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Perspectives

Studio production in New York

Resuming physical studio production in the wake of COVID-19

The COVID-19 pandemic has caused streaming services, and the content they create, to skyrocket in popularity. While New York City (NYC) is uniquely positioned to meet the demand for resuming physical studio production, the need for space is outpacing supply. Our new case study details the New York production shortage and outlines what content creators, studios, and real estate investors can do get ahead of it.

The growing content creation landscape

Demand for content has grown year over year and will likely continue to expand as consumers seek out original content across streaming platforms. We identified three factors driving the increased demand:

  1. Consumers are watching more content
    With the advancement and proliferation of streaming services, digital media consumption has almost doubled in the past 10 years. COVID-19 has accelerated the trend, with paid streaming subscriptions up across all demographics.
  2. Content creators want to own the consumer relationship
    Disruption from new content providers has prompted traditional players to create direct-to-consumer offerings to more effectively segment customers, creating an influx of new content.
  3. Competition is increasing and forcing differentiation
    The rapid rise in streaming services has led consumers to seek greater content differentiation. Media companies are spending heavily to keep up with the demand.

Macro trends spur growth in NYC production

Greater investment in content has led to a soundstage shortage across top markets in North America. With Los Angeles at near-capacity, New York production is fast becoming one of the most attractive alternatives. Here’s why:

Growing content creation demand drives need for production space

We believe demand for NYC soundstage space will skyrocket once creators and studios begin resuming physical production and must rush to overcome COVID-19–related delays. In fact, our analysis shows that demand will outpace supply through at least 2024 by about 19%.

Demand is driven by broadcast and streaming
Advantageous tax credits, combined with an increase in streaming and steady broadcast needs, are behind New York productions’ increased volume—and will be moving forward.

Investments are being made to meet demand
While an estimated additional 780,000+ square footage of soundstage and support space in the city are to reportedly in development for 2023, demand for physical studio production post–COVID-19 is forecasted to outpace supply through at least 2024.

Significant investments are being made in NYC to keep up with demand
As of 2019, there were more than 300 soundstages and 73 qualified production facilities (QPF) in New York State, with 49 of these QPFs based in NYC providing more than 1.7M square feet of soundstage and support space in the city. However, these facilities have not been enough to keep up with demand, and facilities have been at about a 95% to 100% occupancy rate over the past few years. At least 10 expansions or additions are reportedly in development by 2023, adding an estimated additional 780,000+ square footage of soundstage and support space in the city. However, demand for space is still forecasted to outpace supply through at least 2024.

How content creators choose a production space
Once a city has been selected, decision-makers need to choose a production space to house their production. Availability and budget constraints are considered minimum requirements when finding a location. However, once these are met, decision-makers choose a facility based on amenities, reputation, and geography within the city.

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Control

Explore key takeaways for creators, studios, and investors

Content creators resuming physical production should secure spaces in advance to overcome competition, a priority that should be heightened in the near term by COVID-19 and pent-up demand for new content. Locking down a facility even before it comes onto the market can ensure ample space when spaces reopen.

Content creators, studio operators, and investors should consider building or expanding production spaces given that demand for New York production space will continue to outpace supply. Relationships within the industry and a strong reputation for ease of collaboration are critical. NYC production is a word-of-mouth business, and creators are willing to pay more for locations that are personable, responsive, and state-of-the-art.

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Case study spotlight: Netflix enters NYC with its own space

With 72.9M subscribers in 2020 and more than 60 original shows produced in 2019, Netflix is driving demand for production space to new heights.

While the company is securing longer-term leases, including a new agreement with Hudson Pacific Properties for an additional 43,000 square feet at Sunset Bronson Studios in NYC, Netflix has adopted a new approach: develop a Netflix-specific production hub.

Fueled by $4 million in tax incentives from jobs creation targets, the company is investing $100 million by 2024 and leased about 161,000 square feet at 333 Johnson Avenue. This facility will include six soundstages and support spaces and is expanding Netflix’s Manhattan office to about 100,000 square feet.

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