Industry Dirt: Happy Holidays

After a quiet summer during which we came to realize that entertainment is completely changing, the fall season brought more than the abscission of leaves and a fifth season of Slow Horses. Big news is now sweeping Hollywood.

The plummet in demand for studio space that everyone in the entertainment biz expected but no one in the real estate industry saw is now front and center. Data centers will be the ultimate users of these spaces.

Here’s what else I’m thinking about:

1. Skydance is absorbing Paramount, with resulting layoffs that will leave large blocs of space available, OR maybe the merged entity wants a large new HQ and statement.

2. Warner Bros. is for sale; if Netflix buys them, the new entity could leave Hollywood for the consolidated location Sarandos has always wanted.

3. Creator economy is real, and it’s our new real estate client. But do they require a lot of physical space? Several LA studio owners are recrafting their sound stages to suit creators. 

-Ted Simpson

REAL ESTATE NEWS AROUND TOWN

CAA’s new HQ is almost done. Century City Center, located at 1950 S. Avenue of the Stars, is a 37-story tower that will house 730,000 square feet of office space above parking and retail space upon completion. Plans also call for two acres of gardens and courtyards at the rear of the property, which sits at the northwest corner of Constellation Boulevard and Avenue of the Stars. CAA will occupy approximately 400,000 SF, while Clearlake Capital has agreed to lease 150,000 SF of space within the building.

Fox Studios will be the next big (1M square feet) project in Century City with a high-rise and studio space on Avenue of the Stars. More below on Fox. (source: Urbanize)

Teddy Schwarzman’s Black Bear bought J.J. Abrams’ Bad Robot building at 1221 Olympic Boulevard, Santa Monica, a 25,650 SF property, for about $31 million, roughly $1,200 per SF. The three-story creative office building is called the National Typewriter Company.

Black Bear has another Santa Monica office at 1739 Berkley Street, less than 10 minutes away from the film and television company’s recent buy. (source: The Real Deal)

Hackman Capital Partners secured $165 million in refinancing for the century-old Raleigh Studios in Hollywood, a 314,940-square-foot campus leased by Netflix and three other production firms. The deal marks a bright spot for a sector seeking to regain its footing in the wake of the pandemic, the 2023 entertainment strikes and other costly headwinds.

In an example of how some properties are faring better than others in the region, Hackman Capital Partners is looking to offload its smaller Saticoy Studios in Van Nuys. There is a growing divide among production spaces in the city, with prime, in-fill campuses showing resilience while older, secondary properties face stiffer headwinds, experts tell CoStar News.

By locking in a new loan on Raleigh Studios, Hackman and its partners — Affinius Capital and longtime owner Raleigh Enterprises — are capitalizing on a stable income stream and high land value.

But the Van Nuys listing shows they are willing to prune assets that may not deliver the same long-term performance, even in a state where new incentives are aimed at keeping production. (source: Costar)

LEASING ACTIVITY

Fox is charging ahead with its $1.5 billion "Fox Future" redevelopment in Century City. The company just moved to carve its historic 53-acre studio lot into two pieces, spinning off a 2.7-acre parcel on Avenue of the Stars for a new office tower.

The plan: 2M+ square feet of new soundstages, production space, offices, and parking while demolishing about 465K SF of existing buildings. The project is still early, winding through L.A.'s approval and CEQA review.

All this as the lot's anchor tenant, Disney, is expected to vacate by year’s end, after Disney's 2019 deal for Fox's film and TV assets (minus the dirt). (source: The Real Deal via Instagram)

United Talent Agency (UTA) renewed its long-term headquarters lease at UTA Plaza, a 192,000 SF, two-building office campus at 9336-9346 Civic Center Drive in Beverly Hills. Built in 1985, UTA Plaza consists of two four-story, granite-clad office buildings connected by a skybridge and with an expansive outdoor plaza and underground parking. UTA has been the sole tenant in the building since 2011, occupying the entire premises. (source: Yahoo! Finance)

Interwoven Studios recently opened its fourth location within Television City, a 25-acre studio complex in Fairfax. The firm now has four locations across downtown, Beverly Grove, Fairfax, and one bordering Culver City and West Adams, encompassing more than 18,000 square feet combined. (source: LABJ)

Casting Networks leased 16,985 SF at 1041 N. Formosa Ave (The Lot). (source: Me)

Paramount has signed a minimum 10-year lease agreement with 1888 Studios to occupy more than 285,000 square feet of the production company in Bayonne, N.J., as a way to capitalize on incentives offered from the state’s film and digital media tax credit program.

