Power Up: Video Game Companies Driving Up The Demand For Creative Office Space
In his more than 30 years in commercial real estate, CBRE Vice Chairman Jeff Pion never thought he would see the day when video games would be so popular they would become a force in commercial real estate.
“If you said 10 years ago this thing called esports is going to be the biggest sport in the world, I’d tell you, ‘You’re crazy. That’s not a sport,’” Pion said. “But now, I do think that more people are playing esports than any other sport in the world.”
According to CBRE’s “Video Games Poised For Prime Time” report, more than 2.2 billion people play video games around the world.
The global e-sports industry is expected to generate $696M in revenue this year and reach $1.5B by 2020, CBRE’s report said.
As esports or competitive gaming continue to grow in popularity, professional leagues are sprouting up and LA-based video game companies and investors are driving demand for creative office space or industrial lots to house headquarters or tournaments for a new generation of spectators.
“The esport companies are looking for space to host tournaments in or to practice and that could be anything from warehouse to office space,” said CBRE Senior Research Analyst David Nusbaum, one of the authors of the report. “The most important thing they need is connectivity. They need to make sure they have access to high-speed internet.”
While most video game players are casual gamers, for the top gamers in the world there are professional leagues in games such as Call of Duty, Starcraft, League of Legends and Madden football that could earn them anywhere from tens of thousands to millions of dollars a year, Pion said.
The Los Angeles region is home to many of the top game developers and esports organizers in the world.
Blizzard Entertainment, Electronic Arts, Playstation, ESL Gaming and more all call Los Angeles home.
According to the report, in the past five years, these companies have continued to add or lease space in the Los Angeles area:
- Riot Games, which developed the “League of Legends,” occupies nearly 500K SF in West Los Angeles.
- ESL Gaming, which hosts gaming tournaments in Burbank, doubled the size of its office to 25K SF in 2015.
- Blizzard built a 50K SF broadcast studio in Burbank in 2017.
Pion represented Hudson Pacific Properties in 2013 when Riot Games agreed to lease 284K SF of Hudson Pacific’s Element LA campus.
Pion said video game companies want creative office space.
“They want space that has a certain vibe to it, not traditional office space,” Pion said. “They want high ceilings, something fun and creative. It’s all part of a culture they want to establish for their employees.”
Given gaming’s popularity and seeing this as an extension of art, technology, media and entertainment in Los Angeles, Pion does not see this trend declining anytime soon.
“This is not just a passing fad. We’re beyond that,” he said. "As that sector continues to grow, there’ll be an increase in demand for creative office space and other property. Not a lot of those venues have been established. It’s going to become an emerging industry, especially in Los Angeles."
