Los Angeles' struggling soundstage sector is slated to make a comeback in mid-2025 thanks in part to tax sweeteners offered by the state of California, according to one of the industry’s most plugged-in players in the entertainment capital of the world.
Victor Coleman, the chairman and chief executive of Los Angeles-based entertainment real estate landlord Hudson Pacific Properties, said the recent proposal to more than double funds in California’s Film & Television Tax Credit Program is already translating to renewed optimism for the sector that's still in recovery mode from the COVID-19 pandemic and last year's Hollywood writers and actors strikes.
"While Los Angeles show counts have yet to normalize post-strike, we presently have contracts for or interest in nearly 80% of our film and television stages," Coleman said during an earnings call. That renewed demand is "coalescing around 2025 production starts, and recently bolstered by the governor's proposal to increase California's film and television tax credit program" from $350 million to $750 million annually.
That increase will have a "massive impact" on revenues for landlords such as Hudson Pacific, the firm's president, Mark Lammas, said during the third quarter conference call.
"We’re confident that production is going to be enhanced by the impetus of what [Gov.] Gavin Newsom and Mayor Karen Bass have put in place," Lammas said. "I think all of that is going to put California back to where it was. "
Growing confidence
Hudson Pacific owns 2.1 million square feet of soundstage space in Los Angeles and another 300,000 square feet in New Orleans and New York City.
Hudson Pacific registered a “notable increase” in holds, or expressions of interest, for its local stages for 2025 production dates. In other bright shoots, stage tours among potential lessees have increased in recent weeks along with the company's transportation and location services, an indicator of future media projects prepping for production, Lammas said.
Still, industry output and employment continue to fall short of the pandemic-induced boom, when streaming platforms and their need for studio space surged exponentially.
Overall production in Greater Los Angeles declined by 5% in the third quarter from the year prior to 5,048 shoot days, according to industry researcher FilmLA, representing the slowest quarter of the year.
The initiative shown by government officials is giving more productions the confidence to move forward, Coleman said. The law is slated to go into effect in mid-2025 at a key point when many companies, including Netflix, envision production to return to normal levels, he said.
“The industry is confident this legislation will pass. It doesn't mean they're going to wait until everything is in place,” Coleman said, predicting increased Hollywood production activity in the first quarter of 2025.
The city of Los Angeles is also considering a range of tax incentives to help cut the red tape for new productions, and has already launched programs to help the city's existing studio development pipeline that totals 8.1 million square feet.
One of Hudson Pacific's more notable soundstage projects is occurring outside of LA; the firm is developing the six-soundstage Sunset Pier 94 in Manhattan for a late 2025 opening.
Clients such as Amazon, MGM Studios and Target lease Hudson Pacific's stages to produce commercials, shows and films. The company also provides production supplies, stage ancillaries, location services and transportation services for those productions.