The Los Angeles film industry is reportedly making its return after being hit hard by the COVID-19 pandemic. According to a recent CBRE report, which analyzed global trends as well as trends in the greater Los Angeles film industry, the sector is beginning to see more activity, with streaming platforms taking off during this time.
According to the report, global entertainment revenue in general fell to $80.8 billion during the COVID-19 pandemic, an 18 percent decrease from the year prior. During this time, theaters took the hardest hit, with $12 billion in revenue in 2020, compared to $42.3 billion in 2019.
However, despite these challenges, at-home streaming services outperformed as many remained home consuming more content than usual. According to the report, digital revenue in the U.S. increased by 33 percent in 2020, with a total $26.5 billion in revenue. Globally, the digital film industry saw revenue increase by 33 percent, totaling $61 billion in 2020.
“There was a really dramatic shift in the amount of television people were watching…Streaming platforms have exploded over the last decade, and it’s created this really intense competition in Los Angeles and elsewhere,” Eric Willet, Director of CBRE’s Research and Thought Leadership, said. “So, very clearly we’re in a period of flux, and over the next couple years, we will continue to see evolution as all these players enter streaming, or more and more of these streaming platforms move to traditional distribution…we are very optimistic about the path for the film industry.”
In fact, as guidelines loosen, Los Angeles is reportedly seeing a record high amount of film permits. According to the report, Los Angeles County saw a 107 percent increase in submitted film permit applications since the start of the year. By March of 2021, the amount of applications submitted reached 1,125.
Despite this, CBRE reported employment levels in the film industry remain far below pre-pandemic levels, with 70,200 regional entertainment jobs lost in the early months of the pandemic. Since then, only about one-third of jobs have returned. However, Willet said employment levels are likely to pick up as more people are able to return to work and the entertainment industry makes a full recovery.
“A lot of the numbers we’re looking at are aggregate entertainment numbers. So some of what’s reflected is individuals who are performers on stage or other avenues…the pressure on filming was particularly intense because people wanted to consume more content, so I think that’s really why we’re seeing an increase in permits,” said Willet.
However, with the increase in submitted permit applications, the demand for stage space is even greater than usual. Willet explained this is likely due to productions being put onhold throughout the pandemic.
“The demand for stage space has definitely waxed and waned over the past decade, but in the last several years, we’ve seen a steady increase in the Los Angeles region, and that could be because of the demand for streaming…The intensity of demand has certainly been heightened over the past six months primarily because of the backlog and that will definitely sort itself out, but when you start going back to normal, I think we will end up at an elevated amount of stage space just because of the sheer volume of content that is being funded by major studios,” Willett said.
In the Greater Los Angeles Area, the report showed that occupancy in the Greater Los Angeles film industry has remained at or above 95 percent in the past several years, which has led to the creation of additional studio space. According to CBRE, more than 1.2 million square feet of new sound stage space is either being developed currently or being planned within the region.
In early 2021, for example, Hackman Capital expanded its portfolio of studio space with the $160 million acquisition of the Sony Pictures Animation Campus in Culver City. Hudson Pacific Properties also reported an increase of 5.9 percent in studio net operating income in the past year with the expansion of their Sunset Bronson, Gower, and Las Palmas facilities.
“Film stages have a high occupancy, almost 100 percent occupied…And as a result we are seeing an increase in the marketplace for new developments. There is an increased pipeline which is really exciting for the future of the region, and I think it will continue to cement Los Angeles as the spot for content creation in the U.S.,” Willet said.
