New Media Tech Hubs Emerge as Industry Shifts

Over the past decade, streaming has changed how Americans consume television shows and movies. As movie theaters closed during the pandemic, streaming has gained even more momentum.

“How we consume that media because of COVID has clearly changed,” says Spencer Levy, chairman of Americas Research for CBRE and senior economic advisor for CBRE on the company’s Weekly Take podcast. “We’ve seen some of the very negative and unfortunate announcements from large movie theater chains recently that are struggling.”

For instance, the parent company of Regal Cinemas, UK-based Cineworld, recently announced that it would “temporarily suspend operations” at Regal theaters. 

Victor Coleman, CEO of Hudson Pacific Properties, one of the largest owners of studio and tech space, says there is an open question around how motion pictures companies are going to release content. In the future, Coleman wonders if studios might direct dollars into streaming videos or pay for play.

Even though streaming has grown astronomically over the past decade, Coleman still thinks movie studios will launch major motion pictures, like the James Bond franchise, in theaters. “They’re not going to put that on the small screen streaming video because they know they’re going to make eventually $1 billion dollars on a movie like that,” he says. 

While the future of movie theaters is murky, there are other potential ways to activate the space, according to Coleman.

“It’s interesting to see Netflix is deciding to buy a couple of theaters for their own production,” Coleman says. “Gaming companies want to use theaters to have full-time gaming hours and have that be live entertainment.”

New Tech Hubs

Media is becoming a large ecosystem that is shifting CRE as tech hubs are emerging in new areas.

“It’s a massively important part of our industry, but there’s a personality in tech, and there are definite clusters in Northern California,” says Lew Horne, president of the Pacific Southwest Division for CBRE. “You’ve got a lot of venture capital and it’s focused on different platforms in Southern California. A lot of the tech really is focused on entertainment and also gaming.”

Many of the optimal markets for media appear to be on the West Coast, but Coleman is eyeing other areas as well. “We’re looking to continue to grow up in Vancouver,” Coleman says. “We’re looking to Toronto. We’re looking in New York. And we’re looking at London as our core markets to continue to grow our portfolios in the media business. “

While other markets have emerged, Los Angeles is still the king with approximately 5.5 million square feet of space. It’s followed by Atlanta with just under 2 million square feet, according to Horne. “It’s our number one industry in the Southern California and LA marketplace” and “I just think you’re going to see that growth here continue to extend,” he says.

While some states are trying to lure movie and television production out of Southern California, Horne says the area has a workforce trained in the technology and versed in the media business. That talent pool gives LA the edge.

Coleman says there have been short stints of temporary production in places like New Mexico, Michigan and Louisiana. On the other hand, Georgia, with its attractive tax program, has staying power. He says Vancouver, Toronto, London and New York have also been “sticky.” “They’ve had the talent,” he says. “They’ve had the ability to produce on a consistent basis. And people want to be there. I do think that model is going to continue in those markets, head and shoulders above others.”