'House of Cards' needs more room
Netflix Inc., the streaming service that's home to the political drama House of Cards, last month leased an entire five-storey office building in Hollywood, less than three months after signing a decade-long deal for adjacent stages and production offices, bringing its total space in the Sunset Bronson Studios complex to more than 500,000 sq ft (46,500 sq m).
The surge in online television viewing is spurring a wave of big real estate deals, as companies such as Netflix, Amazon and Google snap up space to cope with production demands. The amount of office space the entertainment industry occupies in Los Angeles County has surged, with media tenants in 25.5 million sq ft, up 2.99 million sq ft from five years earlier, according to agents CBRE Group Inc. The space the streaming companies lease has evolved from the small offices of a few years ago to the giant production facilities associated with traditional Hollywood studios.
"The sort of boom around those marketplaces has been specific to the digital media and the entertainment world converging with the technology world," said Victor Coleman, ceo of Los Angeles-based Hudson Pacific Properties Inc., Netflix's landlord at Sunset Bronson Studios.
The growth in leasing by entertainment companies reaches from downtown L.A. and Hollywood to Playa Vista, once a stretch of marshland between Los Angeles International Airport and Venice that's become known as 'Silicon Beach' due to the influx of media companies and digital startups. Entertainment-industry growth has helped an office market hurt by a years-long exodus of traditional occupiers including hotel operator Hilton Worldwide Holdings Inc. and defence contractor Northrop Grumman Corp., both of which moved to Virginia.
Demand for space is being driven by commercial and critical successes for streaming services. Netflix signed up a record 7.05 million customers in the fourth quarter, topping analysts' estimates to cap the company's first year as a global online-TV service. Its show House of Cards, an Emmy nominee for outstanding drama series last year, returns for a fifth season in May.
"What's going on in L.A. now is similar to what we saw when cable companies were growing rapidly," said Jeff Pion, a vice chairman at Los Angeles-based CBRE. Demand for digital content, and the production that comes with it, mirrors the era when cable subscriptions climbed and new TV channels brought viewers more options, he said.