As the entertainment industry stalls during the pandemic, one segment of the business continues to meet an insatiable demand for content — animation.

Cartoon creation has long been centered in the San Fernando Valley. And while the Valley’s industrial real estate market has faced headwinds in the pandemic, as live film and television on soundstages have ratcheted down, animation can be produced without large congregations of workers.

Meanwhile, content demand from Netflix and its streamer competition, including Amazon.com Inc’s Prime Video, Walt Disney Co.’ Disney Plus in Burbank and Warner Bros.-owned HBO Max also in Burbank, has skyrocketed.

“The new streaming channels have added new markets for animation – and the COVID shutdown has increased the demand for cartoon shows and animated features. The medium has never been more popular,” animation historian Jerry Beck told the Business Journal.

“Animation is probably insulated from all of that lockdown,” said Alex Bergeson, managing director at Newmark Knight Frank’s Century City office who has transacted office leases in Burbank, Universal City and the Valley, including animation-related lessees. “It was a hard transition to get people up and running to do full production from remote locations, but it’s my understanding that a lot of those (animation) firms have figured it out now and it’s full steam ahead.”

While live-action production workers have experienced mass layoffs and pay-slashing at companies ranging from Disney to small prop shops, animation has managed to absorb the shock waves by refunneling the project pipeline to its workforce remotely.

“The artists can work at home, and thus, there has been no shutdown or slowdown in producing animation,” Beck said.

Office moves

Just before the March outbreak, Burbank and North Hollywood featured major moves among animation companies. In February, Los Angeles animator Titmouse Inc. expanded into the Burbank Media Center at 2835 N. Naomi St. as its single tenant, growing its workforce from 700 to 950 employees. Titmouse, which makes “The Epic Tales of Captain Underpants,” had previously taken over extra space in North Hollywood at 5061 Lankershim Blvd. near Magnolia Boulevard. That location is across the street from Bento Box Entertainment at 5161 Lankershim Blvd. Bento Box took on additional NoHo square footage in 2019 at 4640 Lankershim Blvd. and has proven so valuable that Fox Corp. acquired it last summer. Bento Box has animated newbie Netflix cartoon “Hoops” and announced Aug. 29 that it will animate a comedic spinoff of “The X-Files.”

As listing agent, NKF’s Bergeson had shown Titmouse a Captiva Ventures and Westbrook Partners property at 6265 San Fernando Road — 100,000 square feet worth of creative office conversion. However, Titmouse passed for the less-expensive Naomi building.

“With the Burbank deal, they almost doubled their office space,” Bergeson said.

This lease, Bergeson said, represents “a long-term consolidation and expansion” for Titmouse. “They’re taking all of these people from all these locations and consolidating them.”’

At 5161 Lankershim, “Bento Box has done incredibly well,” Bergeson added. “They did that deal prior to my client New York Life acquiring the asset. That’s always been a very core location for them.”

Bento Box also grabbed 20,000 square feet at 1500 Flower St. in Glendale.

Burbank had a banner leasing year in 2019, when Disney, including its animation division, took 116,000 square feet in The Tower at 3900 W. Alameda Blvd. Disney also leased 90,000 square feet at the Pinnacle at 3400 W. Olive Ave., where Warner Bros. also committed to 100,000 square feet after Warner Music left for downtown Los Angeles.

“These were massive commitments to Burbank,” Bergeson said, noting that Burbank’s 3 percent vacancy from such moves was “basically unheard of. There’s not a lot of product out there online. You don’t have a ton of big block space just sitting right now.”

Meanwhile, Netflix, the platform with the biggest war chest to fund new animated content, assumed square footage near Hollywood Burbank Airport.

“Content creation is going to be the largest driver for our market for the foreseeable future,” Bergman said. “The virus has done even more to drive content to consumers.”

Cartoon capital

The Valley and Tri-Cities have a storied history as the epicenter of animation, from the birth of feature films to the feeders of Saturday morning cartoons through the 1990s syndication market.

“(Walt) Disney establishing his studio in Burbank in 1940 certainly brought the studios closer to where the animators were,” said Beck, a Toluca Lake resident. “Warner Bros. also brought their studio to their lot in the Valley in the 1950s. Hanna-Barbera opened their big studio (at 3400 Cahuenga Blvd.) in the early 1960s.”

