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A new film and TV studio will be part of £6B plans to develop the Meridian Water site at Edmonton in North London.
The deal with Troubadour Theatres to create three studios comes soon after Hackman Capital Partners, the owner of sites including Culver Studios in Los Angeles and Silvercup Studios in New York, said it would back plans for a £300M studio complex on an 11-acre site at Dagenham.
The Enfield studio is due to open in spring 2021, Construction News reported.
The surge in studio plans comes as repeated UK lockdowns stimulate an already busy online streaming entertainment sector. This growth comes on top of five years of steady expansion.
The trend is expected to continue according to Setting The Stage, a report from CBRE, which said unmet demand and premium rents compared to alternative uses are prompting more developer interest.
“We estimate there is at least 2M SF of active demand in the market at the time of writing. With 1.5M SF of soundstages in the development pipeline and demand expected to grow, more purpose-built space will need to be delivered,” CBRE UK Associate Research Director Michael Brown said.
Landlords have a strong financial incentive for investing in studio space, CBRE said. A 15K SF stage leased for six months could attract a rent around £70/SF, net of typical discounts and incentives. However, landlords are agreeing rents in the range of £40 to £50/SF in exchange for the certainty that comes with longer leases. This compares with £16/SF for prime London logistics space and £7/SF in the UK regions.
“Compared with other asset classes, there are relatively few investors in the studio market," CBRE Senior Director Simon Calvert said. "Still, investor interest is increasing rapidly and competition is growing. Amid a shortage of purpose-built studio supply, producers are struggling to find suitable space. This is adversely affecting the sector’s growth. In order to meet its potential, the sector needs investors and landlords to deliver much needed studio facilities.”
Studio expansion at the main production centres of Shepperton and Pinewood has not kept pace with demand. Since 2018 both have been let to producers — Netflix and Disney — on 10-year leases, further diminishing supply, CBRE said. Many other studios report that they are near or at full practical occupation. Industry estimates suggest unsatisfied demand worth £2.8B between 2015-2017, before the current surge began.
A shortage in the supply of large warehouse units suitable for conversion is also cramping expansion, whilst new-build costs of up to £300/SF and conversion costs of £40/SF are challenging for some developers.
Studio development is also proposed in regional centres, including Mercian Studios in Birmingham and Enterprise City in Manchester.
Revenue from streaming services such as Netflix and Amazon Prime has helped boost the UK’s TV production sector to record revenues over the past five years. The latest figures show domestic revenues reached a new high of £1.9B in 2018, whilst global revenues are tripled since 2015 to $49B.
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