Tech Giants Will Soon Own 10% of Commercial Real Estate on the West Coast
As the world struggles through the pandemic, Netflix and Google are projected to emerge with an even bigger footprint with Netflix rivaling Disney’s presence in Los Angeles.
While the pandemic will likely slow expansion, the increased time at home has created a surge in streaming. Tech giants are poised to come out on top.
Netflix already has more employees in L.A. than at its headquarters in Los Gatos, and it's committed to even more real estate – an additional 826,000 square feet in office space and sound stages. According to a review compiled by the tech office broker HelloOffice, The FAANG companies – Facebook, Apple, Amazon, Netflix, and Alphabet (formerly known as Google) plus Hulu – will make up 10% of all commercial real estate on the Westside by 2023.
These numbers demonstrate how the movie capital of the world has added streaming capital to its credentials. It is increasingly influenced by tech companies as “almost half the tenant base on the Westside is made up of companies combining technology and entertainment.” Although most are currently working from home, a recent study by the University of Chicago concluded that “only a third of work could be done remotely,” indicating most will return to in-person offices.
FAANGs are expected to increase profits even as the pandemic causes “many less-capitalized businesses [to] go under.” Netflix announced 15.8 million new subscribers last quarter which is more than double what it projected.
Google’s first major office opened in 2011 in Venice, but the tech company outgrew its spaces quickly. Its most recent acquisition was signing a 14-year lease to take over 585,000 additional square feet of office space in 2022, becoming its third L.A. campus.
Amazon and Apple have also stretched its presence. Their increased stakes in Culver City which has largely been occupied by MGM and Sony Pictures Entertainment highlight the shift from moviemaking to streaming. Amazon announced in 2018 that it would lease 530,000 square feet at Culver Studios while Apple is set to have 1,000 employees in the city by 2022.
The pandemic has offset some expansion as Facebook and Netflix were preparing to move into new offices this year. Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai plan to begin reopening in June and July but state that most employees can or will continue to work from home. In spite of these delays, Petra Durnin, head of market analytics at HelloOffice, claims that “collectively these companies are still expected to occupy an additional one million square feet over the next one to two years.”