Streaming Wars Could Be a Beacon for L.A. Office

The ongoing streaming wars may help to fuel recovery in Los Angeles’ office market. The streaming wars began before the pandemic disrupted the market earlier this year. The phrase came from the rollout of new streaming services, like Disney+, and the expansion of other staples, like Netflix. The pandemic has only fueled the war between streaming services, and it could spell good news for the office market in L.A., which has been impacted by the pandemic.

“The streaming wars are far from over, especially after viewership counts skyrocketed following shelter-in-place mandates,” Bill Bloodgood, executive managing director and agency market leader at Newmark, tells GlobeSt.com. “Disney reported it had over 100 million streaming video subscribers in August and plans to launch a new streaming service under its Fox-acquired Star brand.”

It isn’t only new streaming services that are fueling the expansion of media companies. Staples like Netflix are also reporting strong viewership during the pandemic. “Netflix, meanwhile, is reportedly on track to have 200 million subscribers by year-end, while the company accounts for roughly 13 percent of today’s global internet traffic,” Bloodgood says.

The expansion of media companies isn’t a forecasted event; it is happening today. Despite the pandemic, streaming providers have continued to expand during the pandemic. “FAANG companies remain in expansion mode, as demonstrated by recent leasing activity from Netflix, which leased 171,000 square feet in Burbank, and Facebook, which leased 85,000 square feet in Playa Vista, according to Newmark’s 3Q20 Los Angeles office report. They, along with other tech and media companies, also have active requirements in the market for additional space,” says Bloodgood.

While these companies have helped to create some leasing activity in Los Angeles, the market still had negative net absorption of 1.8 million square feet in the third quarter. Some of this is also due to an increase in sublease space, which is currently 6.9 million square feet. “Sublease availability will increase throughout the region as will opportunities for trophy-grade space in desirable pockets of the market at discounted rental rates,” says Bloodgood.