Variety has learned that 1888 Studios is expected to be operational by the fourth quarter of 2028.

Currently under development by Togus Urban Renewal, 1888 Studios will offer 1.1 million square feet of production space spanning 23 smart sound stages with a minimum of 40-foot clear ceilings, production support space, flexible post-production space, offices, mills, base camp and backlot, and lighting and grip facilities to accommodate every phase of production. 

The tax credit program, which expanded in 2025, empowers the New Jersey Economic Development Authority (NJEDA) to designate three studio partners and three film-lease partner facilities, each linked to large-scale infrastructure commitments. (source: Variety)

FUNDING

Hollywood-oriented AI is getting a major boost from the Saudi government, which announced Wednesday that it will anchor a $900 million funding round for Luma AI, the San Francisco company building models meant partly for entertainment.

Humain, the AI company backed by Saudi’s PIF, will be the lead investor in Luma AI’s latest funding round, which also includes powerhouse VC Andreessen Horowitz as well as early-stage investors Amplify Partners and Matrix Partners. The size of Humain’s stake was not disclosed, but principals described it as significant. (source: The Hollywood Reporter)

GammaTime, a West Hollywood-based streaming platform focusing on a genre of short films called micro-dramas, announced it raised $14 million in seed funding.

The seed round was led by Israel-based venture funds Vgames and Pitango. Other investors included celebrities Kim Kardashian, Kris Jenner and Alexis Ohanian, who co-founded online forum Reddit Inc. in 2005. Ohaninan also started early-stage venture firm Seven Seven Six based in Jupiter, Florida in 2020.

GammaTime is helmed by Chief Executive Bill Block, who ran the Miramax studio from 2017 to 2023. Slava Mudrykh, a former Google games executive, will serve as chief revenue officer. Alex Montalvo will take the role of chief content officer. He is an alumnus of Quibi, a mobile-only shortform streaming service that shuttered in late 2020 after burning through $1 billion in funding.

The micro-drama genre typically offers 90-second episodic series with soap opera-like content. It became highly popular in China during the pandemic, according to the Los Angeles Times. However, in an email to the Business Journal, Block said the format’s time has arrived in America. (source: LABJ)

Pinkfong goes public. On its first day of trading in Seoul, it rose more than 9% to about $28 a share. That increased the company’s market value to roughly $400 million.

Although Pinkfong has the number one YouTube hit of all time (Baby Shark Dance), its monetization of that song has been limited because of YouTube’s strict rules for “Made for Kids” content. In 2020, YouTube, after settling a lawsuit the year before with the Federal Trade Commission over complying with the U.S.’s Children’s Online Privacy Protection Act, imposed stricter restrictions on children’s content.

YouTube applied the policy globally, including barring personalized advertising and disabling comments and subscriber notifications that help drive engagement. That led to a severe drop in the profitability of many kid-content creators.

Without the tighter restrictions, “Baby Shark” could generate two or three times as much direct revenue for Pinkfong, according to an estimate by Boston University’s Garrett Johnson, who has analyzed the 2019 settlement’s effect on online children’s content.

Most of Pinkfong’s revenue comes from content sales which includes earnings from YouTube and other platforms like concerts, versus smaller lines of business in licensing or merchandising. Operating profit hit roughly $13 million last year.

