December 1, 2023

In an effort to reap the benefits of the excessive demand for soundstages, Tony Guanci determined to pivot quite a lot of industrial holdings in Sylmar to studio areas.

“Covid triggered so many modifications in the way in which we watch content material,” Guanci, the chief govt of the deliberate Sylmar Studios, stated. “So we pivoted away from what we sometimes do to phases.”

“The core firm is a significant industrial developer. We had these properties for logistics, however throughout Covid we noticed the inflow of streaming and manufacturing demand,” Guanci added.

As soon as accomplished, Sylmar Studios might be a 27-acre, $500 million mission with soundstages, 120,000 sq. ft of workplace area with post-production capabilities, parking, a restaurant, a rental facility and extra. The primary stage, scheduled to be accomplished subsequent yr, will embody a handful of studios and workplace area.

The websites sit on an Alternative Zone, which Guanci referred to as an “additional advantage.”

Sylmar Studios can even have a lighting and grip companies, which entities filming on the middle will use.

Patrick Dempsey, Sylmar Studios’ president and basic supervisor, stated leases will quantity to roughly 40% of different revenues mixed.

Dempsey, a veteran studio govt whose native expertise contains working on the Culver Metropolis-based Hackman Capital Companions’ Culver Studios, stated he anticipated the brand new studio to be in excessive demand due to a low studio emptiness fee and since there has not been a big, new-build mission like this in many years. Many have been proposed in areas akin to downtown, however haven’t but opened.

“These are world-class, purpose-built studios. A number of what’s in L.A. proper now’s transformed warehouses,” he stated.

Large plans

Rendering: Sylmar Studios will embody 27 acres.

The mission broke floor final yr and might be accomplished in phases beginning subsequent summer time.

And whereas pre-Covid streaming giants like Netflix Inc. and Inc. have been signing long-term leases for big quantities of area, Sylmar Studios just isn’t anticipating one long-term tenant however somewhat many productions and firms, as many as three at a time.

“It’s first-come, first-serve. We’re concentrating on world-class, legit productions,” Dempsey stated. “We’re not in search of an anchor tenant.”
Carl Muhlstein, an govt managing director at Jones Lang LaSalle Inc., stated most corporations have been shifting away from giant, long-term leases and he as an alternative was seeing “a return of season-by-season utilization” of phases.

He added that this provides landlords extra pricing energy over their property whereas stopping tenants from having to pay for downtime.

“The previous long-term leases have been useful to regulate phases and for builders to safe financing however have gotten a factor of the previous aside from very specialised conditions,” Muhlstein stated.

Guanci added that Sylmar Studios’ gentle and grip enterprise can be a “massive cash supply,” so having one long-term tenant could possibly be a drawback in the event that they weren’t making use of the leases. He added {that a} long-term tenant taking many phases must agree to make use of the gear and never preserve any phases empty to be thought of for a lease.

Dempsey stated the mission has already seen a whole lot of curiosity resulting from its location close to the place individuals within the enterprise reside and different studios.

Certainly one of his present priorities is build up the administration staff for the property.

Soundstage demand

Staff: Sylmar Studios CEO Tony Guanci, left, and president and basic supervisor Patrick Dempsey at a mission website. (Picture by David Sprague)

Previous to the pandemic, studio occupancy ranges have been greater than 90%, based on Movie LA.

Whereas that quantity dropped a bit when Covid halted productions, it has since ticked upward as backlogged initiatives resumed filming.

Sonnet Hui, a vp and basic supervisor of Venture Administration Advisors, stated studios have been near 100% occupied popping out of the pandemic.

“They’re in excessive demand as a result of individuals are in search of content material and content material creation and leisure,” she stated.

And regardless of latest adaptive reuse stage initiatives and studio expansions, there may be nonetheless demand for the asset sort, consultants agree.

“There’s nonetheless super constraint of provide. We’re not terrified of oversupply like another nationwide markets,” Muhlstein stated. “Now we have no land and entitlements and approvals are sophisticated, and proper now building prices of those city, infill studios and proposed studios are very tough to finance.”

There was a flurry of bulletins for soundstages in recent times to fill that demand, however Muhlstein cautioned that not all of these initiatives would truly come to fruition.

“Actual property all the time has a whole lot of bulletins,” he stated. “Not everybody might be accomplished. It’s arduous to say which is able to.”

For phases which might be already below building, although, Muhlstein expects to see a “utilization spurt.”

“There’s a whole lot of reveals which have been greenlit or authorised to go and are beginning to bunch up. We expect everybody goes to be actually busy. That is an trade that is aware of learn how to react,” he stated.

Excessive rates of interest and building prices, consultants agree, make initiatives that aren’t already far alongside tough in some circumstances to get began.

“The lenders aren’t lending, or if they’re the necessities are actually, actually excessive and form of stringent,” Hui stated. “Till the rates of interest are settled, among the initiatives could also be pushed out, however builders are nonetheless dedicated however placing the brake on sure initiatives except they’ve financing lined up.”

Muhlstein added that discovering the quantity of land required for these initiatives additionally makes them tough to do.

“There’s a large amount of curiosity in studios in its place funding,” he stated. “Some corporations are shifting away from workplace and multifamily even to seek out different investments as a result of they get higher yields. The massive studio operators have had no downside elevating capital, even presently.”


A giant query for some will be the writers’ strike.

However trade analysts and the individuals behind Sylmar Studios stated the strike would solely enhance the demand for studio areas.

“After they attain an settlement there might be a frenzy to get again to work and create content material,” Hui stated.

Guanci stated the work motion was “benefitting us.”

“The pent-up demand for phases might be off the charts,” he stated, including that Sylmar Studios would open at a time when studios wanted to movie rapidly.

Contracts, he stated, would even be renegotiated for some time, so there can be a whole lot of certainty at that time.

Past Sylmar Studios, Guanci is engaged on bringing studios to Nashville and Louisville and different markets as nicely.

“We just like the sector … it simply is sensible for us to be on this area,” he stated.