Red-Hot Market for Large Film-Production Space in NY/NJ

Film-production facilities have continued to thrive in the NY/NJ metro, with the total amount of soundstage footage increasing across the region by 14% since January 2021, according to a new report by CBRE’s film-studio valuation practice.

Generous tax credits and surging demand for streaming content during the pandemic have lifted growing demand, in a dense market with very little supply of the large-volume spaces that studios require.

According to the CBRE report, there is still room for rent growth in the NY/NJ market. The report cited statistics from the Motion Picture Association showing the number of global subscribers for streaming services surging from less than 400M in 2016 to more than 1.3B at the end of 2021.

Demand for soundstages in the New York area is so strong that production companies, who usually rent space for three to 12 months, are signing 5- to 10-year leases with film studios, CBRE said.

At least nine studios have initiated projects with an estimated 1 million square feet of new soundstage space in NY/NJ; the current inventory in the New York metro, including northern NJ, for soundstages and filming areas is approaching 3 million SF, CRBE said.

CRE investors and existing film production companies recently have been making acquisitions to increase their share of the NJ/NJ soundstage space.

Steiner Studios, which opened in the Brooklyn Navy yard in 2004, is starting construction on a 900K SF film production facility in Sunset Park, Brooklyn. Since 2004, NY State has offered tax credits for film production projects.

Hackman Capital Partners, in partnership with Square Mile Capital Management, bought Kaufman Astoria Studios in Queens last year. In 2020, The partnership acquired Silvercup Studios, which has three film campuses in Queens and the Bronx, including the original, which was converted from the historic Silvercup bakery in NYC.

The recent setbacks for Netflix, expected to be a leading film-production player in NY/NJ, have not dampened the outlook for film-production in the region.

For several months, since the largest undeveloped property in northern NJ—a 289-acre parcel that was part of the former Fort Monmouth Army base that was shut down in 2010—was put up for bid October, it has been widely assumed that the most interested buyer was Netflix, which had been discussing relocating its studio from Georgia.

Netflix opened a studio in Bushwick, Brooklyn last year and confirmed it expected to bid on the Fort Monmouth site.

However, a dispute over a bowling alley included in the parcel forced the Fort Monmouth Economic Revitalization Authority to toss out the bids and start over again. A fresh round of bids will be accepted on June 6.

In the interim, Netflix disclosed in its first quarter earnings call that it lost 200,000 subscribers in Q1 2022, its first subscribers loss in more than a decade, and that it is projecting to lose another 2M in the second quarter.