Engineers building drones and fighter jets could soon replace film and television crews at Manhattan Beach Studios, the 22-acre campus whose soundstages and backlot created the worlds of “The Mandalorian,” “Avatar” and “The Avengers.”

Lenders are shopping the studio’s $240-million mortgage to investment firms as an aerospace and defense manufacturing facility after its owner, Culver City-based Hackman Capital Partners, defaulted on the loan. The move is symptomatic of a broader economic shift reshaping Los Angeles: while local production slumps through an industry downturn, space tech is booming.

Sitting in the South Bay’s supply-constrained industrial zone, MBS is a prime opportunity for reuse to meet demand from fast-growing aerospace start-ups, said Mike Condon, executive vice chair at Cushman & Wakefield and one of the realtors pitching the property to potential buyers.

“MBS is kind of a perfect storm because of the physical aspects of the production buildings: high clear height, heavy power,” Condon said. “It has office space, which a lot of these companies need.”

The South Bay industrial real estate market spans roughly 201 million square feet, Colliers reported in this year’s first quarter. Condon estimated that only about a fourth of that space could be repositioned for advanced manufacturing, which requires more existing power service, parking and clear height.

Available facilities that check those boxes are few and far between, he said. 

The aerospace companies vying for South Bay land tend to rent, not buy property, Condon said. The region was responsible for most of L.A.’s largest industrial leases signed in the first three months of 2026, Kidder Matthews Inc. reported. That includes a 205,000-square-foot space in El Segundo’s Mattel Design Facility that went to space research company Varda Space Industries Inc.

“These tenants are cash-constrained and focused on reinvesting in the business, so we’re not seeing a lot of them actually acquire the real estate,” Condon said. “Most of the groups (we’re pitching to) are investors that are going to reposition the product to lease it to those kinds of tenants.”

A leg up

MBS is one of a handful of troubled studio properties in Hackman’s portfolio looking for an out. Before the local production scene saw a downturn, the firm bought the campus in 2019 for $650 million in an acquisition spree that made it the world’s largest independent owner of studio properties.

In recent years, weak soundstage occupancy has led to a string of defaults on Hackman-owned production facilities. While it looks like the historic Radford Center in Studio City, which the firm reportedly sold to Netflix Inc. at a heavy discount, will continue to produce movies and television shows, repurposing is emerging as a compelling value-add move.

Soundstages are essentially big boxes designed for acoustic and lighting control, making manufacturing their “obvious alternate use,” said Kevin Donner, vice chair at Cushman & Wakefield. But not all studios fit the needs of heavy manufacturing tenants.

MBS, home to 15 soundstages, is unique among other similar properties coming online both in its flexible zoning and proximity to L.A.’s aerospace and defense manufacturing hub, Donner said.

“That zoning (on Radford) was a little bit more restrictive,” he said. “There are other studios, like in Glendale or in the Arts District or other areas where you could probably do less with it.”