The streaming services industry which has grown to include Netflix, Disney +, Amazon Prime, Apple TV+, Hulu, HBO Go, and a host of smaller platforms, emerged as among the biggest beneficiaries during lockdown. According to research by information and measurement company Nielsen, during the week of March 30, people spent more than 160 billion minutes streaming video, up from 69.8 billion minutes in 2019. Fulfilling this growing demand presents a challenge for Netflix and its competitors across the world, not least because the space in which movies and TV shows can be produced is severely limited.
The changing landscape
The UK film industry has traditionally relied on the large studio complexes of Pinewood, Shepperton and Elstree, but given the global increase in consumer appetite, there is an urgent need for more and better equipped spaces for movie production. The UK is second only to the Greater Los Angeles region in the U.S. in terms of square footage of soundstages in TV and film production centres. It has long been a global hotbed for the production of film and TV dramas, particularly within the South East of England. It has the educated workforce required to film and produce, as well as a wide range of locations across rural countryside, sprawling metropolis (Batman is currently being filmed in Liverpool City Centre), urban decay, beaches, and even a desert in Kent. All this, plus the tax breaks makes it a very attractive place to produce shows. Given that demand for studio space continues to outstrip supply, there is a clear need for new purpose-built film studios capable of hosting big-budget productions. There is a reason why this particular asset class is so scarce – traditionally, production companies have opted for short leases, for fear of shows getting cancelled after one season, which did not incentivise the construction of quality purpose-built film studios. But the rise of Netflix and other streaming services has changed the equation. The new content creators want offices on-site and are willing to make longer-term commitments for space they could restage after a show. This revived interested is evidenced by the fact that Pinewood Studios is now fully leased to Disney for 10 years, while Shepperton is entirely occupied by Netflix. Elstree Studios is fully let to CBS/ Universal (the owners of Sky), who recently admitted that they would need more space on top of the extension for which they recently obtained a planning permission. This is a very worrying trend for producers who soon will not be able to get into any facilities, especially with the backlog of shows that lockdown has created.
The future of studio complexes will look very different. At present, there are only a few studios that are consented with the leading facilities, including Littlewoods in Liverpool, Dagenham East in east London and Ashford International Studios. No longer will the tech giants controlling the entertainment market put up with the facilities they currently have to work with. With thousands of staff who could be on site for many months, it is important for the streaming companies to be able to provide their talent with the best possible experience. In order to appeal to potential tenants, these facilities have to be competitively priced against logistics and industrial assets. In addition, they require substantial areas of land to house the equivalent of an aircraft hangar for the stages’ complex. These considerations make the traditional west London locations with their lack of space and expensive housing unviable. The new facilities at Ashford International Studios combine the creative environments of four film and high-end TV stages, production offices, educational facilities, high-end accommodation for visiting productions, retail and leisure and offices to accommodate all of the supporting functions. Although the sound stage complex will provide approximately 200,000 sq ft, there will still remain a significant shortfall of space. Allsop has been appointed by Quinn Estates and the Creative District Improvement Company to find an additional funding partner to provide approximately £45m for the development of the studios a part of the wider £250m Newtown Works regeneration project.
Earlier this year, Allsop advised Jacob Loftus’ General Projects and British Airways Pension Fund on the purchase of Oscar-winning Twickenham Studios, with British Airways investing a further £12M to revamp the studios, showing an appetite for this frequently overlooked asset class. While COVID-19 and the subsequent lockdown have had an undeniable affect on many asset classes within the property sector, they have also played an important role in intensifying the demand for high-quality spaces for use as film studios, once again showing that every crisis presents an opportunity.