Small Media Leases Pack Powerful Punch

REDONDO BEACH, CA-The deal is small in comparison to some of the gargantuan office leases that have been inked in Southern California this year, but Shelter Digital’s commitment to 12,000 sf in the Redondo Beach submarket illustrates that some niches of the office market are marching to their own tune, so to speak. This is especially true of office space occupied by entertainment and media-related companies like Shelter Digital, the local division of an Italian film, digital production and post-production services’ company for the movie and television industries.

Juan Apitz, senior associate with locally based Goodglick Co., says that the Shelter Digital lease is the latest example of a trend in which production and media companies are moving to the South Bay submarkets of Los Angeles from their traditional Hollywood and Westside roots. The unit that is taking the 12,000 sf is Shelter Digital USA, a joint venture between Rome-based Shelter Digital and South Bay Sound Co. of Manhattan Beach, CA, a post-production and sound effects dubbing company.

Shelter Digital signed a five-year lease with two five-year renewal options for a 178,000-sf building in the West Bay Business Park along Manhattan Beach Boulevard. The local unit of the Italian firm joins a growing list of media and entertainment-related companies in South Bay submarkets, including film production company New Masters from nearby El.Segundo, Pointe Studios in Hawthorne and Raleigh Studios in Manhattan Beach.

The Shelter Digital deal illustrates that companies large and small in the media and entertainment industries are keeping leases flowing at least for some submarkets even during the economic downturn. Other recent deals include Fox Interactive Media’s agreement for 421,000 sf of office space at the Horizon at Playa Vista project, being developed by Dallas-based Lincoln Property Co., and ASB Real Estate. Fox Interactive, which will move its headquarters to the Hospace next year, will occupy virtually all of the space in phase one of the 15-acre, creative-style office campus, designed for nearly one million sf. Terms of the deal were not disclosed, but industry sources peg the 12-year lease in the range of $350 million.

The media and entertainment deals have even been filling space in Downtown L.A., where Los Angeles Center Studios has created a 20-acre project with everything from sound stages to office space to serve the film and television production industries. The office portion of LACS includes 450,000 sf of short- and long-term class A office space for entertainment-related and creative companies.

In the past year, LACS has signed about 60,000 sf of long-term leases with tenants like Film L.A., ePrize and Creative Kingdom, all of which have expanded their offices at LACS and in some cases more than doubling their original size. The LACS campus also includes five new creative office suites ranging from 2,000 sf to 4,500 sf, which the owners built out in anticipation of future demand.

Yet another example of the current and future demand for entertainment and media-oriented office space is NBC Universal’s plan to develop a news center and TV studio at Universal City in the San Fernando Valley, a project that will be modeled after the new NBC News World Headquarters at 30 Rockefeller Plaza in New York City. NBC Universal would become the major tenant in the new complex, which would be developed by L.A.-based Thomas Properties Group to include 200,000 sf of production facilities, 450,000 sf of entertainment-related office space and a comprehensive parking plan. At last report, Universal and Thomas were in discussions with government and transit officials regarding plans for the complex.