Through the IPO, Pinkfong is set to generate nearly $50 million in funds when excluding costs, which will help it create new content. It wants to produce three new titles by 2028. (source: MSN)

TEXAS FILM INCENTIVES

Texas state legislators seriously upped funding for the Texas Moving Image Industry Incentive Program with the passage of Senate Bill 22 this year. The law guarantees $300M worth of program funding every two years for the next decade — a huge upgrade from the irregular funding amounts with no renewal guarantees of sessions past, according to industry advocates.

Hopes are high that the funding will spark a flurry of activity, including new studios and production facilities.

The funding is likely to draw more film and television production to Texas, spurring development to the likes of the upcoming Hill Country Studios, Musslewhite said. Hill Country's plans to begin vertical construction on its $267M, 820K SF San Marcos project this year were partially dependent on the bill’s passing. 

Other studios, including Bastrop 552 outside of Austin and Super Studios in Mansfield, are also preparing to break ground as SB 22 moves the needle, according to Media for Texas.

In addition to new studio projects, producers are expected to target existing industrial space, like Hillwood’s speculative industrial buildings at AllianceTexas in Fort Worth, North Texas Film Alliance founder and CEO Brian Whitlock said.

Yellowstone Director Taylor Sheridan’s Bosque Ranch Productions leased 450K SF in the development from Ross Perot Jr.’s Hillwood.

“We’re looking at an opportunity where there is a new asset class around this,” Whitlock said. 

But that asset class might not grow quickly or turn immediate profits, and the new funding incentive won’t be a magic wand to turn Texas into the new Hollywood, according to some industry watchers and longtime studio owners. Read more here: Bisnow.

LOOKING TO MOVE?

If you’re looking to move or just like window shopping, check out 42XX, located at 4204 Glencoe Ave, Marina del Rey, CA.

The campus consists of three low-rise buildings that seamlessly connect with exterior walkways and stairways.

The project features in-demand amenities: usable outdoor space, lush, mature landscaping, abundant natural light streaming through floor-to-ceiling windows, a cafe space, covered parking in an open-air garage, valet services, and bike storage.

42XX has the ability to offer tenants adjacent expansion opportunities via other assets in the neighborhood.

Plenty of space available. Message me if you’d like a tour.

If 42XX is a little too Westside for you, check out The Premiere, located at 6922 Hollywood Blvd, Hollywood, CA. With monthly rents at $2.00 per SF, this Class A office space is undergoing a facelift and is worth a look.

ODDS & ENDS

I enjoyed this Matthew Belloni profile in The New York Times.

Starting on January 5, 2026, NBCU's hybrid employees would be required to work in person at least four days a week. Workers would still have the option to work remotely on Fridays. Paramount Skydance also issued an RTO mandate. David Ellison, Paramount's new CEO, told his workforce they'd have to report to company offices in New York or Los Angeles five days a week starting January 5. Paramount is offering severance to those who refuse to comply. Beyond the media industry, companies across corporate America, including JPMorgan, Starbucks, and Amazon, have issued in-office requirements.

Hudson Pacific cuts two board members as it trims expenses during production downturn.

WeWork meets Soho House (both financially troubled, btw). NeueHouse finally shutters after years of poor financial results. Like many things Hollywood, it glittered but wasn’t gold. 

They built their careers in network TV. Then they started a production company for the influencer age. The Elixir team is a part of a major shift in entertainment away from traditional mega corporations and toward a media landscape fueled by individuals and small teams creating their own content. And from conversations with former network TV colleagues, they are not alone in noticing the trends. 

Thanks for reading. If you want me to look into something or have some ideas for the newsletter, let me know, and I’ll get right back to you.

Ted Simpson
Founder and CEO
Commercial Real Estate Advisors
(c) +1 310.384.6512 |(e) [email protected]
CA DRE License #0109718

P.S. Whenever you’re ready, here are 3 ways I can help you with your real estate.

1. A new home for your business. So, you want to move, but you don’t know the market. I can help.

2. Time to renew your lease? Don’t quite trust your landlord? Consider me your personal polygraph. BTW, I recommend starting the lease renewal process six months out at a minimum.

3. Sublease your space. You’ve outgrown your space and need to move but don’t want to pay two rents? I got you.