Warner Bros. Closes on Studio Sale-Leaseback in Burbank
Worthe Real Estate Group and Stockbridge will acquire the 32-acre Ranch Lot in Burbank with plans to invest $500 million to redevelop the site.
A partnership between Worthe Real Estate Group and investment firm Stockbridge has completed a deal with Warner Bros. to acquire the Ranch Lot, a historic studio facility in Burbank, in a sale-leaseback transaction. The transfer of ownership will take place in 2023, and Warner Bros. will take occupancy of the property in 2025, following a redevelopment by the new ownership.
The partnership plans to spend $500 million to redevelop the 32-acre land site. The redevelopment will include 16 sound stages with connected production support space, a multi-level parking structure, a commissary, mill space and a 320,000-square-foot office complex. The development project will total 926,000 square feet.
The Ranch is adjacent to the Burbank Studios, Warner Bros. primary studio facility, which has 32 sound stages. Once the redevelopment of the Ranch is complete, Warner Bros. will have a total of 56 sound stages.
In addition to the Ranch, the deal also includes a lease transaction with Warner Bros. for Second Century campus, a two-building office campus totaling 800,000 square feet currently under development from Worthe Real Estate Group and Stockbridge. Warner Bros. will be the sole tenant in the property. Warner Bros. will also acquire a portion of The Burbank Studios adjacent to the Second Century campus from Worthe and Stockbridge, which will give Warner Bros. access to an additional production office space and eight soundstages, as well as a mill building and a commissary.
Studio facilities have become a hot asset class in Los Angeles and other markets with a strong presence from the entertainment industry, thanks in large part to the streaming wars. Research from CBRE shows that strength in the global entertainment market has contributed to a 1.2 million-square-foot pipeline of new studio space development and occupancy of existing spaces has stayed above 95%.
Other developers are also answering the call. For example, Bain Capital Real Estate and BARDAS Investment Group are planning a massive new $450 million entertainment studio in Hollywood. Echelon Studios sits on five acres and will include four 19,000-square-foot sound stages, a 15,000-square-foot flex stage, a 90,000-square-foot creative village and a 350,000-square-foot creative office in two buildings.