is changing the
entertainment industry

Demand for media content has skyrocketed. Can the built environment keep up?

June 14, 2020

When COVID-19 forced lockdowns around the globe, screen time soared to an all-time high (and not just for kids!). Digital media has been consumed at an unprecedented rate, and entertainment app downloads have hit record numbers throughout the pandemic.

As demand for new content increased, traditional in-person production essentially came to a halt in response to the virus. Creators have been eager to return to the studio, but the stage will look much different. To avoid mass gatherings, producers will use more green screen technology and visual effects to replace large crowds of extras. Viewers are not likely to notice a difference on-screen, but significant changes will happen behind the scenes in order to meet health and safety regulations.

The entertainment industry doesn’t just require studio space. Post-production, marketing, casting, prop storage, and editing all lease their fair amount of space. Amber Schiada, Senior Director of JLL Research in LA, tells James Cook that new creators like Amazon Prime, HBO Max, Apple TV, and Disney Plus have absorbed almost 4M square feet of creative space throughout Los Angeles in the past few years. Even DIY entertainment apps like TikTok and YouTube require a significant amount of office and studio space.

The desire for a constant stream of media content will remain long after the pandemic. New creators will continue to compete with traditional production companies, increasing the demand for creative workspace in media hubs like LA, New York, Toronto, and Vancouver.

James Cook: [00:00:00] Has your TV watching increased in the past few months while you're not alone? The entertainment industry is seeing more demand for content at the same time. COVID-19 has kept its productions on hold today. We're talking about what that's meant for the entertainment industry and what the implications are for commercial real estate.

[00:00:21] This is building places where we look at the world of commercial real estate through the eyes of the experts that study it every day. My name is James Cook and I research real estate for J L L. Can you hear me okay?

[00:00:35] Amber Schiada: [00:00:35] Yeah, I can hear you. Great.

[00:00:36] James Cook: [00:00:36] All right. My guest today is Amber Schiada. Amber, you lead research for the Southwest region and you are based.

[00:00:45] Out of Los Angeles. So LA it's the epicenter of our topic today, I guess, is LA the only place that would be like an entertainment city in the U S

[00:00:56] Amber Schiada: [00:00:56] so Los Angeles of course, is the home of Hollywood. And everybody thinks about the movies when they think about LA, but there's also a pretty substantial virgining industry and the New York area.

[00:01:08] And then of course in Canada, Toronto is the center of their media industry. And then Vancouver on the West coast actually is a pretty popular filming location.

[00:01:16] James Cook: [00:01:16] The past couple months, nothing crazy has been going on. Totally normal, a kid, a kid. What happened when people were forced to stay at home for the pandemic?

[00:01:26] Amber Schiada: [00:01:26] Well, you have to figure out other things to keep yourself entertained, right? You can't go anywhere. Can't visit friends, no more events. If you look at app downloads, you can kind of get a picture for, you know, what is it that people are doing the top grossing apps in may. We're all really based on content delivery.

[00:01:44] So with the exception of two or three social focus apps, the top 10, we're really focused on either streaming content or content that was produced by some of the big players in our entertainment

[00:01:55] James Cook: [00:01:55] as well. So is that like YouTube and Netflix and Disney plus those kinds of apps?

[00:02:00] Amber Schiada: [00:02:00] Absolutely. Yeah. And then six talk actually has been the number one, not just downloaded, but also the top growth.

[00:02:07] James Cook: [00:02:07] I imagine that Netflix has probably added a few new subscribers in the past couple months. 

[00:02:12] Amber Schiada: [00:02:12] Oh yeah. They have their best subscriber quarter ever in Q one. And a lot of that came. Enlarged.

[00:02:19] James Cook: [00:02:19] So unprecedented demand at the same time supplies effected too, right? Cause you can't film a TV show. If you're, if you have to wear a mask, you can't do a kissing scene kissing scene.

[00:02:32] I sound like my grandmother.

[00:02:34] Amber Schiada: [00:02:34] Yeah. So it's interesting. Obviously content creators are super eager to get back to production and we've been shut down. So this whole pandemic and LA, and this , the industry gets to open up again and there'll be able to start shooting once more. But in order for that to happen, the Alliance of motion, picture and television.

[00:02:55] That's pretty reserved. They put together their guidelines that they released earlier this month. That talk about some of the interesting changes that are going to have to happen on set in order for those health and safety regulations to be maintained

[00:03:05] James Cook: [00:03:05] as a viewer, you won't see anything different on the screen, right?

[00:03:09] It's going to be behind the scene changes.

[00:03:12] Amber Schiada: [00:03:12] So we actually may see some changes in the way that productions look because of some of these health regulations. So one of the interesting ones is limiting the use of extras. We don't need a lot of people in crowds, and it's really difficult to minimize that if you're using extras on set, especially if you're filming, you know, maybe big audiences or things like that.

[00:03:33] What some productions are considering to mitigate that though, are these visual effects and more green screens. So you can sort of make it look like you're filming a big crowd, but you're not really

[00:03:44] James Cook: [00:03:44] the postproduction the editing. Does that happen in LA and New York? Or is that distributed now? Since people could do it say even from their homes,

[00:03:56] Amber Schiada: [00:03:56] It could be right.

[00:03:57] The technology has allowed that kind of work to happen more remotely. However, places like New York and Los Angeles, and certainly Toronto, they have labor pools that exist with this kind of talent already there. So there's certainly a thickness of the labor pool as it comes to any sort of production related jobs.

[00:04:14] What's the

[00:04:15] James Cook: [00:04:15] impact of the entertainment industry on the built environment in a city like Los Angeles.

