Silver Lake Funds $500M Shadowbox Studio Expansion

As Hollywood studios and streaming services race to produce more film and TV content, a national shortage of soundstage space is drawing investors into the market for the large leased spaces needed for film production.

At the same time, lucrative film and TV production incentives being dangled by several state economic development agencies to draw studio projects is expanding the market for soundstages from traditional venues like Los Angeles and New York to locations in Georgia and New Jersey, among others.

Menlo Park, CA-based private equity firm Silver Lake is investing $500M in Shadowbox Studios, a production company with soundstage facilities in Los Angeles, Atlanta and London, aiming to expand the company’s footprint of leasable film production by more than 4M SF, according to a report this week in the Wall Street Journal. 

The expansion is expected to build additional soundstage space at dozens of facilities operated by the production company. Shadowbox is aiming for a total of 68 soundstages through the expansion, with half of them based in the Atlanta metro, WSJ said. Shadowbox will also expand its soundstage facilities in the Santa Clarita area north of LA.

Shadowbox, which previously operated under the name Blackhall Studios, launched its film production business in Atlanta in 2017. Commonwealth Asset Management is the majority shareholder in Shadowbox.

Commonwealth’s head of real estate, Peter Rumboldt, told the WSJ the company is projecting that film and TV production spending from Hollywood studios and streamers like Netflix will total nearly $90B this year.

Demand for soundstages in the New York/New Jersey metro is so strong that production companies, who usually rent space for three to 12 months, are signing 5- to 10-year leases with film studios, CBRE reported.

The tightness of large space needed for soundstages has persisted despite a steady increase in supply—which CBRE says now tops more than 3M SF of inventory in NY/NJ—as production companies expand. At least nine studios have initiated projects with an estimated 1 million square feet of new soundstage space in the New York metro.

Netflix, which is producing a deluge of new film and TV programming as it battles to maintain a dwindling subscriber base, has been a key driver in the demand for soundstage footage.

Earlier this month, the Fort Monmouth Economic Revitalization Authority (FMERA) disclosed that Netflix has entered a bid to build a production studio on a 292-acre site on a former US Army base in Monmouth County, NJ, GlobeSt.com reported.

After Netflix confirmed last year that it was interested in relocating its film production from Georgia to New Jersey, the Garden State expanded a series of generous film production incentives.

NJ’s Film and Digital Media Tax Credit provides a transferable credit against the state’s corporate business tax and gross income tax for film and digital media projects that incur at least 60% of total film production expenses through authorized vendors.

CRE investors and existing film production companies recently have been making acquisitions to increase their share of the NJ/NJ soundstage space.

Steiner Studios, which opened in the Brooklyn Navy yard in 2004, is starting construction on a 900K SF film production facility in Sunset Park, Brooklyn. Since 2004, NY State has offered tax credits for film production projects.

Hackman Capital Partners, in partnership with Square Mile Capital Management, bought Kaufman Astoria Studios in Queens last year. In 2020, The partnership acquired Silvercup Studios, which has three film campuses in Queens and the Bronx, including the original, which was converted from the historic Silvercup bakery in NYC.