While many studio developers are lying low as the sting of last year’s twin entertainment strikes still lingers, and as doubts are raised regarding continued soundstage demand, East End Studios is staying busy.
The company debuted its first ever ground-up studio project in Glendale earlier this year and has three other local studio campuses underway in efforts to expand its footprint and accommodate modern sets.
“I don’t know if you’ve seen any of the other facilities that have grown organically over time,” Shep Wainwright, one of the managing partners of East End Capital, said. “For the most part, they’re pretty old and stale. They weren’t purpose-built for today’s workflow.”
East End Studios is a Glendale-based subsidiary of New York-based East End Capital, a real estate investment firm that has its hands in a variety of asset classes – including office, multifamily and retail.
Wainwright said while the company still evaluates deals on a rolling basis, it took a leap of faith in 2020 when it saw immense value in studio space from a real estate perspective and pivoted its business accordingly.
Since then, East End Studios has grown to encompass 2.7 million square feet of studio campuses existing and currently in development, totaling 38 soundstages.
“East End is one of the most active soundstage developers certainly in Los Angeles,” Sam Glendon, a first vice president at CBRE Group Inc. specializing in industrial, soundstage and office properties, said. “These projects…they’re years in the making.”
Purpose-built studios
East End opened the doors to its first ever ground-up development studio project – a 97,000-square-foot studio campus – in Glendale in June after three years of work. Located on Glendale Avenue, less than two miles from The Americana at Brand, the campus features two soundstages, over 40,000 square feet of production and office support space, a rooftop terrace, and on-site parking.
The company is currently under construction on two new campuses – its 303,000-square-foot, five-stage and $230 million Mission campus in Boyle Heights and its 340,000-square-foot, four-stage Sunnyside campus in Queens, New York.
Griffith, which will begin construction next year, will become a 611,000-square-foot, 11-stage campus on the border of Burbank and Hollywood. And lastly, ADLA, which is almost fully entitled and set to cost $1 billion, will be the company’s biggest project yet featuring 16 stages and ancillary spaces spread over 1.28 million square feet in the Arts District.
While the campuses each vary in size and number of soundstages – and all have the ability to accommodate feature films – Wainwright said he anticipates mostly streaming or network episodic television to be the primary use of these facilities, with one series likely to lease up their entireties – at least this will likely be the case for the Glendale, Mission and Sunnyside campuses.
“Television series have always been the highest demand group for soundstage use in Los Angeles, in addition to other things like commercials and music video shoots,” Nicole Mihalka, a managing director at Jones Lang LaSalle Inc. specializing in creative office and entertainment real estate, said. “But the thing that really keeps the stages running on the long-term, and what keeps the occupancy up, are television shows.”
Since the Glendale studio opened, it’s already welcomed a handful of clients, including Apple Inc., ABC, Amazon.com Inc., Hulu, Fox Corp. and Target Corp. – although Wainwright said East End hopes to secure a long-term tenant for the space soon. The company is currently in talks to pre-lease its Mission and Sunnyside campuses prior to their delivery.
Fleeting production
All this expansion comes especially notable at a time when many productions are leaving Los Angeles, opting for more business-friendly markets.
States like New York, Georgia, Nevada and New Jersey have famously drawn productions out of Los Angeles over the last few decades due to attractive tax laws, but now overseas destinations are becoming more popular too – namely Canada, Mexico, Australia, Ireland and the U.K.
“People want to film in Los Angeles,” Glendon said. “The majority of the industry lives in Los Angeles so the idea of flying to Western Europe or Mexico or Canada for six months and being away from your family and your world is not ideal. They do it because of the financial benefits.”
And while experts acknowledge it may be tough to convince motion picture films to return to Los Angeles, it is the television market that has become really the lifeblood of Los Angeles entertainment and is essential to retain.
“We have not been as big on the film side, but what we really can keep is growth in television because those are longer-term cycles and that’s what drives soundstage occupancy in Los Angeles,” Mihalka said. “That’s what folks want to see – those shows that get picked up and get renewed and then can feed all of the entertainment workers in Los Angeles – and that’s driven by showrunner preferences. The showrunners sort of lead where the shows are going to be, and those are the ones that want to stay in Los Angeles because they have kids that are going to school here. They don’t want to have to be in New Mexico for seven months. Sometimes they are, but it’s not the preference.”
Campus amenities
As Los Angeles attempts to rally with these international, more-business-friendly markets, experts believe expanding and updating the city’s current studio supply will be critical in enticing production back.
“We need new stages,” Mihalka put bluntly. “We have been underserved on the amount of stages – especially new stages. We are severely lacking in that department. We need more stages in Los Angeles in order to compete with these other markets.”
