Call it the new entertainment space odyssey. An explosion of streaming platforms, an increase in content, and a lack of space to produce everything has ushered in a frantic era of building, purchasing and expanding soundstages. It’s a competitive market, led by Michael Hackman, Founder and CEO of Hackman Capital Partners, credited with turning global studio real estate into a thriving new asset class.
In the past five months alone, Hackman Capital Partners has entered into agreements to acquire the historic land from CBS Radford in Studio City; Wardpark Film and Television Studios, Scotland’s largest production site; Kaufman Astoria Studios in New York City, Queens (the original home of Paramount Pictures in the 1920s); and Ireland’s two largest film studios, Ardmore Studios and Troy Studios. He also entered into an agreement with the City of Toronto to develop a waterfront complex, Basin Media Studios.
Hackman Capital’s other properties include The Culver Studios; City of television; MBS Media Campus; Raleigh Studios in Hollywood and Saticoy; Sony Pictures Animation Studios (in Los Angeles); Second line stages in Louisiana. Eastbrook Studios in London is currently under construction, as is a state-of-the-art studio complex in Downsview, northwest Toronto. Wharf Studios, a new campus in London, will open in January.
That’s 16 studios, soon to be 19 by deal close, with over 120 active soundstages and 90 more planned or in development, for well over $ 10 billion in studio assets.
“In every market where we open, demand has exceeded supply. At some point, that will balance out, ”Hackman said – but not anytime soon.
In a rare interview, the longtime real estate developer tells Deadline how becoming a supporting actor in film and television production was the business opportunity of a lifetime, and when it started for him in Culver City.
DEADLINE: Hackman is a key player in the entertainment industry, but many Deadline readers may not know you. What is your story?
MICHAEL HACKMAN: I grew up in Columbus, Ohio, one of five children. Two sisters (and my two children) work with me in the company. I graduated from Ohio State University, moved to Los Angeles in 1978, and started my business in 1986, focused on industrial real estate. [warehouses, factories] build a portfolio of more than 400 buildings totaling more than 35 million square feet. In 2005, I moved on to the next concept, urban infill [developing sites in a market that’s already mostly built out]. I started to focus on Culver City because I lived in LA. It was dynamic, three metro stops were planned, a bright future, an excellent location. We started buying buildings, focusing on the development of creative offices. One of our first projects was the 150,000 square foot creative office campus in the Hayden Tract, which was later leased to Beats by Dre. Then Apple bought Beats.
DEADLINE: It is one more step towards entertainment. When, why go into the studios?
HACKMAN: In 2014, we purchased The Culver Studios, the historic site from 1918 where Blown away by the wind, Citizen Kane, HEY, The matrix and many others were filmed and embarked on an innovation plan that would modernize and more than double the lot, while preserving historic structures. Eventually, Amazon became our tenant.
At the same time, I met Rick Nelson, CEO of The MBS Group, which provides lighting and grip equipment rental and production services, and also operates film and television studios. He was based at the MBS Media Campus, then called Manhattan Beach Studios. We started to really study the business. Technology and broadband were developing, and we clearly understood where things were going. We knew there would be growth and that would be a game changer.
Then, at the end of 2018, we had the opportunity to purchase CBS Television City – 25 acres in downtown LA, one of the best locations in the city. We were able to secure this deal in 2019, a watershed moment, when we also had the opportunity to purchase The MBS Group and the MBS Media Campus. [from Carlyle Group]. Once it happened, it all took off. We could now not only buy studios, but also provide essential services to the content industry. We have worked hard with the MBS team to grow their services and their footprint. [Editors note: MBS has over 850 employees, services almost 400 soundstages through 65 locations, and supports more than 400 productions annually.]
DEADLINE: How would you characterize the sound stage market?
HACKMAN: Very competitive. In LA there are over 500 sound scenes. Hackman Capital Partners, as big as it is, owns about 70 of them. In New York, there are 255 sound stages, we own 38. We don’t have a controlling position in any particular market, and we don’t. is not our intention to do so. We work with many other owners and businesses to maintain their studios.
In each of the major markets like LA and New York, the occupancy rate is close to 100%. They go from one show to another. In every market we open, demand has exceeded supply. At some point, it will balance out. New York in particular is a very underserved market. You need more steps but also bigger ones. Only about 50 of New York’s soundstages are over 15,000 square feet.
