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Saturday, May 21, 2022

21st Century Cartoons Coming From Netflix

 Streaming leader Netflix Inc. shocked the real estate industry in September when it announced that it had signed 2020’s biggest commercial real estate lease in the Greater Los Angeles area in Burbank, where the Los Gatos-based company will open its first animation sudio.The streamer signed a formidable 171,000-square-foot lease at Burbank Empire Center, located next to Hollywood Burbank Airport at 2300 W. Empire Ave.

Life insurance company New York Life, which owns Burbank Empire Center, will benefit as Netflix takes on 150,000 square feet up front at the property, with a 21,000 square-foot expansion later on.

Netflix will occupy the seven-story building’s ground floor plus square footage on floors three, six and seven.Burbank’s drawNetflix establishing an animation studio in Burbank makes sense on multiple levels. Since the earliest days of Walt Disney Co., Burbank has long been home to Hollywood’s animation industry. The region’s storied past includes such animation houses as Hanna-Barbara, Walter Lantz Productions, Ruby-Spears, Filmation and Film Roman creating theatrical and Saturday morning cartoons in the region.

Currently, Viacom-owned Nickelodeon Animation Studio, and WarnerMedia’s Warner Bros. Animation and Cartoon Network are all based in Burbank while DreamWorks Animation is located in neighboring Glendale.

Also, Netflix has already enjoyed success airing both original animated shows and acquired content — such as anime from Japan and Korea — on its streaming platform. Animation house Titmouse Inc., which in February announced a significant deal of its own when it assumed 95,000 square feet at Media Center North at 2835 N. Naomi St. in Burbank, created “The Midnight Gospel” and other shows for Netflix. With the move, Titmouse became the sole tenant at the 101,907-square-foot structure, which previously housed Psi, a career excellence center. Titmouse, which makes “The Epic Tales of Captain Underpants,” had previously taken extra space in North Hollywood at 5061 Lankershim Blvd.

Overall, content demand from Netflix and its streaming competition, including Amazon.com Inc’s Prime Video, Walt Disney Co.’ Disney Plus in Burbank and Warner Bros.-owned HBO Max, 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 in September.At a time when Hollywood’s live-action TV production has struggled to resume in the face of a pandemic, animation creation has ramped up.  “Animation is probably insulated from all of that lockdown,” said Alex Bergeson, managing director at Newmark’s Century City office who has transacted animation-related office leases in Burbank, Universal City and the Valley. “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.” In truth, Netflix has already been leasing space at Burbank Empire Center at 2350 Empire Ave. and 2400 Empire Ave. At each address, Netflix occupies 33,000 square feet of space, according to CoStar Group data.

Multi-year trendThe animation uptick preceded the pandemic, but accelerated this year.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.“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, as well as smaller players in the animation production chain, continue to take space in the East Valley. Titmouse’s move to Naomi Street represented the company’s fourth location and will provide space for a 35 percent increase in workforce, according to media reports, which claim that some 250 people will be added to the company’s current 700-person staff.  And in 2019, Bento Box, the studio behind the hit Fox cartoon “Bob’s Burgers,” signed up for more square footage around its North Hollywood hub at 5161 Lankershim Blvd. Bento Box’s commitment to the building is part of a larger tech and entertainment boom in the Burbank-adjacent community of North Hollywood, which has been capitalizing on industry overage from Burbank.“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.” 

Michael Aushenker
Michael Aushenker
A graduate of Cornell University, Michael covers commercial real estate for the San Fernando Valley Business Journal. Prior to the Business Journal, Michael covered the community and entertainment beats as a staff writer for various newspapers, including the Jewish Journal of Greater Los Angeles, The Palisadian-Post, The Argonaut and Acorn Newspapers. He has also freelanced for the Santa Barbara Independent, VC Reporter, Malibu Times and Los Feliz Ledger.

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