After a slump of its share price, hundreds of layoffs and an unexpected drop in subscribers this year, Netflix is shedding real estate in the L.A. market.
The streaming giant will sublease 180,000 square feet of space at Burbank Empire Center at 2350- and 2400 West Empire Avenue in Burbank, the Commercial Observer reported. New York-based Prospect Ridge bought the property a year ago for nearly $107 million.
The move follows a crushing first quarter for Netflix, which reported losing 200,000 paid subscribers, its first decline in a decade, with management predicting a loss of 2 million more in the second quarter.
In the first half of the year, the share price of the Los Gatos-based company plunged 71 percent, forcing the company to lay off 450 workers.
Netflix leases dozens of soundstages, animation studios and office sites throughout Greater Los Angeles, including Hollywood and Burbank entertainment hubs, according to the Observer. It still leads the subscriber race, with 222 million subscribers. Burbank-based Disney+ is second with just under 138 million subscribers. Netflix plans to spend $17 billion this year to produce shows and films.
Netflix declined to comment directly to the Observer, but a spokesperson said the company evaluated its real estate portfolio and will sublease or terminate lease agreements at a few locations that are not being used, according to the Observer.
Netflix does not have plans to sublease the 171,000-square-foot office in the same Burbank media campus it uses for an animation studio.
Burbank may have the largest concentration of entertainment companies in the nation, including Walt Disney Company, Warner Bros. Entertainment, Netflix and Comcast’s NBCUniveral, as well as video game companies and e-sports studios.
It also has L.A. County’s lowest office availability rate, or the sum of vacant and soon-to-be-vacant space, at 13 percent, according to a second-quarter report from Savills.
Available sublease space in the L.A. region has increased to 9 million square feet, according to the report, which said lease deals are “falling out of contract by the end of the quarter (mostly from the technology sector) and other active requirements now on hold.”
[Commercial Observer] – Dana Bartholomew
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