[Editors note: A few more will come online with Lionsgate Studios from Robert Halmi and Fehmi Zeko’s Great Point Capital — with the studio as long-term anchor tenant – set to open in Yonkers. And Steiner Studios is branching out from its Brooklyn Navy Yard home to build a second studio complex in Sunset Park, Brooklyn. They are among developers and private equity firms including Hudson Pacific Properties and Blackstone (Sunset Studios in L.A.), TPG Real Estate Partners (Cinespace Studios in Chicago and Toronto, Babelsberg in Germany), Commonwealth Group (Blackhall Studios in Atlanta), and a handful of others who have moved into the soundstage space.]
DEADLINE: Why the boom? Streamers and media companies spend billions of dollars on content. Is it just that more content is being produced?
HACKMAN: Yes, but not only that. Sound stages are also in demand due to the growth of technology. You would think it would be the other way around, but the technology allows producers to do more on a soundstage than was previously possible. For example, virtual production is a game-changer because it allows producers flexibility – they can avoid taking the traveling circus to the scene. In general, it’s also important to be on real studio ground where you can control who comes in and who leaves, not to mention controlling costs and production times, and producers have more creative freedom. It has become even more important with the Covid. A stage is autonomous and a studio lot offers the possibility of creating an ecosystem to satisfy all your production needs within a single campus. The studio concept has been around for over 100 years but has become even more important as we go along.
DEADLINE: Did you point out that you are not in the content business?
HACKMAN: We are not in the business of “content creation”. If you equate the content with mining for gold, our business is providing the pots, pans and jeans, all wrapped up in a blanket of great service. We want to make sure all of our clients get everything they need to create the best content possible. Our business has grown far beyond real estate infrastructure to production logistics and to providing a full set of turnkey services to our clients. Along with the best facilities, we provide tools to help content creators turn their vision into reality.
The first thing Rick Nelson taught me was that the word “no” does not exist in the production world. You find a way to do it. A big part of what the company does is production planning and advisory services for content creators, helping them find a home for their shows, whether or not it’s on one of our properties.
DEADLINE: Is it fun?
HACKMAN: It’s funny. I grew up in the 60s and 70s. I have always loved television and movies. Most of the shows I liked were filmed at CBS Studio Center. The case is fascinating. I marvel at it. It never gets old for me. I have been through so many sound stages, and every time I see the sets I am absolutely amazed at the talent that exists in this industry. The amount of talent and how hard everyone works below the line is amazing; this is the most impressive part of the business.
Some of the studios we bought have historical elements, and it’s incredibly rewarding to turn them into state-of-the-art facilities. I bring this passion from my experience in real estate, to really restore these iconic studios to their glory. It’s really exciting to renovate and rebuild an existing studio, but also to put your mark on building something new and creative, while helping to have a positive impact on communities and create jobs.
DEADLINE: Explain the hub and spoke studio system. Apparently it’s not just for airlines anymore?
HACKMAN: The hubs would include LA, New York, Toronto, Vancouver and London. The shelves are markets like Atlanta; Louisiana; Albuquerque, New Mexico; Ireland; Scotland. The shelves can be overflow markets or just smaller emerging markets that can also be self-sufficient. Jason Hariton, director of real estate for the MBS group, coined the term “hub and spoke” for studio space when he was the head of global production and real estate operations for Netflix.
Hariton, who could be said to be a secret Hackman weapon, oversaw 1,000 productions a year at the giant streamer. He is part of the fourth generation of the company; his great-grandfather was a Hollywood driver, his grandfather worked at Paramount and his father at Universal. Jason makes sure that we are building or buying the right assets in the key hub markets and that we continue to grow that way around the world. All the success of our business is possible because we have a phenomenal team.
In New York, we have Silvercup and Kaufman Astoria. In Toronto, we have two offerings, waterfront and a large studio on 48 acres. We are looking for projects in Vancouver, where MBS already operates studios and sound stage services.
MBS has a Canadian group of 200 people and a group in London of around 150 people, where we have Eastbrook Studios, The Wharf, MBS Innovations Lab and are trying to do more.
In LA we have MBS Media Campus, The Culver Studios, Raleigh Studios, Television City and soon CBS Studio Center. We do not have a production facility in Atlanta, but MBS serves most of it.
DEADLINE: You mentioned a window for supply and demand for soundstage to balance. How long?
HACKMAN: We are working hard to meet the meteoric demand. The growth in viewership globally, combined with increasing access to broadband, will continue to create new customers for long-term streamers, and major studios in major hub-and-spoke markets will continue to be important hubs for content creators. .