Entertainment Company and Hollywood's Largest Office Tenant Now Has More Than 1.5 Million Square Feet
MAY 03, 2019|KAREN JORDAN
Online entertainment giant Netflix is Hollywood's newest office star.
The company is expanding again in Hollywood, California, where it has become the largest office tenant, growing into more than 1.5 million square feet of offices as it ramps up its production of original content.
The Los Gatos, California-based firm, known for creating shows such as "Orange is the New Black" and movies including Academy Award-winning "Roma," is signing new leases totaling more than 160,000 square feet at two buildings owned by different companies in the storied neighborhood that is synonymous with filmmaking in the nation's entertainment capital.
The company now leases almost a quarter of the 6 million square feet of office that make up the Hollywood market, according to CoStar. It has surpassed in size several media companies such as Live Nation, Technicolor and Capitol Records, which occupy significant space in Hollywood.
Netflix has preleased 100,000 square at 817 Vine St., an office under redevelopment by commercial real estate investor Clarion Partners. The company purchased the property for $24.8 million from the Musician’s Union of Hollywood in 2016, according to CoStar data.
The entertainment company also agreed to sublease 68,834 square feet on three floors at the Hollywood Creative building located at 1350 North Western Ave. owned by Solana Beach developer La Terra Development, according to CoStar data. Netflix is taking space listed by financial technology startup ZestFinance.
Netflix is expected to move into both buildings in September, according to CoStar data.
The deals come on the heels of a massive expansion in the area late last year when the company signed three leases within weeks of each other that pushed its footprint to become the largest in Hollywood. The company needs more space as it is trying to go head-to-head with major entertainment firms such as Walt Disney Co. and Warner Bros. Entertainment as well as emerging online competitors such as Amazon and Apple in the world of television and film. Netflix is spending billions on original shows and movies and is hiring marquee talent including Captain Marvel's Brie Larson and Roma director Alfonso Cuaron.
Kevin Shannon, co-head of capital markets at commercial property services firm Newmark Knight Frank, said he is not surprised at all by Netflix’s growth in Hollywood.
“Content creation is the biggest driver in L.A. by far,” Shannon, who was not involved in the deal, said in an email. “Netflix’s footprint will continue to grow.”
Netflix's footprint in Hollywood is almost three times that of competitor Amazon's entertainment division in Culver City's Culver Studios.
Among Netflix's leases in the area, it occupies space in the Sunset Bronson Studios and took all 302,000 square feet of Hudson Pacific Properties’ Epic, an under construction project at 5901 Sunset Blvd. The company also committed to 355,000 square feet last November at Kilroy Realty Corp.’s Academy on Vine, a $450 million, four-building office, retail and residential development under construction.
Additionally, Netflix made news last month for its plans to possibly purchase the Egyptian Theatre in Hollywood, which would mark its first foray into theater ownership.
Netflix declined to comment.
Article by CoStar