CBS Studios is selling for $1.8 billion as demand for show-business real estate grows

by Peter Grant | Update November 16, 2021 08:00 AM EST

Hackman Capital and Square Mile win bid for complex where classic television shows like ‘Seinfeld’ were shot

A venture of two real estate firms has agreed to pay more than $1.8 billion for the historic CBS Studio Center in Los Angeles, people familiar with the matter say, the latest deal in the red-hot studio arena.

These people said Hackman Capital Partners and Square Mile Capital Management LLC had won, outperforming about a dozen or so other parties. According to these people, the price tag was also about $500 million more than what was estimated to have put the studio up for sale three months earlier.

These people said, the two sides are expected to sign a contract soon, and the deal is not final yet.

The higher-than-expected price tag shows how the demand for limited studio space is growing. Classic network-television programs such as “Seinfeld,” “The Mary Tyler Moore Show” and “Gunsmoke” were shot at the CBS complex. But a large amount of new demand is being fueled by companies like Amazon.com Inc., Netflix Inc. , and Apple Inc. Competing to create new streaming content.

Real estate investors are getting in on the action by purchasing sound stages, office space, and other real estate for show business.

“We are seeing the entire sector becoming more institutionalized,” said Stephen Sommer, managing director of Eastdill Secured LLC. “Historically owned by traditional users—Comcast, Disney, Warner-In.”

Private-equity giant TPG’s real-estate business said last week that it was buying CineSpace studios in Chicago and Toronto, which have a total of 56 phases. According to people familiar with the matter, TPG paid $1.1 billion.

Content creation is booming partly due to strong demand for homebound viewers during the pandemic. Several new streaming services have entered the business in recent years, including Disney+, Paramount+ and NBCUniversal’s Peacock.

Meanwhile, some of the largest production companies are selling their studio complexes, realizing that it is more efficient to use the cash for other purposes and lease the space they need. For example, in 2019, CBS Corp. sold its Television City complex in Los Angeles for $750 million, also to Hackman Capital.

CBS merged with Viacom in late 2019, and last summer the merged company put CBS Studio Center up for sale. The complex, which includes 18 sound stages and more than 210,000 square feet of office space, has been home to shows such as “Entertainment Tonight,” “Seal Team,” “Parks and Recreation” and “Big Brother.”

At the time the CBS Studio Center was put up for sale, market participants expected it to go from $1.2 billion to $1.3 billion.

Other large institutions betting big on entertainment real estate include Blackstone Inc., which in 2020 bought a 49% stake in a venture that owns studio lots and office buildings in Hollywood. According to people familiar with the matter, TPG Real Estate has agreed to pay €65 million, equivalent to $74 million, to buy a stake in Studio Babelsberg AG in Germany.

Hackman and the Square Mile venture this year also purchased the Kaufman Astoria studio in New York City and the Sony Pictures Animation campus in Culver City, Calif.