The coronavirus pandemic has been erratic, causing devastating harm to some and no harm to others. Commercial real estate has been no different. Within the industry, the pandemic has distressed whole sectors and driven significant growth in others. The newest beneficiary of the pandemic is sound stages. The boom in online content streaming during the pandemic has driven demand for sound stage real estate, according to a new report from CBRE, and institutional capital is taking note.

Also known as production real estate, sound stages are not a new sector. The real estate niche is an 11 million-square-foot market mostly concentrated in six major metros—Los Angeles, Atlanta, New York City, British Columbia, Ontario and Louisiana. Unsurprisingly, Los Angeles accounts for half of the total market with 5.5 million square feet of sound stage space. However, there has been notable growth in the Atlanta, Vancouver and New Orleans markets as well.

The market has consistently maintained a 90% occupancy rate, but until now, the market has been fragmented. The pandemic has driven demand in the market segment, and the arrival of institutional capital has promoted the standardization of formats and operations. Hudson Pacific Properties and Hackman Capital are among the investors active in the space.