The desire for 24/7 streamed entertainment has surged during the pandemic—and so has Hollywood’s need for more real estate as production sets. The commercial real estate sector is rapidly growing as television and film producers express a need for more high-quality soundstages, creative labs, and production offices, MarketWatch reports.
Since the pandemic started last spring, American demand for streamed entertainment has increased 74%, according to the commercial real estate firm CBRE Americas Research. Streaming companies like Netflix, Amazon, Disney+, and Hulu are racing to create original programming, and while entertainment companies usually rent soundstages on an as-needed basis, Netflix began taking on multiyear leases to keep its production pipeline in full swing, MarketWatch reports. Its content rivals are following suit.
Most of the buzz in commercial real estate has centered on growth in warehouse demand due to the increase in online shopping and shipping since the pandemic began. The cost of building a soundstage is five times that of constructing a distribution warehouse.
Still, this niche market is prompting more investors to take notice. In June, Blackstone acquired a 49% stake in Hudson Pacific Properties’ Sunset Studios, one of Hollywood’s largest studio operations. The deal included 2.2 million square feet of studio space and nearby office properties that were valued at $1.65 billion, MarketWatch reports. Blackstone also gained rights to build another 1.1 million square feet at the three-studio complex.
“Today, one of our highest-conviction themes” is ownership of studio space for creating film, television, and digital content, Nadeem Meghji, head of real estate in the private equity firm’s Americas region, told MarketWatch. “Fundamentally, this is a real estate play and critical infrastructure for the production of TV shows and film.” Meghji told MarketWatch that Blackstone plans to grow its studio portfolio in Los Angeles as well as a handful of other markets in the U.S. and internationally, including New York, London, and Vancouver, among others.
Source: Magazine Realtor
