As technology evolves and streaming becomes increasingly popular, Los Angeles continues to see high demand for studio development. According to Relativity Architects, which has been designing studio space across the globe since 2013, Los Angeles has seen an even larger need for high quality production space, with the growth in long term leasing making it exceedingly popular among developers and investors alike.
“Studios have been at 80 to 90 percent occupancy for over five years now,” Tima Bell, co-founding principal of Relativity Architects, said. “Studios just don’t close as evidenced by the amount of content we now have, and one of the big shifts in this was Netflix deciding that they weren’t going to get studios per show, they were going to get studios long term. The minute long-term leases came into play, it changed the landscape of studios, because all of a sudden you wouldn’t get this revolving list of shows that could go to any channel.”
The entertainment industry is heavily focused in Los Angeles, as evidenced in recent data from CBRE. The brokerage firm reported that Los Angeles currently holds about half of the total 11 million square feet of soundstages in North America. Of that, streaming companies occupy approximately 3.7 million square feet, which is up approximately 1.8 million square feet over the past four years.
As demand for studio space increases, so does the need for further development. According to Bell, studio projects are primarily built in the Eastern portion of Los Angeles, such as in Boyle Heights, Burbank and Glendale, due to the additional land available there. Further, areas that are accessible to popular neighborhoods, like the Los Angeles Arts District and Los Feliz are more likely to see nearby studio development.
Currently, Relativity Architects is working to develop six studio projects across Boyle Heights, Burbank, Glendale and the Arts District. These include a 125,000 square-foot soundstage and 75,000 square-foot office space at 2233 Jesse Street in Boyle Heights by developer East End Capital. A 150,000 square-foot studio expansion of East End Studios is also in the works in Glendale. The architecture firm began its work in studio space in 2015 with designs for Los Angeles’ Siren Studios. Since then, the company has developed designs for 13 production facilities across North America, while also designing various other types of commercial assets.
“Getting studios that are closer to culturally hip and popular locations is really what is the goal. Now, Burbank is special because Burbank has forever been a movie town. That’s ultimately where our movies are filmed, with Universal, Warner Bros., there’s a number of lots out there and it’s sort of geared for that, which is fantastic,” Bell said. “Other [lots] in Glendale and Boyle Heights are really about the proximity to the river because that’s where a lot of the large industrial pieces of land are. You need a lot of land to make studios.”
However, with the growing demand for studio space, developers are also facing space constraint issues. Due to their large size and already significant presence in Los Angeles, studio developments are also popping up in places like Atlanta and New York. Tax incentive programs have also helped attract major studio developers to other markets.
“The space constraints are real. It typically takes about 80,000 square feet to get two shows, which is kind of the sweet spot if you want to make a reasonable campus. You can always do one show, or smaller commercials or something like that but those are a little harder to generate,” Bell said.
He continued, “Demand is increasing, there’s no question about that. The best thing about Los Angeles is we have a reasonable tax credit, but we have the best infrastructure for this. This is our industry.’
Despite this, Los Angeles remains the largest hub for entertainment in the country due to its large talent pool. According to CBRE, California has the largest entertainment employment base totaling more than 628,000 employees. The market is followed by New York, which accounts for just over half of that, employing 360,000 in the entertainment industry.
Studio development in Los Angeles isn’t expected to slow down anytime soon, with streaming services increasing views by 75 percent year-over-year. However, as technology continues to shift, Relativity Architects anticipates the types of spaces needed by content creators will continue to change as well.
“I would realistically say that somewhere in the next five to seven years, we will fulfill the current demand. What I can’t predict, and what no one can predict, is what the demand will be like in five to seven years….There’s so many ways that the content creation can expand and compound that it’s very hard for me to ascertain demand, but not so much supply.”