Soundstage Leasing Plunges While Supply Pipeline Booms

The voracious appetite by streaming services for new content during the past three years was met with an unprecedented surge in studio and soundstage production in the major film and TV production hubs.

In Los Angeles, projects that are either underway or have been proposed could double the footprint of studios, to nearly 4M SF. In the NYC area, developers are building 11 new film and production campuses, a 30% increase overall.

Investment giants including Blackstone, Apollo Global Management and Bain Capital have made huge bets on the film and TV production sector.

Now, developers who are racing to build new studios and soundstage facilities are holding their breath that the latest leasing statistics are an anomaly caused by last year’s strikes in Hollywood or a remnant of the pandemic that won’t last very long.

Leasing of production facilities by film and TV-related firms in the New York City area plunged 85% in 2023 in a year-over-year comparison with 2022, which also saw a decline from the 2021 peak of nearly 1.1M SF, according to a new market report from CBRE.

“Film and television-related firms severely cut back on signing new leases for a second consecutive year in 2023,” CBRE’s report said.

“Entertainment leasing is likely for another slow year as streaming services look to trim costs and the industry recovers from labor disputes that froze scripted entertainment production for much of the year,” the report said.

Most film and TV soundstage projects are continuing full speed ahead, but at least one major project in Georgia’s film hub has been paused. Tyler Perry, the actor and filmmaker, abruptly halted an $800M expansion in Atlanta last month.

As of February, only 38% of Atlanta’s soundstages were occupied, according to a Bloomberg report, but Perry did not cite the slowdown as the reason he paused a project to add 11 new soundstages to Tyler Perry Studios, which opened in 2019.

Perry cited another looming threat to soundstage expansions everywhere—and this one potentially will have far more impact than a temporary slowdown in leasing.

Perry stopped his project after OpenAI debuted its new GenAI tool, Sora, which can create visually complex shots of subjects and their backgrounds. Perry told the Hollywood Reporter he was astounded by the capabilities of the new tool and immediately decided to stop the Atlanta project as he assesses the new technology.

“All of that is currently and indefinitely on hold because of Sora and what I’m seeing,” Perry said, in the interview. “I had gotten word over the last year or so that this was coming, but I had no idea until I saw the demonstrations of what it’s able to do. It’s shocking to me.”

Perry projected that the use of GenAI will be “a major game-changer” in TV and film production because it will enable filmmakers to produce TV pilots at a fraction of the current cost, which can run as high as $20M or $30M.

“This will touch every corner of our industry,” Perry said. “I am very, very concerned that, in the near future, a lot of jobs are going to be lost.”