[00:04:21] Amber Schiada: [00:04:21] So you think about. Filming you think about movies and you just, you probably really think about just the studios and maybe the backlots were at Warner brothers or universal studios. Right. But that's only one small sliver of what it takes to get a production done is the actual shoot.

[00:04:37] All of the jobs that come before that, writing the script, getting the financing, figuring out your talent, you know, who. Who are you going to cast? And then after the shoot, right? The, the post production, the editing, um, and then the distribution and the marketing that goes around it, you know, there's always a huge media parade around every new, big blockbuster release.

[00:04:55] Right? So you think about the writing, um, and the casting, a lot of that would be done in offices. A lot of the props, I mean, where do you think all of that is stored? A lot of that is sorting warehouses, but the built environment really does support all these levels of development when it comes to production.

[00:05:10] James Cook: [00:05:10] And do you see demand for commercial space growing along with the growth in the entertainment industry?

[00:05:19] Amber Schiada: [00:05:19] Yes. So we've always had the big players, you know, universal Disney, but now what we're seeing is we've got competitors like Netflix and Amazon prime and Apple TV class, and now HBO, max just launched their streaming service last month.

[00:05:33] So it's all of these new content creators and. Their drive to just develop so much content so that they can, you know, in an effort to compete with the traditional players. It has just ignited our office market here in LA. In the last five years, we've seen nearly 4 million square feet of new media demand from some of these players.

[00:05:54] And so it really is a Testament to the amount of money that they're spending to develop this content, but also the number of platforms that you can now stream or distribute all of this content on. So it really is a huge demand driver for the office market.

[00:06:09] James Cook: [00:06:09] Is there new office space under construction right now to meet that demand?

[00:06:13] Amber Schiada: [00:06:13] I think what's interesting about our market here is LA is as big and as swirling as it is actually doesn't have a lot of land left. So there's really very few Greenfield sites and that you can develop. So what we have seen is this trends of conversion. So the creative types that work in Hollywood also like to work in creative offices.

[00:06:33] Either old manufacturing space into a sexy new creative office space. The pen factory is one example. It was literally an old big pen factory, and it was totally remodeled several years ago.

[00:06:47] James Cook: [00:06:47] When we talk about YouTube. And tick tock, the content creation of those as mostly done sort of DIY style outside of studios.

[00:06:59] So I guess they, they probably don't use up as much office or studio space as a traditional production house. Would.

[00:07:06] Amber Schiada: [00:07:06] Well, you'd be surprised. So, yeah, actually, so Tech-Talk, which is owned by byte dance. They have significant space in Culver city and they are a new entrance to our market last year in LA, where YouTube is doing the same thing.

[00:07:21] They have significant amount of space and privacy. And in fact, part of that space includes studio space.

[00:07:26] James Cook: [00:07:26] Do you consider the video game industry to be a part of that industry. And is that also been focused in, in LA

[00:07:33] Amber Schiada: [00:07:33] video games are another way that people are keeping themselves occupied. We've seen so much growth since the beginning of the year in terms of Twitch.

[00:07:42] Pretty much every video game platform has seen an increased amount of, of, of use the industry itself. And LA is actually pretty large. We have nearly 300 companies that work in the video game industry, big names like blizzard, Activision, Epic games, which is who produces fortnight.

[00:07:59] James Cook: [00:07:59] So. It sounds like there's a lot of increased demand in commercial space in Los Angeles because of this extreme growth in entertainment.

[00:08:12] I am now to the point where I feel like there's more services. Then I'm going to subscribe to, does that mean that we're at peak demand and there's too much content for the market to bear?

[00:08:24] Amber Schiada: [00:08:24] I personally don't think so. I don't know about you, but when I'm watching TV, I'm also looking at my father. I have two screens in front of me sometimes when I'm I'm working, I have the news on, on another screen as well.

[00:08:37] So you think about just all the different avenues in which you can obtain content and also. I think that consumers are really hungry for new, fresh, diverse content. And so that has opened up, I think. Yeah. I think that that will underscore demand going forward or something. I don't think that our appetites are easily satiable

[00:09:00] James Cook: [00:09:00] let me ask you this.

[00:09:01] What are you watching tonight? Do you have what's on what's on the queue.

[00:09:05] Amber Schiada: [00:09:05] Okay. So I'll tell you what, we just finished watching a whole series of star Trek, Voyager, which totally just paints me as a nerd, but I don't care. Cause it's amazing who doesn't want to be an Explorer. So last night we turned on Hulu and we noticed that perfect strangers is now available.

[00:09:23] And of course we watch like four episodes. Cause sometimes. So it was so funny when I was a kid, but I don't know. I kind of look at it through a different lens as an adult about teaching them how to be American. I don't know if I agree with all of these things.

[00:09:37] James Cook: [00:09:37] Oh my God.

[00:09:38] Amber Schiada: [00:09:38] Oh, weird. Yeah. Watch it through a modern lens.

[00:09:40] It's a little different.

[00:09:41] James Cook: [00:09:41] Oh yeah. So on Netflix, um, cheers is on Netflix, but it's end of the month. It's leaving Netflix. So we're also racing to watch all of cheers in a month, which is tough. Cause it's like 11 seasons, but that's another show that has some really dated moments. You're like, wow. Things were different.

[00:10:03] Are Amber, it was great to talk to you and uh, we'll catch up again soon.

[00:10:08] Amber Schiada: [00:10:08] Sounds good. Thanks James.

[00:10:10] James Cook: [00:10:10] Do you have a comment on today's episode or a question you'd like for us to tackle while you should just tell us about it, leave a message on the podcast hotline, and we might even use your voice on an upcoming show.

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[00:10:52] And if you'd like to learn more about retail real estate, you should check out our sister show where we buy. It's a show where we talk with retail experts and we visit the places where we buy.