Small Biz

smallbiz/dobb/mike1st/jc2nd BRUCE DOBB When Redken Hair Products abandoned its Canoga Park production facility in l995, it took 360 jobs with it and left behind a 189,000-square-foot industrial property that had been badly damaged by the Northridge quake. Two years later, a state-of-the-art film production facility is emerging on the site with a major studio anchor and a cluster of industry-related small companies that will ultimately add 1,000 new jobs to the local economy. Variel Studios, as the site is now called, is the nucleus of a media cluster in the West San Fernando Valley that may one day rival the one in Burbank. The seed for this blossoming entertainment hub of small businesses started when developer Robert E. Selan and his partners took a big risk by purchasing the 11.3-acre Redken site at 6625 Variel Ave. last year. That risk paid off when New Line Cinema leased 125,000 square feet of the building for two years at a monthly cost of 89 cents per square foot. (Comparable buildings in the area go for 55 cents a foot.) And that company installed millions of dollars in improvements before its lease expired. Today, about the same amount of space in the building is being leased by Fox Television, which is paying 92 cents a foot. The Canoga Park property is uniquely suited for filming. It offers parking for 812 cars, plenty of adjacent surface parking for trailers and vans and a floor plan and structure ideal for film shooting. Warner Bros. and Ivan Reitman Productions both wanted to lease the site, but Fox won out. So what does all this have to do with small business? Well, that studio-based anchor can go a long way toward attracting small, support-oriented companies to the area, which is exactly how Burbank’s Media District became so successful. The Variel Studios site where Fox Television is now housed has up to 30,000 square feet of office and non-production space that will be used to provide a home to some 20 small companies. The Valley Economic Development Center, an independent non-profit Chamber of Commerce spin-off that has worked with more than 7,000 small and mid-sized companies following the Northridge quake, is playing a major role in bringing those small companies to Variel Studios. The VEDC is working with property owner Selan and his partners to offer small, high-potential companies “affordable” rents, tailored to the particular company’s ability to pay, and other amenities, such as conference rooms, secretarial services, business consulting services and computer hardware that smaller and start-up companies may not be able to afford. VEDC is just now beginning its search for the right tenants for this facility. They must be companies with high potential for creating new jobs and for expanding. They need to be operated by success-oriented individuals who understand that risk and reward are related if you believe in your product or service and are willing to work night and day. Jim Jacobs, senior consultant at VEDC, is heading up this effort, and can be reached at (818) 907-9977. He currently runs the West Valley Business Assistance Center and has been assisting small companies with recovery efforts since l994. Los Angeles City Councilwoman Laura Chick understands the importance this project for the future of her district and has helped obtain the Quake Recovery Repair Loan that will make this vision a reality. “What started out as a loss of jobs (Redken leaving) has been rapidly turned into a job bonanza for the local economy,” said Chick. “This is what economic recovery is all about, and my office is working to be sure it happens throughout the Valley.” VEDC provides financing, business counseling, and assistance with marketing, accounting, sales and other aspects of business operations. Many smaller firms in the entertainment industry received quake-recovery relief with VEDC’s assistance. These companies edit films, provide lighting or sound equipment, design special effects, develop software products or provide other vital services needed by the industry. One VEDC client, Orbit Entertainment Group, produces television commercials. This company began by operating out of a single-family house with three employees and within two years has grown to nine full-time workers housed in 3,500 square feet of office space in Hollywood. When in production, it employs dozens of editors, writers and camera crews. Orbit’s sales have grown five-fold over this two-year period. This kind of growth is only possible with the right nurturing and management consulting. VEDC has effectively created an “incubator without walls” that helps Orbit and other companies flourish. The goals of an incubator are: diversification of the local economy, expansion of the small business sector, increased employment and income in a designated community, recycling of existing vacant properties, business retention, technology transfer or development of a targeted technology. As of l997, there were 44 California incubators with more than 500 businesses in them. These incubators are often organized around industry clusters, such as computer software designers, environmentally beneficial products, light manufacturing, transportation, communications, etc. The incubators themselves are subsidized by a wide range of entities: the federal Economic Development Authority, Department of Housing and Urban Development, California State Department of Trade and Commerce, phone companies, utility companies and publicly spirited sources of private capital. If things go as planned, the incubator at Variel Studios will spawn a thriving community of small companies serving the entertainment industry in Canoga Park. Bruce Dobb is the chief credit officer for the Valley Economic Development Center’s revolving loan fund and a regular contributor to the San Fernando Valley Business Journal.