As a New York based postproduction supervisor I spend a lot of time looking at budgets, quotes, and invoices. So recently I started to wonder how the cost of real estate in Manhattan compares to Los Angeles. And longterm, does the rising cost of real estate, combined with the inflexible space requirements of postproduction, threaten the traditional Manhattan post house? For background research I spoke with a commercial real estate agent, and then I visited a few post houses.
My first real estate lesson was that New York City and Los Angeles are divided in submarkets, or neighborhoods. The variation between submarkets can be large, especially in certain industries such as entertainment which clusters together in areas like Hudson Square or Burbank. I’ve chosen the Midtown South and West LA submarkets for my calculations because they are the most representative submarkets in both cities.1
- As of July 2012 the average asking rent in Midtown South is $51.73 per square foot per year.
- As of May 2012 the average asking rent in West LA is $39.96 per square foot per year.
- The $11.77 difference between Manhattan and Los Angeles is misleading because Manhattan’s vacancy rate is 4.8% and dropping (less availability, rents likely to increase), while LA’s vacancy rate is 15.6% and rising (more availability, rents likely to decrease).
- It’s 29.45% more expensive to lease in Manhattan as opposed to Los Angeles. I wonder if New York’s recently 30% Postproduction Tax Credit is related to real estate expenses.
The Average Edit Suite
With these numbers in mind I set out to find the real estate cost of the average edit suite. But after visiting a few post houses it quickly became clear that there is no such thing as the average edit suite. The variations are endless.
After some consideration I realized that many suites had common aspects that struck at the essence of my questions. For example; I don’t want to consider an editor working on a laptop in a cubicle because this setup would hinder proper monitoring. This setup would also hinder producer screenings because the noise of the producer/editor collaboration would interrupt coworkers in adjacent cubicles. Therefore I will define the average edit suite using the following criteria:
- The edit suite must be completely enclosed.
- The edit suite must have room for a separate preview monitor and speakers.
- The edit suite must have room for a producer to comfortably screen, but not necessarily work in for extended periods of time.
Based on these criteria I saw a lot of similarities. At each post house the small suites usually stayed within nine to thirteen feet in length and width. 10’ x 11’ and 9’ x 13’ were common dimensions. Therefore, I feel comfortable saying that the average edit suite is 10’ x 12’. But we need to consider the loss factor.
Agents talk a lot about “the loss factor” when negotiating a lease. The loss factor is the amount of space you’re paying for versus the amount of space that you can actually use. For example; that two by two concrete support pillar is four square feet of space that you’re renting but can’t use. The same is true of walls between offices.
To account for loss factor I’ve increased the dimensions of the average edit suite to 11’ x 13’ or 143 square feet. Based on these dimensions:
- The Manhattan edit suite will cost: $7,397.39 per year.
- The Los Angeles edit suite will cost: $5,714.28 per year.
- The $1,683.11 difference is only $32.37 per week.
As a proud Brooklyn resident I feel the need to bring up the fact that the average asking rent in downtown Brooklyn is around $29 per square foot per year. However, I am aware of the fact that Brooklyn poses some geographic challenges. A New Jersey-to-Brooklyn or Upstate New York-to-Brooklyn commute is a schlep for many employees. The cost benefits of relocating to Brooklyn (or New Jersey) need to be weighed against the potential loss of talent.
The cost difference between Manhattan and Los Angeles surprised me because it was smaller than I expected. In fact, by comparing different submarkets it is possible to reduce the difference even further; the Financial District to Burbank for example.
That said, my research is far from comprehensive. Post houses need a lot of space for the business of post but unusable for the actual work, like a nice lobby and administrative offices. Considering the total space requirements would change my results.
Another important factor that I haven’t considered: labor! The cost of labor is the number one expense for any business in entertainment. Comparing New York and Los Angeles editor rates would probably be a more effective way of comparing the cost of doing business.
Finally, I don’t know what type of margins post houses operate within. But as the cost of real estate rises and the rate of postproduction services declines, it’s hard to imagine that Manhattan will remain a viable option in longterm. Thoughts?
The “average asking rent” and “vacancy rate” of Midtown South and West LA are representative of their respective cities. A more comprehensive comparison is beyond the scope of this entry. ↩