Lights, Camera, Construction: SoCal’s Entertainment Boom

One of the world’s most recognizable entertainment capitals is going through a growth spurt. Los Angeles and the greater Southern California area have seen a rise in the construction of entertainment spaces over the past few years. 

Southern California has long been the home of entertainment industry companies and world-class performance venues. As digital media companies break into the industry, and as technology redefines how to produce, access and distribute entertainment, commercial real estate has adapted to meet demand. 

Soundstages and Office Space 

If the global success of shows like “Mad Men” and “Transparent” is any indication, television is in a golden age. The success of the medium has sent production crews back to Los Angeles, creating a strain on the supply of local soundstages. 

While soundstages have historically run at a utilization rate of about 70%, many are running at close to 100%, JLL International Director Carl Muhlstein told the LA Times. 

Online streaming services on the production side have driven increased demand. Last year, Netflix signed a 10-year lease at Sunset Bronson Studios, one of three studio facilities owned by Hudson Pacific Properties, the largest independent owner of stages in Hollywood. Amazon Studios announced plans to expand at the Culver Studios campus, signing a 280K SF lease in October.

Apple was also reported to be interested in renting the space for film and television production. 

Many studios in Los Angeles are legacy facilities dating back to the silent film era and are outdated. Further contributing to the shortage is the lack of new studio construction. As the value of land continues to rise in LA, some developers see acreage-hogging soundstages as poor investments. 

A solution to the large space commitment is flexibility. Soundstages that can transition to other uses, like concert venues or event halls, can increase the utility of the space without driving up costs. Construction firm Parker Brown took adaptability into consideration when building studio space for Ryan Seacrest Productions.  

Office space demand has risen to support the corporate side of these companies. Orange County ranks as the fourth-largest office market on the West Coast and among the top 30 in the U.S.

Developers have turned to adaptive reuse to meet demand. In El Segundo, Hackman Capital Partners, the developer behind the Amazon Studios lease, is turning a former aerospace campus into 550K SF of office space. 

Music Production and Concert Halls

While streaming services have disrupted the traditional methods of distribution for the music industry, the business is still alive and well in Southern California. Major companies have continued to expand their real estate footprints. 

Universal Music Group signed a 146K SF lease at the Warner Center in Woodland Hills. The company will combine its two San Fernando Valley offices into a bigger creative space. Parker Brown will serve as the general contractor. 

Streaming services for music have disrupted the economics of the industry. Artists make more money on concert tours and creating experience-oriented content than with record sales. In 2015, the top 25 concerts alone grossed just under $360M. 

The real estate world has responded with more concert venues. Seeing the demand, Michael Swier, the owner of The Mercury Lounge and the Bowery Ballroom in New York City, converted a 102-year-old movie theater in Los Angeles into The Teragram. The 600-capacity venue hosts performers running the gamut from indie-rock to punk/new wave.

Entertainment Venues

San Diego is a case study for the growth of casinos in Southern California. 

In October, Valley View Casino & Hotel announced a $50M expansion, becoming the region’s sixth casino property to launch a construction project that will increase its size and guest amenities. The news follows groundbreaking on Pala Casino Resort & Spa’s $170M expansion, adding to the rapid development pace of casino construction. An estimated $1B is being spent on new hotels, pools, spas and remodels in more than half of the region’s 10 casinos.

San Diego’s entertainment boom extends beyond gambling. University City, known as the Golden Triangle because of its location inside Interstate 5, I-805 and I-52, has undergone major renovations to become a job and entertainment center. 

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