Gemdale USA Corp. has sold a 75,600-square-foot Hollywood office building leased by Netflix and a parcel next door for $93 million.
The Pasadena-based firm traded the 3.5-acre site at 1350 North Western Avenue to The Georgetown Co. of New York, the Commercial Observer reported.
Newmark, which represented Gemdale, announced the deal.
The U.S. arm of Shenzhen-based Gemdale and Los Angeles-based partner LaTerra Development put the office campus–which is fully leased to Netflix through June 2027–on the sales block in October.
The sale comes amid a boom for content creation, an ongoing trend that got an extra spur from people consuming swaths of TV shows and movies at home during the pandemic.
The complex could accommodate another 109,000 square feet of development on the extra land, according to Newmark.
Kevin Shannon, Newmark’s co-head of U.S. capital markets, said the Hollywood campus offered an ideal combination of stable income from the Netflix lease, as well as the potential for growth from the development of the adjacent parcel.
“The new ownership will have a variety of options for the site ranging from by-right development to pursuing a zoning change to increase density,” Shannon said in a statement.
The Netflix tenancy is a sublease from ZestFinance, based in Burbank, and is three blocks from Netflix’s 1.3-million-square-foot Hollywood office headquarters.
Netflix moved into the building in 2019, after first subleasing 68,000 square feet of space formerly leased to ZestFinance.
The streaming giant then spent over $10 million on renovations to the building.
Netflix also occupies almost 400,000 square feet of space across Hudson Pacific Properties and Blackstone’s portfolio of studios across Los Angeles, as well as 100,000 square feet at LPC West’s 817 Vine Street. Last year, it signed a lease for 171,000 square feet in Burbank, for its own animation studio.
“A majority of the Class A office inventory in Hollywood is controlled by a small concentration of owners with long-term holds, making opportunities to acquire institutional assets extremely rare in this market,” Newmark’s Laura Stumm said.
While other sectors of the economy struggled during the pandemic, entertainment companies have led the way in Los Angeles’ office market recovery, particularly on the Westside, according to Newmark research.
Driven by increased consumer demand for content, technology, streaming and video game companies led leasing activity in 2021, a trend that is expected to continue in 2022, according to the Commercial Observer.
Newmark’s Shannon, Strum, along with Ken White and Rob Hannan, represented the seller in the transaction.
[Commercial Observer] – Dana Bartholomew