Level Up: eSports Expands Its Footprint in LA’s CRE Market
Since Pong first debuted on Atari in 1972, video games have grown from an adolescent pastime to a global business and a burgeoning world of competition, becoming more popular than baseball, basketball, and hockey among men age 18 to 25.
eSports, short for electronic sports, is the professional competition between individual players and teams across multiple video game titles. These competitions have begun to fill arenas and draw tens of thousands of viewers who use streaming services like Twitch and YouTube. According to the NewZoo 2018 Global eSports Market Report, there are currently over 380 million eSports enthusiasts around the globe who watch popular games including Fortnite, League of Legends, Dota 2, and Overwatch.
eSports players and teams cultivate audiences through streaming platforms and social media, building their influence among young, enthusiastic fans made up of mostly millennials. By 2020, eSports revenues will exceed $1.6 billion from media rights, merchandise, advertising, sponsorships, and game publisher fees.
The eSports phenomenon expands its reach
No longer a niche hobby, eSports has even entered the mainstream at U.S. collegiate and professional sports levels. UC Irvine was the first public university to debut an eSports arena in the US and it has one of the most innovative eSports programs in the world, including scholarships for its athletes.
Traditional sports owners like Kroenke Sports & Entertainment (holding company of the LA Rams) are also developing their own eSports teams, such as the Los Angeles Gladiators, a league team for the Overwatch game. Video games may even reach the highest level of sports competition: the Olympic Games. eSports is currently under consideration to be included as a demonstration sport for the 2024 Olympic Games in Paris.
As eSports drives demand for bricks and mortar, LA leads with training facilities and battle arenas.
As its popularity soars, eSports is even making an impact in commercial real estate. With the meteoric rise of eSports has come a shift in the way video game organizations are utilizing office space. There are many major eSports organizations based in Los Angeles, including Team Liquid, FaZe Clan, Cloud9, TSM, and 100 Thieves.
Traditionally, eSports organizations operated out of gaming houses where players live and work, with many international players from countries like South Korea where eSports is already a mainstream national pastime.
However, Team Liquid, a leading professional eSports organization whose owners include Michael Jordan and Magic Johnson, partnered with sponsor Alienware (a Dell company) a few years ago to open a 10,000-sf training facility in Santa Monica and revolutionized the operations model. Their facility includes a coffee bar and lounge, 24-hour dining, and plentiful common areas in addition to a main scrim (or practice) room, analyst stations, war rooms, and an in-house production studio with editing bays and an interview room.
Riot Games, developer of League of Legends, also put their footprint in West Los Angeles with their League Championship Series (LCS) Battle Arena. The approximately 76,000-sf arena is located across the street from the company’s headquarters campus and seats up to 400 fans.
Cushman & Wakefield broker mixes ‘gamer’ passion with finding eSports tenants space.
Kyle Robinson, an Associate in Cushman & Wakefield’s West Los Angeles office, specializes in Entertainment and eSports Tenant Advisory and he knows a thing or two about eSports from personal experience.
He says, “I’d call myself a gamer. I played a lot of video games growing up, from MarioKart and Donkey Kong 64 to Call of Duty, NBA2K and now Fortnite. I began to watch some of the top Fortnite players in the world, learning tips and tricks that I could integrate into my own game. This led to me becoming a fan of these players and the organizations they belong to, which then led to me finding out what types of physical facilities they need to run a successful eSports organization.”
Today, with an increasing number of eSports companies seeking out spaces to call their own, new opportunities are emerging for brokers like Kyle and others who can support eSports innovators in addressing their need for space. eSports operators are typically looking in popular submarkets for 10,000 to 50,000 square feet comprising office, gaming, studio, and showroom space with good fiber and internet, and within close proximity to housing and to the airport for international players.
These companies are pop-culture oriented with many design features and amenities geared towards producing a cool and creative multi-purpose space that is beneficial for company culture, such as an in-house dining offering a variety of international foods, yet also functional for their wide range of business needs, such as gaming arenas and in-house studio space for content creation.
Kyle says, “We are seeing a lot of teams heading in this direction. There are several eSports companies currently in the market and a high concentration of eSports organizations already settled on the west side in Playa Vista, Culver City, and Santa Monica.”
LA poised to be a top choice for eSports companies and their CRE needs
According to Cushman & Wakefield Research, leading eSports-related organizations and gaming companies currently occupy more than 1 million square feet of office and specialty space in the Greater Los Angeles market.
“As eSports continues to grow and evolve, Los Angeles will continue to be one of the major players in the industry. It will always be the entertainment capital of the world and a top destination. For players it is vital for their brand to be able to go to popular places and meet and share stories and strategies with their fans,” Kyle says.