New York | Empty offices become film sets

(New York) After two years of exaggerated return-to-work predictions, many offices are still vacant. But on some empty floors of midtown Manhattan office buildings, unused space has recently taken on a new role: that of a film set.

Turning a real office into a facsimile on the small screen is part of the business strategy of Backlot, a localization service for film and television productions in New York City, which offers owners a way to earn revenue from their lifeless cubicles.

The boom in content production and the demand for authentic locations has helped the business grow, says Darren Goldberg, managing partner and head of acquisitions at Backlot. “When you shoot scenes for shows like trillion Where Succession, it’s not just one piece, he said. It’s really about the authenticity of the environment. »

The glut of office space left by the pandemic-induced transition to remote work is expected to remain a stubborn problem in major US cities. The service offered by Backlot is just one of many new solutions offered to owners of empty offices. Some are converting office buildings into apartments and life science labs as a long-term solution, but others are looking for shorter-term, less expensive and more manageable options, such as renovating the space for accommodate storage, gymnasiums and even schools.

The task is complicated by the rising cost of any type of renovation and the lack of foot traffic in many city centers and office districts, says Brian Strawberry, chief economist at consultancy firm FMI.

Backlot offers film and television productions easy access to 22 million square feet of office, restaurant and retail space in New York City. By scouting and prepping locations, taking care of paperwork and negotiations ahead of time, the company turns empty spaces into filming locations to fuel voracious demand for content.

For example, when the revival of the cult comedy party down needed to shoot a quick scene in New York this year, Backlot did it. Other Backlot properties have been used in TV shows like Harlem, The Watcher and Law & Order: Special Victims Unit.

Well chosen moment

Backlot’s clients include hospitality and real estate companies such as Hines, RXR and Union Square Hospitality. “Office buildings don’t like to get in the way of their tenants who make a lot of money, and they don’t want to be bothered by 150 people coming in to shoot a movie or a TV show,” says Goldberg.

A deal to place real estate investor SL Green’s entire portfolio on Backlot generated “millions of dollars for [l’entreprise] in incremental revenue over the past few years,” said Steven M. Durels, senior vice president of the company, which bills itself as New York’s largest commercial landlord.

Now is a good time for companies like Backlot, which are coming up with new uses for commercial real estate. Office rents have recovered from the depths of the recession, but are still down 6.2% on average nationally since 2019, with declining renewal rates, according to a report by JLL, a real estate services company. A record number of leases are expiring in 2023, forcing landlords to rethink how they fill their office towers and derive revenue from them.

The office space surplus is 20 to 40 percent, depending on the city, says Tracy Hadden Loh, a fellow at the Brookings Institution who focuses on real estate. “The problem is that no one has figured out how to reuse these massive, million-square-foot office buildings from the 1980s,” she points out.

The most common strategy is to convert office towers into apartments or condos. These conversions saw a record 43% increase nationwide in 2021, creating 11,090 new apartments, according to research by RentCafe, a division of real estate software company Yardi Systems.

But residential conversions represent only a small fraction of vacant office space. Office renovations are often prohibitively expensive and come up against Building Code requirements and the difficulty of fitting out bedrooms in large areas.

That hasn’t stopped some start-ups from trying to find new business models for vacant space. In Seattle and elsewhere, business leaders are experimenting with retail to attract new tenants to downtown areas. Cities are studying plans to facilitate residential conversions.

Silofit, a Canadian company that transforms former office spaces into private gyms for personal trainers and their clients, recently expanded its concept to Miami. And a handful of education start-ups and charter schools, like Acton Academy, have experimented with renovated commercial spaces.

Downtown office space is also of great value to the logistics industry. For example, Neighbor, a self-storage concept that helps building owners make profitable use of unused space, has experienced significant growth.

Record year

The platform’s popularity exploded in the past year, said Joseph Woodbury, CEO and co-founder of Neighbor. Compared to last year, the site now has four times as many commercial spaces actively used for storage.

As landlords look to rent out their unoccupied floors and parking lots, more and more want to list on Neighbor because they’ve stopped believing they’ll attract enough tenants, prolonging the rate cut of occupancy.

Another solution is to change the way offices are furnished and rented, moving away from the traditional model of large spaces with a 10-year lease, which has fallen into disuse. Many landlords have turned to preparing spaces for rental so that potential tenants have the opportunity to move in quickly and stay for shorter periods.

Codi, a San Francisco startup, offers what’s akin to timeshare for office tenants by pairing small businesses with hybrid schedules to use the same space every other day in a typical week . The company, which operates about 50 locations in the San Francisco Bay Area and New York, has grown 40% in the past six months.

Codi has also just launched a service to rent unused commercial space for offsite meetings for companies that have embraced remote working.

“The workplace is changing and businesses value ease, speed and flexibility more than ever,” said Christelle Rohaut, CEO of Codi. “The traditional desktop experience doesn’t offer that. »