Warner Bros.’ land deal is blockbuster
Burbank firm is buying nearby studio, moving into two office towers designed by Gehry.
Warner Bros. has sweeping plans to expand its Burbank headquarters by acquiring a nearby studio complex and moving into two Frank Gehry-designed office towers fashioned to look like icebergs floating alongside the 134 Freeway.
The purchase of Burbank Studios and office tower completion are scheduled for 2023, the year of Warner Bros.’ 100th anniversary. As part of the deal, Warner Bros. will sell its historic North Hollywood Way facility known as the Ranch lot, which has long been popular for television production.
The multi-phased project, unveiled Monday, is one of Burbank’s largest and most complex real estate transactions ever, with an estimated combined value of more than $1 billion.
“This is an opportunity to reimagine not only our workspace but our future,” Kim Williams, Warner Bros. executive vice president and chief financial officer, said in a statement. “It will also better position our company for the future and provide for more production capacity.”
Warner Bros., which was acquired last year by telecommunications giant AT&T, is eager to take over the complex because it has ambitious plans for expansion. Burbank Studios offered additional office space, eight soundstages, a mill building and a commissary, the studio said.
Warner Bros. currently occupies about 1.2 million square feet of office space outside its main lot and can move much of those operations into Burbank Studios. Buying Burbank Studios also enables Warner Bros. to expand its main campus with a contiguous parcel so it can concentrate its employees and productions in Burbank at locations that are secured by the company.
The complex that Warner Bros. agreed to buy, positioned along West Alameda Avenue, is the former headquarters of NBC Entertainment and the TV home to such talk show giants as Jay Leno and Johnny Carson. From Studio 1, Carson would wryly tell viewers the show was broadcast from “beautiful downtown Burbank.”
Warner Bros. is buying back property that it once owned. Studio co-founder Jack Warner sold the parcel to NBC in 1951. NBC, originally a radio broadcaster, was hungry for studio space to support its push into television.
Current owner Jeff Worthe acquired the studio complex in 2007 from NBC’s then-owner, General Electric Co. (NBCUniversal executives later regretted the sale, according to one knowledgeable insider who did not want to be identified questioning a prior regime.)
Worthe, in an interview with The Times, said he paid NBC about $250 million for the 35-acre lot. He is selling about three-quarters of the property, which he named Burbank Studios, to Warner Bros. for an undisclosed amount.
Worthe and partner Stockbridge Real Estate Fund plan to keep about 7 acres of the Burbank Studios site, where they will build the Gehry-designed office towers, which Warner Bros. will occupy as the sole tenant. Financial terms of the lease were not revealed, but calculations based on similar recent office deals suggested its value would surpass $800 million.
Gehry, of Los Angeles, is one of the world’s best-known architects. Among his designs are Walt Disney Concert Hall; the Guggenheim Museum in Bilbao, Spain; and the Grand, a $1-billion mixed-use complex being built across the street from Disney Hall in downtown Los Angeles.
“Once upon a time, Hollywood Studios had an important architectural presence in the city — they were like monuments to the movie-making process,” Gehry said in a statement. “With this project, I was trying to recapture that feeling of old Hollywood splendor.”
The Warner Bros. buildings are intended to be a 21st century version, the architect said, creating a strong architectural presence in the center of Burbank.
“From the freeway, the buildings are composed as one long sculptural glass facade that creates a single identity like icebergs floating along the freeway,” Gehry said in the statement.
The 800,000-square-foot office complex will consist of a seven-story building and a nine-story structure. Construction is expected to begin in the fall.
Worthe would not divulge the cost of the buildings, but based on the price per foot of similar recent developments, it would top $550 million.
Worthe and development partner Stockbridge will buy the Ranch property for a yet-unknown amount from Warner Bros. in 2023. That’s when the studio plans to move its operations at the Ranch to Burbank Studios.
The Ranch will continue to operate as a studio and office complex, Worthe said. He envisions developing as much as 1 million square feet of additional office and production facilities there in coming years.
The Ranch outpost has a rich Hollywood history. It was used for filming the movie “Lethal Weapon” and the TV series “Bewitched” and “I Dream of Jeannie.” Opening credits of Warner Bros.’ 1990s sitcom “Friends” feature the young cast members frolicking in a fountain near the center of that lot.
Already the biggest office landlord in Burbank, Worthe and his partners, including Blackstone, control 75% of the space available to rent. He caters to the entertainment industry, and his tenants include Warner Bros., Walt Disney Co., Sony, Fox, DC Comics, Viacom’s Nickelodeon and IHeartRadio.
“We are proud to continue our long-standing partnership with Warner Bros., which dates back over 30 years,” Worthe said. “We are thrilled to deliver these iconic buildings to Burbank and can’t think of a better way to honor Warners’ past 100 years and celebrate their exciting future.”
The massive deal comes as studio space is at a premium around Los Angeles. Streaming services have been fueling the boom in television production — last year, more than 450 scripted shows were produced, a phenomenon that some in the industry call “peak TV.”
Last week, Disney unveiled its plans for a streaming service called Disney+ and said it would spend more than $1 billion in fiscal 2020 to create original programming for the platform. Warner Bros.’ parent company, WarnerMedia, plans its own streaming service to showcase HBO and Warner Bros. television shows and movies.
The Warner Bros. acquisition is part of a pattern of rapid expansion among creators of entertainment content in Los Angeles County that has led to more than 3 million square feet of leases for new space in the last nine months, said real estate broker Carl Muhlstein of JLL, who advised Burbank Studios in the transaction.
The growth surge will continue as companies such as Disney, Google, Apple, Amazon and Netflix stake out campus-like properties — in Culver City and elsewhere in the region — with the expectation of future growth, Muhlstein said. “We are going to see a lot more preemptive leases or purchases by old media, new media and tech,” he said.
Warner Bros. is calling the design and construction phases of its new endeavor the Second Century Project, to observe its upcoming centennial.
The Gehry towers would transform the skyline of Burbank, which has long been the creative hub of Hollywood and also is home to Disney, the industry’s largest studio. The office buildings will be energy-efficient.
“We are thrilled that Warner Bros.’ long-term plan includes an exciting new vision for their campus in Burbank,” Mayor Emily Gabel-Luddy said in a statement. “This commitment further reinforces our city’s standing as the Media Capital of the World.”
Warner Bros.’ Williams added: “This is an investment in our employees, our creative and business partners, and the Burbank community that will continue to be our home for decades to come.”