Stage Shortage

On Aug. 1, Hollywood tilted a little more northward with the official opening of Quixote Studios North Valley.  The debut of the $25 million facility with five soundstages and 20,000 square feet of production offices for a 75,000-square-foot total footprint on 10 acres represented a giant leap forward for Pacoima. And the trend to either build or convert buildings to soundstages extends from the Valley north to Santa Clarita and beyond. “We’ve struggled to find locations for filming in the Los Angeles area, so opening stages like this really gives us an opportunity to continue promoting Los Angeles as a destination for film,” FilmLA President Paul Audley, who attended the Quixote opening, said in a statement. “For the Northeast San Fernando Valley, this is huge,” added Los Angeles City Councilwoman Monica Rodriquez, whose district includes the new studio at 10445 Glenoaks Blvd. For Quixote, the opening of the first new class-A soundstages in the North San Fernando Valley in decades comes at a time when content creation has jumped into overdrive by traditional Hollywood studios and new streaming services. According to an upcoming study from FilmLA, soundstage occupancy in L.A. County will exceed 90 percent in 2019.  The company, which already has stages and equipment facilities throughout Los Angeles, New York, New Orleans and Georgia, built the North Valley studios in response to “peak TV” demand. The Sony Picture Television production “Them: Covenant,” a horror anthology series, has already signed on to film two seasons of the Amazon Studios series at Quixote. “We built these stages in Pacoima because it was a perfect combination of land affordability and proximity,” Quixote Studios Chief Executive Mikel Elliott said at the opening ceremony. “We see this section of the Valley as a production hub in the years to come, and there will be hundreds of jobs created right here on these stages.” A primary attribute of the stages is parking for hundreds of trucks and vehicles. “We’ve been looking for a long time. It kind of came together because we had another business in that area so we knew the area,” Elliott told the Business Journal, referring to a film equipment rental firm he owns. When Dallas-based industrial developer Xebec began to work on the property, they decided to customize it to Elliott’s vision. It took two and half years for construction. “We had a second show from Paramount but because we were delayed in construction we had to say goodbye,” Elliott said. The neighborhood of Pacoima proved perfect for filming. “You need big buildings, 40-foot-high ceilings, and you need a ton of parking. Hard to find that unless you intend to purpose-build it,” Elliott explained. Plus, Pacoima has easy proximity to Hollywood with access to the 170 and 5 freeways. Out of the gate, Quixote will keep 300 to 400 people on the payroll. “When we’re done, it could get to 800 to 1,000 employees,” Elliott said. “It’s really going to be a boon to Pacoima.” Content demand What’s driving a demand for soundstages is entertainment content production, boosted in recent years by the emergence of streaming channels. According to a Motion Picture Association of America report released in March, the world’s entertainment market — encompassing both theatrical and home releases — grew to a record in 2018 of $96.8 billion in revenue, 9 percent more than in 2017. A substantial chunk of that can be accounted to the rapid growth of streaming video, which blew up to 613 million subscriptions worldwide. With this year-over-year increase of 27 percent, streaming video surpassed cable subscriptions last year for the first time as more content is being created than ever before, largely to support the appetite of streaming giants such as Netflix, Inc., Amazon.com Inc., Viacom-owned CBS and Walt Disney Co.-dominated Hulu. On the near horizon, Burbank-based Disney and WarnerMedia are jumping into the marketplace. Warner Bros. already has a DC Universe channel up and running, and Disney plans to launch its Disney+ service later this year. Quixote isn’t the only player catering to the streaming and filming market. In the Santa Clarita Valley, L.A. North Studios, formerly known as Triscenic Production Services, began operation at the start of January to offer space for film production, soundstages and production offices at 27615 Avenue Hopkins. Of the total 143,000 available square feet, 14,000 of it is offices and the remaining 130,000 square feet is devoted to warehouse space. “We took the building with the intention of converting the warehouse portion into production for the entertainment industry,” said L.A. North Studios partner John Prabhu. Prabhu praised the city of Santa Clarita as an industry savvy, business friendly community. “They’re very pro-film,” he said. “They give you the road map. They’ve been very helpful. It’s not an easy thing to achieve (when converting a warehouse facility into entertainment production space). In order to get everything approved by planning, we did it in what people would consider record time.” L.A. North has rented out its three soundstages to a Showtime series, a feature film and a short-term reality show. In a few months, the company plans to opens stage 4 with 36,000 square feet and stage 5 with 16,000 square feet. Another Santa Clarita player is Nick Mairose, chief executive of post-production house Elite Media Technologies. In December, Elite Media bolted from Burbank to 26320 Diamond Place. Mairose said he has been in the digital streaming and platform space for at least 12 years, preceding founding his company. However, “in the last five years, it’s really ramped up with Netflix, Amazon, Apple,” he said. After eight years in Burbank, Mairose said the move to Santa Clarita Valley has been good for business. “In Burbank, there’s not much new construction and places to grow so I wanted to look outside of there,” he said. “More and more production is happening out this way. The goal to get in with production on the front end. … The majority that has happened on production they are still having to haul all of their data to Hollywood or the Westside, I’m hoping to offer them something local.” Geographically, Prabhu agreed that Santa Clarita is an ideal spot for a filming facility. “We’re still within the 30 mile zone,” he said. “The film industry is still able to get there. There’s a lot of housing for the entertainment industry and amenities, restaurants.” Hedging bets The entertainment industry – like the real estate sector – is cyclical. That’s why Xebec, the company that built and owns the Pacoima property rented by Quixote, has alternate uses in mind. “The building is designed so that if Quixote closes, it could become an industrial space,” said Gretchen Kendrick, chief operating officer at Xebec. “However, Quixote has signed a 10-year lease with options.” Xebec originally intended to build this facility for its bread-and-butter client type as e-commerce last mile construction. “We’re still part owner of (Sun Valley Business Center), Kendrick said, referring to the 255,528-square-foot warehouse at 11063 Pendleton St. in Sun Valley where tenant OnTrac, a logistics company for Amazon, signed a 10-year lease. In Chatsworth, Xebec is currently developing several buildings that will house an e-commerce company and two hair care and cosmetics tenants. However, Kendrick recalled, “One of the things we’ve noticed in this area is streaming media is desperately looking for space. We were just pouring the slab when Quixote entered the picture.” The change in usage required some changes, as Quixote wanted the building with no interior columns. Quixote, Xebec’s first such studio facility, has inspired the company to look into more such projects in North L.A. “We may be building another one,” Kendrick said.