Writers Strike Silences Studios, Throwing Upstart Real Estate Asset Class Into Uncertainty

The cameras have stopped rolling and the lights have gone dark on millions of square feet of film and television studio space in the U.S. as movie and television writers strike for better pay.

While a smattering of productions are still happening, studio owners interviewed by Bisnow say a protracted strike will not only take a bite out of their revenues, but will also have broader economic impacts, especially for the millions of workers involved in the production industry.

The Writers Guild of America's strike, which was authorized on May 2, is “going to be a challenge for the film industry labor and vendors. Layoffs are already happening,” Tyler Edgarton — whose firm, Raulet Properties, owns four film and TV studios in Metro Atlanta — told Bisnow in a text message.

Two of Raulet’s studios are devoid of activity, with productions finishing up in the other two studios on programs that already have completed scripts, Edgarton said. He expects both the Directors Guild of America and the Screen Actors Guild-American Federation of Television and Radio Artists to go on strike over the summer, turning studios from Hollywood to New York and Atlanta into ghost towns, Edgarton said. 

“When the directors strike, that will probably shut down any remaining shows that were active,” he said. 

Rahim Charania, founder of the real estate investment firm Woodvale and owner of Cinelease Studios - Three Ring Studio in suburban Atlanta, said his space is leased up through September, although no filming is currently taking place due to the strike. For now, Charania said his firm is not in talks with any production companies to lease space beyond September and likely won’t be until an end to the strike becomes clear.

“We are fully occupied. But they’re not filming,” Charania said. “And when they’re not filming, people are out of work.”

Over the past decade, the ownership landscape of soundstages and production facilities has changed from mom-and-pop ownership to more institutional investors. Blackstone, TPG Real Estate Partners, Bain Capital Partners and Square Mile Capital Management have spent billions combined buying and developing new studio space across the U.S.

There was 15.7M SF of soundstages as of last summer across the six major North American filming hubs, Los Angeles, New York City, Atlanta, British Columbia and Ontario, Canada, and New Orleans., according to CBRE, up from 12M SF in 2020. But in the years since, more than a dozen studio complexes have been planned or started construction.

Institutional investment into the film and movie real estate industry also means the pension funds, insurance companies and retirement accounts that these firms manage money for will also feel the hit from the WGA strike, especially if the dispute is protracted.

Hudson Pacific Properties, which owns 90 soundstages in Los Angeles and the UK, suspended its outlook on its funds from operation for the year due to the writers’ strike. HPP CEO Victor Coleman said the firm is somewhat buffered from the strike since 70% of its space is under multiyear leases with guaranteed minimums. The impact is being felt nonetheless.

“With the strike underway, productions at all studios have now been disrupted,” Coleman said on a May 9 earnings call. “Whether brief or protracted, the strike will impact our entire studio business.”

Hollywood sprang into overdrive producing original content as soon as it was able to during the pandemic, rushing to catch up with demand from viewers hungry for new shows and movies on streaming services while stuck at home.

The value of the global film and television industry was $235B in 2020, according to data compiled by Research And Markets. By the end of 2023, it’s expected to be $283.5B, and grow to nearly $345B by 2027, according to The Business Research Co. 

While some are hopeful that writers will come back to the table to end the strike sooner rather than later, past writers’ strikes have a history of churning on for months. In 2007, the WGA strike lasted 100 days, according to Vanity Fair. The 1998 strike lasted even longer, spanning 153 days. 

Those past strikes had massive impacts on the broader economy. The last writers’ strike was estimated to have cost California alone $2B, according to a study by the Milken Institute.

Over the past decade, the studio system expanded well beyond the historic hubs of Los Angeles and New York, with Atlanta gaining momentum thanks to a generous film and television tax credit program and a strong foundation of local talent. So, too, could the pain be more widespread as a result. 

The WGA is striking over various issues this time around, including the call for increased pay, better residuals as more shows go on streaming services and a cap on the use of artificial intelligence as a writing tool by studios, the Associated Press reports.

Some are predicting the strike may outlast this summer, especially as DGA and SAG-AFTRA prepare for contract talks this summer. SAG-AFTRA already plans for members to vote to authorize a strike this summer. 

“As a Georgian, I know that anything that slows or threatens production in our state has a negative effect on the more than 40,000 businesses and tens of thousands of Georgians that support the industry,” Charania said. 

But studio owners and investors say they hope and expect that studio demand will come flooding back once all three unions reach contract agreements — a deluge not unlike what they saw as the economy reopened from the pandemic. 

Bardas Investment Group Head of Investments Jackson Brissette said institutional investors are likely taking the strike in stride. Bardas is partnering with Bain Capital Real Estate for a $600M redevelopment of the Television Center in Hollywood into a 620K SF studio campus called Echelon Television Center. 

Brissette said that studio rents tend to be more like hotel rates: Short-term leases mean rents change more often. While owners may feel pain in the interim during the strike, a flood of pent-up demand means that these landlords will quickly reap the benefit on the other side, he said. 

“It will be a shit show when everyone tries to start again at the same time,” Edgarton said. "That happened coming out of Covid."

Brissette said he expects that production will ramp up in earnest in 2024 assuming the strike resolves as entertainment companies rush to create new content for consumers.  

“We consider this somewhat of a blip. The writers’ strike, this happens in the business,” Brissette said. “On the consumer side, the demand for content is still insatiable.”

UPDATE, MAY 24, 10 P.M. ET: This story has been updated with new data on the supply of soundstages from CBRE.