Leisure, Media Serving to LA’s Struggling Workplace Sector Limp Alongside

In September, Netflix signed an SF 171,000 office lease in Burbank with plans to install its first dedicated animation studio on the property. The streaming giant originally planned to lease SF 150,000, but added SF 21,000 in its largest lease of the year to date, CoStar reports.

The coronavirus made 2020 an extremely lackluster year for office space, but the fact that the biggest lease of the year is an entertainment customer has shown that the sector’s performance was a ray of hope in an otherwise bleak office landscape.

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The building at 2300 West Empire Ave. where Netflix rented SFr 171,000.

Workers in the film and television industries are considered indispensable in California, but must adhere to public health protocols. Filming during the coronavirus pandemic was expensive and logistically complicated if it was possible at all, but it happens.

Much of the demand is driven by the so-called streaming wars between digital media services and the explosive increase in demand for content exacerbated by the pandemic.

Because of that demand, most entertainment tenants didn’t give up space even after production in LA halted during the early months of the pandemic, said Jennifer Frisk, senior managing director of Newmark’s downtown Los Angeles office.

Some asked for rent relief from the landlords of studios at the beginning of the pandemic, but Frisk said she didn’t know of any studios that gave relief.

Like filming soundstages, production offices and studio spaces are two different types of space that the entertainment industry relies on. In some cases, like the planned expansion of Sunset Gower Studios in Hollywood, they will be built together on one lot.

Another major entertainment-related lease in the LA area was in Santa Clarita, where LA North Studios rented an industrial building for around SF 114,000. LA North Studios plan to convert the building, which is part of a larger complex developed by Trammell Crow and Clarion Partners, into a soundstage, which should be operational by early 2021.

“All of our sound stages are fully engaged and this expansion enables us to meet the needs of our customers now and in the future,” said LA North Studios co-founders Anthony Syracuse and John Prabhu in a statement announcing the lease .


Courtesy Hudson Pacific Properties Inc./Gensler

A rendering of the Sunset Gower Studios extension.

Entertainment-centric development is also driving the pandemic forward.

Blackstone Group announced in November that it has partnered with Worthe Real Estate Group to advance a 500,000 SF office project in Burbank aimed directly at entertainment tenants. According to the Wall Street Journal, this is one of the biggest office developments this year.

“Our business is to identify issues we believe in and then find ways to invest in those issues,” said Nadeem Meghji, director of real estate at Blackstone America Bisnow in August. “Content creation is a megatrend, and both content demand and spending by traditional media companies and major film studios have exploded.”

The entertainment office market has been relatively good this year, but not nearly as strong as it has been in recent years without a pandemic, when companies like Netflix and Amazon rented entire buildings or studio complexes before they even opened their doors, Freiberg said. And the need to compete among entertainment giants and be optimistic about the future of entertainment and media in LA is not enough to fully boost the office market.

The year ends with the office sector deteriorating “accelerated” according to CoStar. The vacancy rate is over 12%, which corresponds to the last economic downturn, and the sublet space is reaching record highs.

Hudson Pacific Properties’ expansion of Sunset Gower Studios to add a 15-story office tower and two soundstages received critical approval from the city’s planning board this month. This project is also a joint venture with Blackstone, which acquired 49% of the shares in three studios from Hudson Pacific in the summer.

Although the Sunset Gower plans were originally submitted in 2017, the continued progress of the project shows that developers are still optimistic when it comes to entertainment usage, said Michael Freiberg of JLL, who works with customers in the entertainment and entertainment sector Creative industry works together.

“The demand is still there,” said Freiberg.

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