Industry Dirt: Summer Edition

With all this AI technology seemingly advancing at an incredible rate, the world is looking to Hollywood to see how it will change our lives. While I can’t speak to the creative aspects, I do have some thoughts on the business and real estate impacts in our city.

Here’s my take, followed by some CRE news around town.

-Ted Simpson

The Shifting Landscape of Media Real Estate in Los Angeles

Consolidation Reshaping Demand

The media industry in Los Angeles is undergoing major consolidation, with seismic impacts on both office and studio real estate demand. Legacy players like Disney have absorbed Fox, while Paramount is inching toward a potential merger with Skydance and RedBird, signaling a shakeup in studio identity and long-term real estate needs. Even smaller, iconic firms—like The Jim Henson Company—are facing generational handoffs that could drive consolidation or downsizing.

The result: fewer entities occupying more space, but with growing caution about long-term commitments. As companies merge, redundant real estate becomes ripe for sublease or disposition.

Oversupply of Studio Space

A decade ago, studio space in Los Angeles was scarce and competitive. Today, it's a different story. Hackman Capital Partners, the dominant player in the studio sector, has aggressively expanded with massive redevelopments like Radford Studios and CBS Television City, adding millions of square feet. But in a post-pandemic world of remote editing, virtual production, and fewer greenlit shows, many of these spaces now sit underutilized or unleased.

This glut is colliding with a demand dip. Traditional production volumes are down, and while virtual production is on the rise, it requires less physical space and different infrastructure. The result: an oversupplied market with an expensive product that isn’t leasing as expected.

Real Estate Owners Are Paying the Price

Few have felt this pain more than Hudson Pacific Properties, which owns a significant portion of LA’s traditional studio inventory. Despite once being the premier landlord to Netflix—its largest tenant at 700,000 sq ft—Hudson’s stock recently plummeted to ~$2.00/share, reflecting deep market skepticism. With rising interest rates, limited new leases, and a concentrated tenant base, owners are trapped between long-term capital investments and short-term income uncertainty.

Hudson’s story isn’t unique. Other landlords—especially those focused on entertainment-focused office or hybrid studio properties—are seeing occupancy declines and rent stagnation, especially outside of prime Westside submarkets.

The Path Forward: LA as the Tech-Enhanced Entertainment Capital

Despite these headwinds, Los Angeles still holds the DNA of global content leadership. The next chapter could position LA not just as Hollywood, but as the innovation engine for the fusion of technology and entertainment, from immersive gaming and AR/VR experiences to AI-generated media workflows.

Recent state legislation, including new rounds of California Film and TV tax credits, helps, but primarily supports legacy broadcast and film production models. The industry’s future lies in creating incentives and infrastructure for new tech-native content creation—not just another soundstage, but the cloud-based pipeline, AI tools, and interactive engines that will define media in the next decade.

Bottom Line

The Los Angeles media real estate market is undergoing a painful correction marked by consolidation, oversupply, and distressed ownership. But with the right investment in next-generation entertainment technology, LA has the talent, brand, and infrastructure to emerge stronger as the global capital of tech-enhanced content creation.

REAL ESTATE NEWS AROUND TOWN

LA’s oldest film studio, Occidental Studios, is for sale. The 3-acre lot — billed as the longest continuously operating film studio in Los Angeles — is on the market for $45 million. The privately gated studio, with more than 69,000 square feet of buildings, has quietly served as a production hub as the film industry reshaped itself around it. The lot features four soundstages, including a recently constructed 15,000-square-foot stage. There’s also on-site parking, production offices, a base camp and a mill — support systems that brokers say makes it a turnkey filming environment in an era of rising production costs and logistical complexity. The per-square-foot listing price of $651 for Occidental Studios would mark a notable sale for the region, and may be too steep for some. Industrial and office properties typically trade for half that benchmark. In one of the pricier examples of recent production real estate transactions, a group of entertainment industry heavyweights, including musician John Mayer, purchased the historic Henson Studios in Hollywood for $489 per square foot in December. (source: Costar)

Producer Steven Paul bought Van Nuys-based Avenue Six Studios, which has four soundstages and a backlot modeled after a New York City street, as he plans to shoot more of his films in the U.S. instead of overseas. “We’re committed to making films in Hollywood and making Avenue Six Studios the most producer-friendly studio for filmmakers from around the world,” Paul said in a statement. “I currently have three productions slated for the studio this year and look forward to welcoming more projects to take advantage of its production capabilities.” (source: The Hollywood Reporter)

LEASING ACTIVITY

Disney plans to vacate the storied Fox lot in Century City by year’s end. However, Disney’s departure will not dampen Fox’s ambitious plans for its Century City expansion, according to an executive who was not authorized to speak publicly. The Fox project is in the preliminary approval phase with the city. Fox has been seeking city approval for a $1.5-billion expansion of its Century City location, a project envisioned to add more than 2 million square feet of building space, including multiple soundstages, postproduction facilities and an office building that fronts Avenue of the Stars. (source: LA Times)

Television City is opening its soundstages to social media influencers amid a historic production slump in California that’s rippled across the entertainment industry. Hackman Capital Partners announced a partnership with Interwoven Studios aimed at offering creators production services and studio amenities typically reserved for films and TV shows. Since opening, the facility has attracted projects with Logan Paul, Jake Shane and FaZe Clan. The move comes amid a downturn in filming in Los Angeles, driven by movies and TV shows increasingly filming in other states and countries. More than a year removed from the strikes, the entertainment industry hasn’t returned to filming in Los Angeles as initially expected. (source: The Hollywood Reporter)

FUNDING

Promise is in the market for a 10,000 SF space as it has expanded its investor base through a new strategic investment and partnership with Google’s AI Futures Fund, joined by Crossbeam Venture Partners, Kivu Ventures, Saga Ventures, and other top investors. The North Road Company, a co-lead investor in Promise, deepened its commitment with additional capital in this round, alongside returning backer Offline Ventures. Notable angel investors include Emery Wells, founder of Frame.io, and Aaron Levie, founder and CEO of Box. These new and returning supporters join Andreessen Horowitz (a16z), a co-lead investor in Promise, in fueling the company’s growth. (source: Promise)

ODDS & ENDS

YouTube turns 20, Vanity Fair takes an inside look at what’s next…Emmy’s?

AV Squad, a go-to creative advertising agency for Hollywood, has become fully owned by its employees. Behind memorable campaigns for films like “Everything Everywhere All at Once,” “Anora,” “Top Gun: Maverick” and “Super Mario Bros.,” the 20-year-old shop becomes a rare show business case that is 100% held by workers. Founded in a pool house by Seth Gaven and Chad Miller, AV Squad said the decision reinforces the agency’s “employee-first ethos” and helps the company remain an independent, creatively driven force.

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.