Besides having commissaries and mills, Wainwright said East End’s campuses feature excellent soundproofing, high clearance heights, automated grid systems, IDF rooms, full LED wall technology and other modern resources, as well as fully amenitized support spaces and on-site parking – which can provide casts and crews with the privacy and security that productions usually demand.
And, unlike most legacy product in Los Angeles – or even converted warehouse to studio projects that are usually somewhat restrictive in terms of design – purpose-built studios allow for the full absorption of consumer preferences. All of East End’s soundstages, for example, are column-free – a trend that’s becoming increasingly desirable but is less commonly found in already-crafted spaces.
“If you look at how these productions actually use the stages, they build their sets and they film in these areas. If you have a big pole sticking right in the middle of where you want to build your stage, obviously there are ways around it, and productions are becoming more and more accustomed to working around it, but it limits what you can do and is a bit of an inconvenience,” Glendon said. “To offer these clear-span areas that you typically only see in purpose-built studios is definitely a nice feature.”
The 30-mile zone
But perhaps among the Los Angeles campuses’ most prized amenities are their locations – all within several miles of each other in Hollywood’s prime studio zone.
The studio zone, or TMZ, which stands for 30-mile zone, is an area defined by a 30-mile radius of Hollywood commonly referenced in the entertainment industry to determine employee benefits and per diem rates – with the core areas typically being Hollywood, Culver City, Burbank, Studio City and downtown. The closer to the core you can be, the more attractive your studio likely is.
“There’s a reason why downtown Los Angeles from an office perspective is less desirable than other areas of town and that’s just the nature of the beast,” Wainwright said. “Film studios are no different from that. If you’re near where the decision makers are and you’re at the center of the TMZ, generally speaking, you’re going to have a higher chance of success in that. That’s always been our thesis from the beginning.”
And in terms of East End’s choice to develop multiple smaller format studio campuses simultaneously as opposed to one consolidated one, Wainwright shared it really boils down to scarcity of space.
“I don’t think that if we had found like a 50-acre campus that it would have made sense,” Wainwright added. “I think it’s nice to have optionality because certain productions want to be in certain parts of town. I’m happy that we have more facilities and just more offerings in different locations that we can provide to tenants.”
Investors wary
While Wainwright admits East End got lucky in the sense that it was granted equity for all five projects pre-strikes, he said, going forward, lenders are investing more cautiously and waiting on the sidelines until occupancy numbers rise.
“It’s gotten more and more challenging,” Wainright said. “Obviously with inflation, construction costs went up and, again, this is speculative lending on construction that is not coming with a long-term lease so, yes, it’s gotten more challenging over the last few years for sure.
“I think that’s going to ease going into 2025 and 2026,” he added. “I think that as Los Angeles gets back to work and gets back to its normal occupancy and production cycles, lenders who are looking to finance these types of facilities will get back into the market.”
And as Hollywood enters a new era – defined by themes like streaming dominance, content contraction and threats of artificial intelligence – Wainwright is all the more confident in the continued demand of new studios.
“I think that there’s been a shakeup amongst a lot of the producers and the streamers and the networks in an effort to try to get profitable,” Wainwright said. “And I think they’re now starting to learn what that new world looks like, and the good news is that they continue to know they need to spend and continue to spend more money on productions in order to stay competitive. It’s just a matter of where they do it and how they do it.”
Industry outlook
So as the world moves further away from Covid, and as Los Angeles now comes off over one year post-strikes, it seems like the general sentiment is optimistic.
“I just want to get them open,” Wainwright said. “What I’m really excited about is to get Los Angeles back to work. New York has been pretty steady, but it’s exciting to see some of the moves being made.”
Earlier this year, Gov. Gavin Newsom proposed $750 million in annual film tax credits – which would more than double the size of the state’s film tax incentive program – a major stride to attract and retain local production.
“We need this tax credit expansion to go through, without a doubt,” Mihalka said. “We need our local politicians on point, pushing for that, and also pushing for the things that our entertainment companies need – (such as) increased public safety (and) having an easier system to approve these projects. I would appeal to our lawmakers locally and in the state to really ensure that the entertainment companies that are here stay here and that they’re keeping shows in Los Angeles. My outlook is positive, there’s really nowhere to go but up, and I think with these new studio lot projects, it’s going to help that endeavor.”
While East End Studios doesn’t have any immediate plans to open more studios beyond the four already in the pipeline, Wainwright said the long-term goal is to keep expanding – maybe even venturing into new markets and reaching bigger audiences.
“I think nobody has given up on Los Angeles,” Wainwright said. “It’s still the largest studio market in the world and I don’t think that’s changing. Well-located, well-built studios have generally always been full in Los Angeles, and I don’t think that’s going to change.”
