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Why Hollywood’s Production Exodus Matters for Commercial Real Estate Investors
Thursday, February 13, 2025
Why Commercial Real Estate Investors Should Pay Attention to Hollywood’s Production Exodus
The commercial real estate landscape in Los Angeles is undergoing a seismic shift as Hollywood loses film and television productions to international markets. With soundstage occupancy dropping and office vacancies rising, investors must rethink strategies to navigate the new reality.
This article breaks down why productions are leaving, what it means for CRE investors, and how to position investments for success in an evolving market.
The Decline of Film Production in California
Hollywood’s long-standing dominance in the entertainment industry is facing unprecedented challenges. The biggest reason? Production incentives abroad.
Countries like Canada, the UK, and Australia now offer significantly higher subsidies, attracting major productions that would have otherwise been filmed in Los Angeles. For example:
● Australia offers rebates up to 40% of production costs.
● Canada provides around 36% in incentives, with British Columbia adding extra bonuses for high-budget films.
● The UK’s production spending surged 31% in 2024, with major franchises like Harry Potter and Supergirl relocating.
Even within the U.S., states like Georgia and New Jersey are offering competitive incentives, further challenging California’s ability to retain productions.
The Real Estate Ripple Effect
The decline in production activity isn’t just a Hollywood problem—it’s a commercial real estate problem. Here’s why:
1. Declining Demand for Soundstages
● Soundstage occupancy in LA dropped from 93% to 90% in 2022, and that was before the 2023 writers' and actors’ strikes.
● Billions are being invested in new studio developments, including Echelon Studios in Hollywood and Warner Bros.' $500 million expansion, but will demand keep up?
2. Office Space Vacancies Are Rising
● LA’s office vacancy rate hit a historic high of 16%, up from 15% a year prior.
Major entertainment companies have been downsizing office space, leading to reduced demand.
3. The Housing Market Faces Pressure
● High production activity previously supported jobs and housing demand in LA.
● With production slowing, fewer workers are moving into the city, impacting rental demand in key areas.
Opportunities for Commercial Real Estate Investors
Despite these challenges, smart investors can pivot their strategies to capitalize on shifting trends.
1. Invest in Mixed-Use and Adaptive Reuse Projects
With office vacancies rising, converting unused office spaces into residential or mixed-use developments could be a lucrative play. Expect more interest in adaptive reuse projects—transforming former studio offices into creative coworking spaces or residential units.
2. Monitor the Expansion of Production-Ready Real Estate
While California struggles to retain productions, other markets are booming. Investors should consider:
● Georgia’s thriving studio market (home to Marvel and Stranger Things productions).
● Vancouver’s rapid studio expansion, including 20 new soundstages at Bridge Studios.
● London’s surge in production real estate, backed by increased film budgets.
3. Leverage Tax Incentives for Long-Term Gains
California’s $3.75 billion tax incentive expansion could drive new production demand in coming years. Investing in properties near key entertainment hubs, such as Burbank and Culver City, could prove beneficial if incentives successfully attract productions back.
4. Consider Alternative CRE Sectors
With soundstages and office spaces facing volatility, data centers, logistics, and industrial spaces are increasingly attractive alternatives. Los Angeles remains a prime location for last-mile distribution centers and e-commerce hubs.
Final Thoughts: Adapt and Invest Wisely
Hollywood’s shift toward global production has created uncertainty in the Los Angeles real estate market, but uncertainty breeds opportunity. By adapting investment strategies to align with emerging trends—such as mixed-use conversions, alternative CRE sectors, and tax incentive advantages—savvy investors can thrive even as Hollywood evolves.
Are you ready to pivot your investment strategy? Share your thoughts in the comments below!
Hi, I Am Sanjeev
REAL ESTATE BROKER / ENTREPRENEUR
Sanjeev Advani is a seasoned real estate entrepreneur and financial strategist from Bakersfield, California. Having built and sold his Company Synergy Property Management, he specializes in innovative investment solutions and portfolio growth. With a rich background spanning real estate, financial planning, and community leadership, Sanjeev brings a blend of tenacity, expertise, and visionary thinking to every endeavor. Dedicated to excellence and driven by a passion for empowerment, he is committed to guiding clients and communities toward success and prosperity.
