(Bloomberg) -- Blackstone Group Inc. and Hudson Pacific Properties will spend more than 700 million pounds ($974 million) to build a film studio north of London, taking advantage of a shortage in production capacity after streaming services ramped up demand for original content.
Blackstone and Los Angeles-based studio operator Hudson Pacific bought the 91-acre (368,260 square-meter) site in Hertfordshire for 120 million pounds, the companies said in a statement on Sunday. Blackstone plans to make it an expansion of the partners' Sunset Studios business.
The companies plan to lease the studio to production companies working with streaming businesses and broadcasters. The firms are capitalizing on a shortage of production capacity in the industry, as businesses work to develop more original content to attract and maintain subscribers. Sunset Studios's production lots in Hollywood have been host to films and television shows including “La La Land,” “X-Men,” “Hannah Montana” and “Karate Kid.”
Read More: British Broadcasters Are Trying to Take on Netflix. Again
There's a “real imbalance between the demand for these studios and the existing stock,” said James Seppala, head of European real estate at Blackstone, in an interview. Hertfordshire was a “natural first destination” given the region's film and media history and proximity to London, he said.
Sky, Europe's biggest pay-TV company, is constructing Elstree studios in Hertfordshire, part of a project to help it keep up with rival Netflix Inc.'s growing catalog of original shows and movies. Netflix, threatened by streaming expansion from content suppliers such as Walt Disney Co., has set up a production hub at the U.K.'s Pinewood-owned Shepperton Studios, adding further pressure to an already competitive market.
Read More: Broadcaster Sky Turns to Original Shows to Fight Netflix, Amazon
If granted planning permission, the Blackstone project is expected to create 4,500 permanent jobs and contribute 300 million pounds annually to the surrounding area, according to Blackstone. In a statement, U.K. Prime Minister Boris Johnson said the proposition is “excellent news” given that “creative industries are at the heart of our plans to build back better.”
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