Development Booms in Burbank, California

Warner Bros. is building a new office complex called Second Century in Burbank, California. (CoStar)

The city of Burbank, California, is undergoing the largest wave of commercial development it's had in years as office, industrial and residential construction surges to keep up with demand by major entertainment companies, even in a pandemic.

The area has the most industrial space under construction in Los Angeles County, with more than 1 million square feet underway that account for almost a quarter of all industrial projects in the county. It is the second-most active for office development in the county, behind only Culver City, with more than 1 million square feet that represents a 1,400% increase from 12 months ago, according to CoStar data.

While speculative development has stalled or sat empty in many areas around Los Angeles and the country, Burbank developers are eager to take advantage of skyrocketing demand in the media-rich city where entertainment juggernauts such as Walt Disney Co. and Warner Brothers have corporate headquarters and ABC, Nickelodeon, and other entertainment firms including Netflix have significant space.

“Los Angeles is in the midst of a content arms race where major studios and digital upstarts are battling for dominance in the streaming wars,” said Ryan Patap, Director of Market Analytics. “Burbank has been one of the key beneficiaries in the metro of the content boom.”

Entertainment and tech firms have been quickly expanding as competition over streaming media services grows. The leasing frenzy has drive down the office vacancy rate in Burbank to among the lowest in greater Los Angeles at 5.3%. It's industrial vacancy rate is a very low 2.7%, according to CoStar Market Analytics.

After a decade of modest levels of new office construction compared to other prestigious office locations such as Hollywood and Culver City, Burbank is making a comeback as one of the most active areas for office development in greater Los Angeles.

More than 2 million square feet of office and industrial space combined are underway in the city of Burbank, while more than 260 apartments are under construction, research shows. The industrial and apartment development comes after no construction on either product type were being built a year earlier.

The majority of the office space is being built for Warner Brothers in a project called Second Century, the 880,000-square-foot expansion of Warner Studios designed by famed architect Frank Gehry slated for completion in 2023.

But even excluding that project from the construction total, Burbank office construction is about 260% higher than this time last year, with construction of the 63-acre Avion Burbank mixed-use project and a redevelopment conversion project at 6265 San Fernando Road.

"Those of us that know the history of the market understand there’s no reason for the demand to curtail, even during this coronavirus pandemic," said Bill Boyd, executive vice president with brokerage Kidder Mathews, who has been an office broker in the area for almost 40 years. "Companies like Netflix and Amazon have a wildly successful business model and they're new tenant prospects that weren’t even a factor during that earlier growth spurt.”

Streaming giant Netflix last month signed the largest lease of the year, taking 171,000 square feet at the Burbank Empire Center for its first dedicated animation studio. Netflix also also moved into 62,000 square feet at Burbank Studios in March.

The Empire Center sits in the northern part of the city in the Hollywood Burbank Airport area, which once a secondary option. It now is becoming a first choice for entertainment and media companies that have little space left to growth in the Burbank Media District, which led office development in the city for decades, Boyd said.

The burst of construction is causing a bit of déjà vu for brokers such as Boyd whose career began back when Johnny Carson was hosting "The Tonight Show" from "beautiful downtown Burbank."

"It’s just like the old days, when everything in Burbank was built on spec,” said Boyd. The projects are "a testament to that proven success."