For most of the past decade, Netflix (NFLX) played the hero for Hollywood and for show business as it took over soundstages and large new office developments around Los Angeles. Even during the pandemic in 2020, Netflix was the star tenant in Blackstone’s $1.65 billion studio and office deal, and the streaming giant reported spiking subscription rates and signed more leases in a time when new deals were very few and far between.
But, now, Netflix is tightening its real estate belt after a disappointing first-quarter report, as well as subsequent layoffs of 450 employees and the company’s stock price dropping 68 percent this year. Commercial Observer has learned that Netflix is putting some of its space in the Burbank media hub up for sublease.
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Sources familiar with the company said that the available sublease space will include about 180,000 square feet at a campus at 2350 West Empire Avenue and 2400 West Empire Avenue. Investment firm Prospect Ridge acquired the property one year ago for $106.7 million, records show.
Netflix declined to comment directly, but a spokesperson said the company evaluated its real estate portfolio and will be subletting or terminating lease agreements at a few locations that are not being utilized. Netflix does not have plans to sublease the 171,000-square-foot office in the same campus that it uses as an animation studio.
Burbank has perhaps the largest concentration of entertainment companies in the country, including Disney, Warner Bros., Netflix, Comcast and more. According to a second-quarter office report from Savills, Burbank has the county’s lowest availability rate, which is the sum of vacant and soon-to-be-vacant space, at 13 percent.
That report also found that available sublease space in the L.A. region has increased to 9 million square feet, and that 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.”
Burbank is also home to Comcast’s NBC Universal, The Burbank Studios, as well as video game companies and e-sports studios, and more office and content creation space is on the way. For example, Worthe Real Estate Group and Stockbridge are currently working on a $500 million makeover of the Warner Bros. Ranch Studio in Burbank that will include 16 new soundstages and a 320,000-square-foot office complex.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
