blackstone paid $1.7 billion for a majority ownership of six office properties totaling 3.3 million square feet in Burbank’s media district. Blackstone said it wanted to be in one of the key cradles of content creation, especially as big Web-based firms such as Amazon and YouTube’s owner, Google, are rapidly expanding their entertainment businesses.
Located at 303 North Glenoaks Boulevard, 333 North Glenoaks Boulevard and 300 East Magnolia Boulevard, the properties were built in 1983, 1978 and 1984, respectively. They recently underwent a major capital renovation and rebranding, which totaled nearly $8 million, and included an extensive plaza renovation, new common areas, significant upgrades to all three lobbies and the addition of two outdoor decks. The buildings are situated on just over three acres of land and provide direct access to an abundance of walkable amenities within downtown Burbank.
Collectively, Connexion Burbank is 91 percent occupied by a diverse set of tenants like Turner Broadcasting (Cartoon Network), Regus, Citibank, Blackmagic Design and University of Redlands.
“With a foundation of long term credit tenancies and a diverse mix of media/entertainment, legal, healthcare, government and non-profit firms, the property currently benefits from excellent proximity to a wide variety of amenities and a creative labor pool,” Levin said. “The building will continue to perform well due to its central location within downtown Burbank, and we expect it to outpace the market as a result of numerous development plans underway nearby.”
The business plan for the property includes minor updates to the lobby and other common areas of the building, she said, but declined to provide how much was earmarked for the purpose.