Online Exclusive: Economy Slows New Development at Studios

The weak economy may have caused the price of construction to fall but don? look for a lot of new building to take place at the film and television studios. Projects already in the planning stage before the economy tanked are still moving forward but new projects are not even making it to the drawing board. For one, the media companies that own the studios are being more careful with how they spend their money. ?ur development pipeline is predicated on capital and where the economy is going,?said Neil Jurgens, vice president of corporate real estate for The Walt Disney Co., at a panel discussion May 12 sponsored by the Southern California Development Forum. Disney recently completed a new fitness center in Burbank and has plans for a new child care center in Glendale. Glendale also is home for the campus of DreamWorks Animation SKG Inc. that did its own $85 million expansion and modernization project last year that added 100,000 square feet to a building identified as the production hub for the studio. The most ambitious studio-related projects, however, are those in Universal City where NBC Universal has a 25-year plan to improve its 391-acre site by adding production and post-production facilities, new office and residential space and making changes to the theme park,. Outside the studio gates, Thomas Properties Group has proposed the Metro Studio @ Lankershim mixed-use project of which NBC would be an anchor tenant in a studio facility. Being in the planning stages for its project is a good place to be during the recession, Tom Smith, senior vice president of West Coast real estate for NBC Universal, said during the discussion. With construction costs down, it is a more favorable climate to approach the project in a more pragmatic way, Smith said. While economics influence future development plans the studios are less reactive in their real estate plans when it comes to productions leaving California for the cost-saving tax incentives offered in other states. Even with film and television work leaving the state, Los Angeles still remains the center of the entertainment industry. A full-service studio operation such as NBC offers cannot be replicated overnight in another state. ?hat you would run away from the talent wouldn? be smart,?said Darren Osti, head of real estate and facility operations for DreamWorks Animation. Working on a studio backlot still carries with it a certain cache. Additionally, the backlots offer amenities and a creative companionship that creates a community among the workers there while making room for wise real estate decisions. At Warner Bros. in Burbank, for instance stage homes in one part of the backlot also double as production offices, said Rasa Bauza, director of design and construction, corporate real estate for Warner Bros. Entertainment. When it comes to new soundstages, Warner Bros. has also found that bigger is the better way to go. When planning a new soundstage there was much discussion over going big versus small, Bauza said, with the final decision to build at 21,600 square feet. The advantage is that if needed the larger space gives flexibility by building smaller spaces inside, Bauza said. At NBC, four studios of nearly 8,000 square feet each were combined into two larger stages. ?here is still demand for the big boxes because of the flexibility,?Smith said.