Despite nearly $ 5 billion in production having fled California last year alone and showbiz agonizing over dwindling profits, the six major studios are spending more than $ 1 billion on the biggest Hollywood construction boom since the advent of sound.
But studio toppers are strangely silent about their plans, which will transform their lots from crumbling art deco landmarks into high-tech production palaces for the next century.
One reason Hollywood isn’t crowing about construction is that studios are sensitive to local building codes and other community constraints.
Another is that moguls want to avoid charges of profligacy during a recession; along with the new digital-friendly soundstages are plans for some of the most opulent executive suites since Hollywood’s golden age, as well as lavish party pavilions and screening rooms.
Some in Hollywood say the real estate game has become as sexy as movie production itself, creating a new breed of power players, hidden agendas and political landmines that experts say will transform the way Hollywood looks at the bottom line.
Meanwhile, the boom couldn’t come at a better time for the local economy, which still lags behind most of the country.
“What is driving this (expansion) is obviously not the domestic box office,” says Jack Kyser, chief economist for the Economic Development Corp. of L.A. County. “It’s the international box office and the new, emerging cable technologies.”
While each blueprint is different, the overall strategy is the same: The studios are attempting to integrate their creative and technical resources before a product boom pushes their facilities to the limit.
o Rupert Murdoch’s Fox Inc. just got approval from the Los Angeles City Council on a $ 200 million plan to add 771,000 square feet of office and studio space to its 1.124 million-square-foot lot on Pico Boulevard.
o Walt Disney Co. got the go-ahead from the Burbank City Council for a $ 600 million, 25-year build-out. The million-square-foot blueprint calls for six new and crucial soundstages.
o Warner Bros., which just unveiled its ivy-covered Steven J. Ross Plaza, has pushed through a design that includes two new office buildings, a 500-seat theater and parking for 1,500 cars. The overall tab is $ 200 million.
o Paramount Pictures, the only Hollywood studio still in Hollywood, says it has approval from the City of Los Angeles that wouldallow it to build one or two new office buildings. It is expected to announce its plans in the next 12 months. The estimated cost is somewhere in the area of $ 30 million for each structure.
o Sony Pictures is skedded to go before the Culver City Council in the next two weeks to seek final approval of a sweeping second-phase, 20- to 25-year expansion of its lot. The proposal includes twin, 200,000-square-foot Thalberg Towers office buildings, a string of office buildings on the south end of the lot and a high-tech barracks for a battalion of special effects wizards. SPE declined to peg a dollar value on the expansion but has already spent roughly $ 100 million on the first phase.
o Universal Pictures, situated on 420 acres in Universal City, recently added the cash-generating CityWalk project to the time-tested Universal Studios Hollywood. Next on the agenda is a 4,000-space parking lot on Lankershim Boulevard — right across from one of L.A.’s new MetroRail stations. And U is the envy of other studios for its 100 undeveloped acres.
“What some people call expansion is really the first big consolidation of assets since the studios grew from Hollywood to Studio City and Burbank in the mid- to late 1920s,” said Marc Wanamaker, who runs the Beverly Hills-based information service Bison Archives.
“And with rapidly growing entities like merchandising, legal, production, publicity and other areas, office space is the most important aspect,” Wanamaker continues. “Though they’re all spending a lot now, this inevitable consolidation will save them money in the end.”
The real estate playing field is anything but level — and rapidly shifting. MCA-U and WB benefited from early strategic thinking and superior geography.
And other developers have managed to beat the big boys to the punch. There’s a technical boomtown sprouting in West Los Angeles — built on Hollywood’s growing reliance on computer-generated images for such blockbusters as “Terminator 2: Judgment Day,””Total Recall” and “The Abyss.”
The hub is Alex Winitsky and Arlene Sellers’ Lantana Center, a service facility in West Los Angeles.
The main building has 110,000 square feet of long-term leasing space, all of which is operating at close to 100% capacity. Top tenants include George Lucas’ Skywalker Sound, Digital Magic and Entertaiment Digital Network.
Another 75,000 square feet is production space, where films “Cliffhanger, “”Born Yesterday,””Universal Soldier” and “Scent of a Woman” have rented.
Lantana, which offers door-to-door pre-and post-production service, plans to expand with another 150,000 square feet of offices and 60,000 square feet of soundstages.
Of the major studios, WB is furthest along in bringing it all under one roof. On the Burbank lot, recent and future improvements promise to make everything from fresh turkey sandwiches to Steadicam rigs available without ever having to leave the adobe-style offices.
Some new construction on the Warner lot was designed to protect old assets high-tech storage vaults for original film negatives that one exec calls “our crown jewels.”
Few renovation plans have drawn more attention than Sony Pictures Entertainment’s — partly because of its ambition, partly because it indicates the massive investment Sony Corp. has undertaken since buying Columbia Pictures Entertainment in 1989.
With a first-phase price tag of $ 100 million, the studio is attempting to transform what was a decrepit 44-acre facility into a cultural hub.
SPE says when it took over the lot from Lorimar, the company inherited a facility defined by rusting metal fences, ancient electrical wiring and termite-infested screening rooms.
Senior VP of corporate operations Kenneth Williams said Paramount, Warner Bros. and Disney claimed superior facilities, putting Sony at a competitive disadvantage.
Sony has since poured money into its screening rooms, 24 soundstages and 14 others at nearby Culver Studios.