Space constraints threaten UK film and TV industry

It may have been another successful year at the Emmys for the British TV industry, but a lack of suitable studio space is understood to have cost the UK the chance to host the production of between five and 10 major feature films, each worth tens of millions of pounds to the UK economy. And a space crunch is on the horizon for the UK’s booming film and high-end TV production industry if land equivalent to the size of 100 football pitches is not found to host the estimated 1.9m sq ft of new studio space needed by 2032, according to Lambert Smith Hampton’s latest report on the UK film and TV property market: Sites, Camera, Action! Demand is being driven by the rise in online services such as Netflix and Amazon Prime Video, which helped propel spending on high-end TV production in the UK to £938m in 2017, according to the British Film institute. UK feature film production spend hit £1.9bn last year, with inward investment productions accounting for 89% of the total spend. Netflix has a budget of $8bn (£6.1bn) to spend on original content this year, including on hit show The Crown [pictured above], which is filmed at Elstree Studios. Amazon Prime Video has an estimated budget of $4.5bn, while Apple is reported to have a $1bn budget to spend on original film and television in 2018 as it and other tech giants, including Google and Facebook, look to push into the market. In addition, traditional channels such as ITV and Sky have also switched to producing more of their own content instead of hosting third-party product and generating income through advertising, which – like retail – is having a rough period. This in turn has boosted the output of film-related industries over the last five years, such as the Soho-clustered visual effects and post-production businesses, by 88% to £13.2bn, making it the fastest growing sector of the UK economy. On location Inward investment into the UK film and television industry is also being driven by the pool of highly skilled labour. The UK is one of the few countries outside the US where major films can be crewed locally, as well as offering tax relief of up to 25% available for films and high-end TV programmes that qualify as British through a cultural test or as an official co-production. Last year the sector employed around 102,000 people, according to data from the Office of National Statistics. The majority of studios are located within London and the South East, including Warner Bros’ 198-acre Leavesden complex in Hertfordshire – where developer Landid helped create the Harry Potter studio tour – and Buckinghamshire-based Pinewood Studios, where work on the second phase of a £200m expansion  started onsite this month, doubling its more than 440,000 sq ft studio space. Pinewood has also recently submitted a planning application to increase the size of the 25-acre, 600,000 sq ft Shepperton Studios in Surrey which, if approved, would involve £500m of private sector investment. In East London a new suite of studios, backed by the local council, are proposed for Dagenham, including 12 new sound stages totalling 264,000 sq ft. There is also increased activity in other parts of the UK. Game of Thrones is filmed in Northern Ireland and Doctor Who in South Wales, with new studios built in both areas in the last 18 months. And despite the recent fire, plans to turn the Littlewoods building in Liverpool into film studios are to go ahead. Despite this, there is still significant room for more new purpose-built studios, with an 80% increase on current supply required, according to LSH. The red-hot logistics sector is sweeping up potential sites, while studio space has also been lost to residential development, such as the former BBC Television Centre and the planned redevelopment of ITV’s London studios on the South Bank. Click on the video below to see what BBC Television Centre looks like now Film London chief executive Adrian Wootton says the body was “working with public and private landowners to unlock new space, either as a long-term investment or as a way to generate significant income in the six to 18 months while planning details are finalised”. Risk factors Widely varying rents are also a factor in why the property has yet to fully embrace the film and TV industry. Leases of between two and five years remain a rarity, giving it a relatively high risk profile even if studios do have the potential to achieve rents that can compensate for that elevated risk. Production companies do not expect to pay a flat rent over the period they rent the studio space. Instead, a lower rent may be paid during set construction and dismantling with a higher rent paid during filming. Where are the biggest returns for London film locations? However, some film companies are looking at longer term solutions to filming space constraints. Warner Bros has taken a lease at the new Belfast Harbour studios, Disney has leased space at Pinewood, and Netflix has singed 10-year lease agreements in the US, suggesting it is not averse to taking on longer leases. There is also widespread political support for film and TV studios, with local councils actively seeking to attract creative industries and London’s mayor giving his support to Dagenham’s planned film studios, which could help developers unlock wider mixed-use developments, according to LSH. High quality television studios within Greater London can rent out studios of around 5,000 sq ft at between £5,000 and £10,000 per day. Purpose-built studios can command weekly rents of up to £30,000 for 20,000 sq ft stages. Blockbuster films will usually require at least 125,000 sq ft stages. Repurposed warehouse space commands lower rents, which vary depending on what refurbishment has been carried out, as well as location. In Greater London quoting rents of around £1 per sq ft per week have been reported. According to LSH, this can equate to somewhere between the £25-30 per sq ft range per year, which offers a premium over the rents achieved by conventional warehouse space, with prime logistics rents within greater London currently at £15.50 per sq ft per year. Christopher Berry, head of media at LSH, said: “We are seeing unprecedented levels of client activity around film and TV studios. “The property industry has been slow to recognise the scale of the opportunity in the sector, but demand for film and TV studio space is exceptionally strong so we expect this to change.” Matthew Colbourne, associate director – commercial research at LSH, added: “Film and TV studios have not traditionally been a focus for mainstream property developers and investors, but the current supply/demand mismatch is creating opportunities within the sector. “There is a clear need for new purpose-built studios capable of hosting big budget productions. Industrial property owners also have the opportunity to market empty buildings as “blank canvas” filming locations to help make up the shortfall in dedicated studio space.” To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette Main image © Robert Viglasky/Netflix/Kobal/REX/Shutterstock