The Streaming Wars Are Making Studio Space the New Darling in Los Angeles

The pandemic amplified an already hot studio real estate market. Now, filming and production studios are quickly becoming the darling of the Los Angeles real estate market. New research from CBRE shows that strength in the global entertainment market has contributed to a 1.2 million-square-foot pipeline of new studio space development and occupancy of existing spaces has stayed above 95%.

“The demand for filming space reflects a broader demand for content. We have seen content consumption increase rapidly over the last several years, and that growth was accelerated even further during the pandemic,” Eric Willett, regional director of research at CBRE, tells GlobeSt.com. In 2020, digital entertainment revenue increased 31% to $61.8 billion and in March of this year, filming permit applications have increased 107% with a total of 1,125 since January.

It all comes down to content consumption. Last year, there was a substantial increase in consumption while the world was required to stay home. “Viewing minutes in the US and globally are up year-over-year and companies are spending vast sums of money to build out their content libraries as they engage in the streaming war,” adds Willett. “The result of all of that is increased demand for the space that is necessary to create all of this content, and of course, L.A. is ground zero for that type of space.”

When the world shut-down, so did the filming industry. Sets everywhere were forced to halt production, but instead of deterring demand, the move did just the opposite. “That six-month or so shutdown caused immense pent-up demand. All of the TV series that were in filming still had to complete there series, and that was on top of new material that was in production. As a result, we saw more demand rather than a pulling on the reigns,” says Willett.

Once the pandemic ends and everyone can’t return to normal life, Willett doesn’t expect to see a significant retraction in viewing numbers, and definitely not one that would detract from the new demand for space. “We expect to continue to see growth. In early 2020, there was a radical increase in the amount of streaming minutes due to the pandemic, but we don’t expect to see any retraction,” he says. “We have set a new normal, and we are expecting to continue to see growth from here, both in terms of the consumption content on a global scale and in the creation of content.”

The demand for filming space could ultimately spell good news for the office market as well. While Willett says that there isn’t a direct link between office demand and studio demand, he imagines that entertainment companies will also be looking for office space. “The growth of the filming and the growth of studio demand in Los Angeles reflects the strength of the office market,” he says. “Over the last several decades, the creative industries have been the largest occupier of office space in the region, and we expect to continue to see the really strong demand continuing from these occupiers. That is certainly a boon for the regional office market.”