Occupancy rates in Hollywood real estate are hitting record highs. 97% of Hollywood commercial real estate is filled, and the trend does not seem to be on the verge of a reversal. Whether or not you are looking for an office in Hollywood, you are likely aware of some factors that are contributing to this white-hot market. Here are the top 3 reasons why nearly all of the good commercial real estate in Hollywood is currently unavailable.
Content and Tech Platforms Are Driving the Boom
There are numerous video streaming services that will expand or be introduced in the coming months. Netflix used to be the only game in town, but recent major plays by Disney, Apple, and Google are creating new competition. Combine this with existing streamers like Amazon and Hulu, and there is a crowded industry. All of these competitors are trying to lock in the right spaces to film their new shows and movies. In Hollywood, at least, there is not much left to go around.
Content Giants Are Locking in Long Leases
Hollywood production spaces used to deal in short leases, which kept desirable properties circulating. Today, giants like Netflix are locking in desirable properties with long leases. With these moves, Hollywood’s commercial real estate problem won’t go away anytime soon.
Cheap Capital Is Also to Blame
With interest rates so low, it is easy for large businesses to borrow money and make aggressive expenditures. Twenty years ago, it would have been too expensive for even a wealthy media company to rent thousands of square feet of desirable space in near perpetuity, but with interest rates still hovering in the 3-5% range for many, this is not as expensive as it once was.
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