Introducing Industry Dirt
Introducing Industry Dirt, a once-a-month newsletter focusing on the intersection of entertainment and commercial real estate.
I’m fully aware of how plugged-in entertainment folks are. So, my goal with this newsletter is to provide info that may not have been in the trades you read. And if it was, give some context & commentary on how and why said info may affect the greater LA real estate market and maybe even you.
While I am more focused on the real estate and less so on the gossip, as someone who has been a commercial real estate broker in this town for over 30 years, I get that sometimes they’re so intertwined that it’s tough to tell where one ends and the other begins. I’ll do my best.
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With all of that out of the way, let’s go.
STUDIOS AND PRODUCTION COMPANIES
Participant’s office is on the market.
With Participant shuttering, its Culver City office is on the market for sublease. The high-end move-in ready sublease is over 10,910 square feet (divisible), with a lease through October 2028. Here’s the video tour if you’re interested. My take: Very sexy studio space in Culver City, which seems to be the “next thing” in entertainment with Max, Apple, and Amazon. Need we say more? Skoll probably paid a nosebleed rent - near Century City rents - but the space will be “auctioned” off at rents half of that. $4.00/psf is my guess.
Construction has commenced at the Ranch Lot in Burbank.
Worthe Real Estate Group, a Santa Monica-based development and property management company, has begun construction on the 30-acre Warner Bros. Ranch Lot in Burbank. Its commencement reportedly marks the largest sound stage development in the nation. Already fully leased to Warner Bros., the $500 million project will consist of a 926,000-square-foot total campus, including 16 soundstages, a parking structure, a commissary, mill space, and a 326,000-square-foot office complex. The project’s current estimated completion date is the first quarter of 2026. (source: SFVBJ)
Paramount “may be changing” hands. It looks like Apollo and Sony want it the most. What to do with the historic Hollywood Studio Lot? You know some investment banker has put a “number” on this as an “asset to be monetized.” Is there a redevelopment opportunity for a buyer?
The Fox lot is going through an entitlement process after its spin-off to Disney. Will it be studios, offices, or…?
Warner Brothers to vacate the entire Douglas Emmett-owned building in Burbank in 3Q24. That’s 456,00 square feet of office space that, while in Burbank, is a tremor felt throughout the office REIT industry.
Imagine Entertainment renews its lease at full occupancy—Happy Days!
MGM, getting absorbed into Amazon, will vacate its home at Beverly 245 N Beverly Drive.
SNAP renews entire space in Santa Monica—good news as most competitors giving back space.
Fab Factory Entertainment signed a master lease on a 66,000-square-foot postproduction, office, and event facility at 1377 N Serrano Ave, East Hollywood. The three-story building formerly served as Netflix’s postproduction HQ.
New build!? The Star LLC submitted revised plans for a proposed $1 billion creative office campus on a 2-acre lot at 6601 W Sunset Blvd. Designed by global architecture firm, Foster + Partners, the spiral-shaped tower, The Star, will offer 360-degree views. We don’t know the developer, which is odd, but this CRE cycle has led to the “graduation” of the current players and perhaps some rising freshmen from places like Asia and elsewhere.
STATS
Some Hollywood intel from the LABJ… Hollywood’s office vacancy rates remained unchanged from last quarter at 27.3% and are down slightly from last year’s 27.8%. Class A asking rates dropped 17 cents this quarter to $4.70 per square foot. Net absorption was negative 2,520 square feet, while 145,000 square feet was under construction.
AGENCIES
When UTA is not battling its ex-partners in court, it may think about its nice but dated space in the former Hilton Hotels HQ (yes, LA had headquarters back in the day). The successful firm overtook the former Playboy space and continues to grow in Beverly Hills and throughout the US. The challenge for the agents is that while Beverly Hills feels like home, the buildings are small-scale and constructed in the 1960s.
For a minute, Maple was the answer, but if you move there, you might as well move out of BH to a newer product in Century City or elsewhere.
Compounding this quandary of what to do and where to go is the rent disparity between old BH buildings and new construction, such as CAA’s new build. Old is $5.00 and new is double that. So, if you have 300,000 square feet, that’s a $1.5M/month difference. I’m told these private equity firms have newly minted MBAs with the latest version of Excel, and even with that, they can do the math in their heads. You can guess what the parent’s response will be to the higher allowance.
WME renewed its lease at 9601 Wilshire Blvd.
WME goes private with Silverlake after renewing its 250,000 SF lease at 9601 Wilshire Blvd, Beverly Hills, for at least 13 years. Douglas Emmett owns the building. (source: Costar)
What will Ari and Silverlake Capital do with WME once they take it private? All signs point to growth, both organically and via acquisitions. I guess the public markets weren’t the right financing source for a business like WME. Silverlake is flush with “fresh capital,” so we’ll see how this changes things in the Beverly Hills triangle, where the firm occupies the 1960s construction, 9601 Wilshire. Yes, agents can walk to Brighton Café and Il Postaio while talking on their iPhones, but the space must be tight, and they certainly aren’t keeping up with the CAAs of the world in terms of prestigious offices (see below reminder).
What should be interesting about the public-to-private move, in addition to growth, is the potential for spinoffs. It’s already been announced that Patrick Whitesell will start a separate company that arguably will need its own offices. This is similar to when Endeavor Content was spun out as Fifth Season and moved across Wilshire---and now on to 65,000 square feet at the Lumen office campus in West LA later this year. What else may we see…?
A3’s former home at 8305 Sunset Blvd.
With A3 closing its doors, expect its WeHo space at 8305 Sunset Blvd, 5th floor, to come on the market.
Old news, but important to remember as WME just renewed in BH and UTA has to decide what to do with its tenancy at its dated building: CAA will relocate to another high-end office in 2026 - JMB Realty’s 37-story, state-of-the-art commercial tower at 1950 Avenue of the Stars, across Constellation Blvd from CAA’s current offices.
Business manager Grant Tani is looking for space. Wilshire Blvd space outside of the triangle is officially meh, even for accountants, err, business managers.
Maple Drive
This appendage to the Beverly Hills market is vaaaaacant. Fandango, now in the hands of savvy manager, Comcast, does not need its 90,000 square feet for one reason or another. Comcast bought Fandango at 407 Maple and vacated.
Extra
📽 What should be done with North America’s old movie houses? This Costar article shares what’s going on in Montreal, which is most likely a preview of what’s to come for most of the US.
Thanks for reading. If you want me to look into something or have some ideas for the newsletter, reach out, and I’ll get right back to you.
Ted Simpson
Founder and CEO
Commercial Real Estate Advisors
(c) +1 310.384.6512 |(e) ted@crea-la.com
CA DRE License #0109718