Institutional Investors Zero in on Film Studios’ Real Estate


Institutional investors are focusing on the real estate and operations of film studios, says JLL.

“It’s more than just the big screen capturing the imagination of investors. The race to produce content among major streaming platforms, from Disney+ to HBO, is pushing up demand for studio space. Netflix alone is estimated to have released more original productions in 2019 than the entire TV industry did in 2005,” the firm says in a recent report.

Pointing out more about need, Carl Muhlstein, international director based in JLL’s Los Angeles office, explains studios have high requirements for controlled environments to make content. “Soundstage occupancy has consistently been at about 95% since 2015, and with the current online content boom, the scramble is on for studio space, spilling over into vacant industrial and retail boxes.”

He notes the need for intense asset management of a higher turnover of tenants compared to other commercial real estate sectors, which was the case when leases on studios were relatively short has dissipated because the film industry is now moving towards leases lasting up to a decade and beyond. “That’s definitely becoming more common as we see both traditional and streaming platforms seek out a place to be based and ensure access to soundstages for a growing roster of films. The industry has moved away from a seasonal approach.”

As an example of the institutional investor activity in film studio real estate recently, this year Hackman Capital Partners and Square Mile Capital Management jointly acquired the Sony Pictures Animation Campus in Culver City, while also partnering with Raleigh Studios to manage Raleigh’s 10-acre campus in Hollywood.

This year has also seen the first large-scale new construction studio project to break ground in Los Angeles in decades with Hudson Pacific Properties and Blackstone planning to build Sunset Glenoaks Studios, a 240,000-square-foot studio space in Sun Valley. 

The project represents a total investment of $170 million to $190 million. The project is already fully entitled and is expected to deliver in the third quarter 2023.

There is currently a 1.2 million-square-foot pipeline of new studio space development and occupancy of existing studio spaces is above 95%, according to a June report of CBRE. Content consumption is playing a major role. Eric Willett, regional director of research at CBRE, says that viewing minutes in the US and globally are up year-over-year. That is especially good news for Los Angeles, which Willett calls “ground zero” for studio space.



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