October 13, 2021

New York Commercial Real Estate Rides Production Boom

via Variety

Fully booked production facilities are one bright spot in New York City’s commercial real estate landscape.

“Speaking as a New Yorker, the pandemic proved the importance of this industry to the economic diversity of New York,” says Hal Rosenbluth, CEO of Kaufman Astoria Studios.

The Kaufman Astoria facilities and all available borough full-service soundstages are mostly filled with at least 34 projects filming as of August. A recent report by New York City’s Mayor’s Office of Media and Entertainment documented the profound economic impact and ripple effect of production coin, as well as the region’s return to pre-pandemic production levels, all bolstered by the state’s production tax credits.

These solid occupancy rates have attracted major capital investment and enticed investors into former industrial zones to build out soundstages, support facilities and other infrastructure. Marquee development projects in the works include new and upgraded soundstages and facilities at Brooklyn’s Steiner Studios, plus a 900,000-sq.-ft., $550 million Made in N.Y. campus managed by Steiner slated for Brooklyn’s waterside Sunset Park; two stages and underground parking at Kaufman Astoria; the long-planned opening of five stages at Lionsgate Studios in Yonkers in November; and the proposed 11 soundstages at Wildflower Studios, on 19th Avenue in Astoria Queens adjacent to Luyster Creek.

Wildflower is a ground-up build with foundation work now underway. The $600 million project is expected to be operational in October 2023 and represents a high-profile partnership between Robert De Niro, Jane Rosenthal and others, totaling 760,000 square-feet of purpose-built production facilities located on a waterfront esplanade that is open to the public.

“We began with a large site, and a blank paper, and began asking industry professionals from senior production executives to lighting designers to makeup artists to the Teamsters, ‘What would your dream facility look like and how would it function?,’” says Adam Gordon, Wildflower’s managing partner, of the innovative plans for the 5.25-acre site purchased from Steinway & Sons.

Wildflower’s concept (executed by architectural firm Bjarke Ingels Group: BIG) is to stack soundstages vertically — rather than spread out over acreage — and center activity along a central corridor, with parking and loading areas below. The building will be an optimized environment for creating content, one designed for storytelling, no matter the eventual format, Gordon promises.

“We compete locally, nationally and internationally, which is not true of other uses of real estate,” says Doug Steiner, chairman of Steiner Studios. The real estate developer got plenty of pushback when he opened his studio complex at the Brooklyn Navy Yards more than 20 years ago. “Our project did a lot for surrounding communities to bring the creative class to Brooklyn and our new project will have similar impact in Sunset Park and Bay Ridge,” he says.

His track record of meeting the needs of demanding clientele put the company in the position to tackle the ambitious eight-soundstage development at Sunset Park. (Under the auspices of the New York City Economic Development Corp., the 36-acre campus will also have room for garment manufacturing and light industrial uses.)

“Production is a great economic driver and pays for itself and then some,” Steiner says, despite its specialized real estate requirements and its comparatively high property costs. He’s hoping that New York’s production soundstage market does not get overbuilt; and he’s confident that there’s enough demand to embark upon a 120,000-sq.-ft. gut renovation of stages 31 and 32 at Steiner Studios, previously utilized for Steven Spielberg’s “West Side Story,” out in 2022.

Additional confidence in Gotham’s commercial real estate market rebound comes from Google’s contract, inked in September, to spend $2.1 billion on the St. John’s Terminal building in Hudson Square. The outlook for office leases remains cloudy in the near term as businesses continue to allow work-from-home and Manhattan’s density poses health obstacles to commuters. Per second quarter Colliers’ research, office vacancy rates are still close to May’s all-time high of just over 17%, while asking rent averages have decreased to 2017 levels.

On set, pandemic protocols remains in place and those have translated into the need for more facility rentals rather than a return to extensive location shooting. Shows continue to book additional stages to accommodate workflow and need for prep space, says Kaufman Astoria’s Rosenbluth.

“New York has been a very busy place, thank God for that. The film business is very important to city and state of New York,” he adds. And decidedly to New York’s post-industrial economy and revitalization of its underutilized commercial real estate assets.

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