Woody Woodpecker creator Walter Lantz originally set up shop in the early 1940s on Lankershim Boulevard, near his distributor, Universal. With the advent of made-for-TV cartoons in the 1950s, the Valley emerged as the capital of cartoons. Hanna-Barbera, long situated off the 101 freeway in Studio City, churned out hit after hit, including first-ever prime-time cartoon “The Flintstones.”

Formed in 1963, DePatie–Freleng Enterprises Inc. (“The Pink Panther Show”) was located on Hayvenhurst Avenue near Van Nuys Airport and, after its final production “Spider-Woman” in 1979, Marvel Entertainment acquired it.

In the 1980s, Joe Ruby, who died last month in Westlake Village, and Ken Spears left Hanna-Barbera after creating “Scooby-Doo” to form Saturday morning cartoons creator Ruby-Spears Productions (“Thundarr the Barbarian,” “Pac-Man”) while Film Roman (“The Simpsons,” “Garfield”) operated at 12020 Chandler Blvd. in NoHo into the 1990s.

Founded in the late 1960s by Tarzana resident Lou Scheimer, Filmation had animated D.C. superheroes, Lone Ranger, Zorro and Tarzan at 18107 Sherman Way in Reseda before making the mega-successful 1980s syndicated cartoon “He-Man and the Masters of the Universe.”

USC Professor Tom Sito is an author and a past-president of the Animation Guild, located on Hollywood Way near Magnolia Boulevard in Burbank. The Woodland Hills resident has worked all over the Valley. His credits include Disney’s “Beauty and the Beast”; DreamWorks’ “Shrek”’; and Filmation’s “He-Man.”

“In the 1960s, there was a stretch of Studio City that was called Animation Alley,” Sito said. It started at Barham Boulevard and headed north on Cahuenga Boulevard into Studio City, with about nine animation companies in close proximity.

Today, Walt Disney Animation and subsidiary Pixar produce global hits, while Warner Bros. Animation operates out of 411 N. Hollywood Way in Burbank and DreamWorks is stationed in Glendale at 1000 Flower St. Rough Draft Studios, which animated Matt Groening’s hit series “Futurama,” stands at 615 Allen Ave. in Glendale.

Adult-skewing animated series have never been hotter, as toons such as “Bojack Horseman”’ and Titmouse show “Big Mouth” populate streamers and cable. From its 72,000-square-foot Burbank facility at 231 W. Olive Ave., Nickelodeon Animation Studio’s. has been producing “SpongeBob SquarePants” TV episodes and feature films for more than two decades.

Real estate reality

While animators ostensibly came to the Valley for convenient access to Disney, Warner Bros. and Hanna-Barbera, there was an economic force driving them north of the 101 freeway.

“Animators gravitated towards the cheaper rents in the Valley,” Beck said. “Before the 1990s, animation studios could (and would) be established in abandoned buildings, dead warehouses and the cheapest office spaces. Ralph Bakshi’s 1987 ‘Mighty Mouse’ cartoons were made in a deserted motel off Van Nuys Boulevard.”

Added Sito: “It requires a lot of employees at a desk, so you need cheap industrial space,” which makes the Valley a perfect place for what is essentially factory work.

“When I was working at Disney in the 1990s, the major clusters (of where animation people lived) was Burbank, Glendale, Van Nuys and Valencia,” he said.

Cheaper housing in North Los Angeles continues today, noted NKF’s Bergeson.

“As it pertains to a workforce, you have great affordable housing,” he said. “Mid-level employees can actually own a house whereas in Hollywood and West Hollywood, that’s virtually impossible.”

In the pandemic economy, industry observers say that while live-action has seen 200,000 jobs lost globally, animation will meet the voracious demand for streaming content as other entertainment sectors struggle to make a comeback under government-imposed health guidelines.

In a May op-ed for animation media site Cartoon Brew, writer/producer Aaron Simpson (Disney Television Animation, Warner Bros. Animation) wrote that animation studios are well positioned to adapt to pandemic-driven upheavals because “the animation industry had been preparing for this disaster for decades without even knowing it.”

Animation has been streamlining its processes via technological advances to allow for low-cost, all-digital studios. That means a Burbank-based company can edit the same project as employees in foreign countries.

But slick technology won’t affect the Valley’s status as the capital of cartoons.

“Will studios return when the COVID pandemic ends?” Beck asked. “Absolutely. Social interaction is crucial to everyone’s well-being. Artists and production personnel will remain based in the Valley because that’s where it landed before this current situation.”

And broker Bergeson said animation will continue to fuel East Valley real estate.

“I’m a huge believer of that movement going forward, and it’s been great for the office market,” he said.

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