Hines doesn’t want to miss out on the action.
The Houston-based company made its first acquisition of studio real estate, buying a 30,000-square-foot property in Burbank through Hines Global Income Trust, according to an announcement on Wednesday. Hines declined to comment on the purchase price, but a source familiar with the deal said Hines paid $45 million for the property.
“Studio assets are experiencing a period of rapid growth in demand,” Varun Akula, who leads Hines’ western region, said in an email. “Studio rents have also grown significantly in the past three years, making this a very attractive asset class.”
The property, located at 3401 West Empire Avenue, is fully leased to New York-based entertainment firm Madison Square Garden Entertainment under a long-term ground lease, the company said.
Worthe Real Estate Group in Santa Monica and Blackstone sold the property. The complex was an extension of Burbank Studios — a 994,000-square-foot development on Alameda Avenue, consisting of Class A office space and soundstages.
Madison Square Garden Entertainment built out the property along with Worthe, building a dome-shaped, 110-foot tall soundstage, Jeff Worthe of Worthe Real Estate, told TRD. The tenant will use the property to create content for its $1.8 billion Sphere project in Las Vegas and will fund any future renovations.
Hines is one of many institutional investors and real estate firms that have become comfortable owning soundstages, which were once leased for a TV season at a time but are in strong demand for longer-term deals these days.
“More media and technology companies are master leasing studio space on a long term basis due to the limited amount of available studio space and an expanding content pipeline,” Akula said. “This change in business model has peaked institutional interest and made the asset class more accessible.”
Blackstone, Square Mile Capital Management and Bain Capital have all poured money into development and acquisition of studio real estate over the last two years.
Smaller firms are getting in on the action, too, also focusing on studio developments in Glendale, which is home to Disney, Warner Brothers and DreamWorks, among other filmmakers and streaming services . New York-based East End Capital is planning to develop about 410,000 square feet of soundstage and studio space in Glendale — its second studio development in the city.