As film-and-TV production slows and tax incentives lose some of their edge, studio real estate owners are beginning to pull back in secondary markets such as Atlanta, New Mexico and the San Fernando Valley.
Hudson Pacific Properties said its Quixote studio-and-equipment rental subsidiary will begin a phased wind-down of leased soundstage facilities and Atlanta-area operations. The move, including redeploying some trailers, trucks, lighting and sound equipment to Los Angeles and New York, is part of a broader effort to save up to $27 million annually across the Quixote platform.
"Quixote is taking steps to move away from leased sound stages and markets characterized by structural cost or demand disadvantages, which will allow Hudson Pacific to focus financial and operational resources on our office portfolio and higher performing segments of our studio business” said Mark Lammas, president of Hudson Pacific, in a statement from the company.
The Los Angeles-based real estate investment trust has been refocusing on its core office portfolio as its media-focused soundstage business has struggled. The move shows how the studio business is shifting after years when tax credits helped Atlanta, New Mexico and Louisiana pull productions away from Hollywood, New York and other regions to raise incentives as tenants retreat toward deeper crew bases and established entertainment ecosystems.
Over the past year, California has tried to woo production back by more than doubling its Film & Television Tax Credit Program to $750 million annually and expanding eligibility and refundability, while New York has kept pressure on by maintaining a roughly $700 million incentive pool with credits of up to 30% or more, setting up a renewed bidding war between the country’s two core production hubs.
Hudson Pacific once pushed aggressively into studios, buying Quixote in 2022 for $360 million and building out its Sunset Studios platform as production demand surged. That expansion included the fully leased Sunset Pier 94 Studios in Manhattan, flagship Hollywood stages, and a Quixote-driven push into secondary markets like Atlanta through leased production facilities.
Now it is cutting costs at Quixote while saying its flagship Hollywood stages are 96% leased and its newly completed Manhattan stages are 100% leased.
Atlanta is not disappearing as a production hub, but it is no longer riding the same boom: Georgia film and TV spending fell from $4.4 billion in fiscal 2022 to $2.3 billion last year, while the number of productions dropped from 412 to 245.
The pullback is bigger than one company or one city. Studio owners are still dealing with the aftershocks of the 2023 strikes, reduced streaming budgets, overseas cost competition, artificial intelligence uncertainty and lower soundstage occupancy in markets that expanded the fastest during boom times.
Atlanta studio reset
Atlanta spent more than a decade building its reputation as the “Hollywood of the South,” powered by a transferable Georgia tax credit worth up to 30% of qualified production spending.
That incentive helped turn the region into a home for Marvel productions, Tyler Perry Studios, Trilith Studios and a deep network of vendors, crew members and converted industrial buildings.
But the market has cooled sharply as Marvel shifted work to the United Kingdom, streamers pulled back on volume and rival states improved their own incentive packages.
The change is visible in real estate: Tyler Perry has proposed a 1.3 million-square-foot mixed-use entertainment district next to his Atlanta studio campus after previously shelving a plan to add 12 soundstages.
Locally based Raulet Property Partners has also seen former Atlanta-area studio buildings return to industrial uses, including a 92,000-square-foot building leased to Sto Corp. and a 121,000-square-foot facility under contract to a cabinetmaker.
Hudson Pacific’s exit adds another data point to Atlanta's reset, vacating a roughly 40,000-square-foot site leased to Quixote in suburban McDonough, Georgia.
Meanwhile, in Los Angeles, Hudson is getting rid of warehouse and soundstage properties totaling some 170,000 square feet in suburban areas, including the Chandler Valley Studios in the San Fernando Valley, where "The Office" was filmed.
Quixote strategy shifts
Hudson Pacific bought Quixote to move beyond owning studio real estate and capture more of the spending around production, including trucks, lighting, trailers, supplies and communications equipment.
That strategy made sense when streamers were racing to make more shows and producers needed space, equipment and logistics across North America, Joe Dickstein, a Jefferies analyst who covers Hudson Pacific, told CoStar News.
It looks different in a slower market because Quixote’s revenue depends more directly on day-to-day filming activity than long-term leases at Hudson Pacific’s Sunset Studios properties.
Over the past year, Quixote stages operated at 53.3% occupancy, far below the utilization rate of Hudson Pacific’s Hollywood studio properties, according to the company.
Hudson Pacific CEO Victor Coleman previously described 2026 as a “reset year” for production and said the company had already made expense cuts at Quixote with “more to come.”
“The two barbells of the country, Los Angeles and New York, are really doing much better than anywhere else when it comes to production,” Coleman said at an investor conference in March.
Quixote remains a drag on the company, drawing little to no value from investors until it can prove it has stabilized, Dickstein said.
The Atlanta wind-down is the next step in that effort, moving Quixote away from leased stage exposure while keeping rental services alive in Hollywood and New York, where Hudson Pacific says demand for its best studio assets are strong.
There's no guarantee the moves will provide a fix. Hudson Pacific faces competition that ranges from studio operators such as Hackman Capital Partners, Cinespace and East End Studios to media giants including Disney, Warner Bros. Discovery, Fox Studios and Paramount Skydance.
This story was updated April 29 to further specify Quixote's real estate holdings in Los Angeles and Atlanta.