The boom in US studio facilities

Last year saw the opening of new studios in four US states whose generous tax incentives have created thriving local production industries.

In the Louisiana shooting hub of Shreveport, Los Angeles-based production and sales company Nu Image opened its $10m-plus Millennium Studios with two sound stages and post-production and visual effects facilities.

In New Mexico, the $30m Sante Fe Studios [pictured], with an initial two sound stages and plans approved for seven more, became the busy state’s second-largest facility, hosting TV pilot Vegas as its first project.

Outside Philadelphia in Pennsylvania, studio development and management company Pacifica Ventures opened Sun Center Studios, a facility with two purpose built sound stages and two converted stages that recently had Sony feature After Earth shooting.

And near Detroit, Michigan, Raleigh Studios, the biggest independent studio operator in the US, cut the ribbon on a new $80m facility with seven sound stages that has played host to Disney’s Oz: The Great and Powerful.

This year should see at least four more North American facilities open or start construction.

This September in the Dominican Republic, the Caribbean nation pitching for production business with the help of a new tax incentive, Pinewood Indomina Studios, operated by the UK’s Pinewood Group, is set to open a water tank facility with plans to add four sound stages at a later date.

A new offshoot of Churubusco Studios is reportedly set to break ground by year’s end near the city of Gomez Palacio in the Mexican state of Durango. The facility should benefit from the new Mexican production incentive that has also helped bring US productions back to Baja Studios, the Baja California studio built by Twentieth Century Fox (for the shooting of James Cameron’s Titanic) but acquired five years ago by a group of local investors.

In the east coast US state of Connecticut, Pacifica Ventures is planning to start construction by the autumn on its long planned $40m CT Studios.

And in the western state of Utah, Raleigh Studios is hoping to break ground by the autumn on the first phase of a $100m, three sound stage studio near the Sundance festival site of Park City. Raleigh says that in operating the studio it will work closely with the festival and the Sundance Institute’s year-round initiatives. 

Much of the studio building activity has been spurred by incentives - either the infrastructure incentives offered by some states directly to studio developers or production incentives that attract the projects which in turn give a new studio its customer base.

“Studios are hard to put together properly and they’re a very risky business if the incentives aren’t in place,” says Dana Arnold, CEO of Pacifica Ventures, which also operates New Mexico’s ABQ Studios in Albuquerque.

Incentives have also made local governments more willing to help fund new studios in order to attract the bigger projects that put more money into local economies. “If you have the base of operations - offices and purpose built stages - you attract the bigger productions,” says Arnold.

But following incentives has also led to headaches for some studio operators, as has the difficult economy of the past few years.

Sante Fe Studios, for example, was affected even before it opened for business by a proposal to drastically cut New Mexico’s production incentive. Though the incentive ultimately stayed at 25% - only now with a ‘rolling cap’ of $50m a year - debate about the proposal has caused uncertainty among producers, says Sante Fe Studios president Jason Hool: “The impact is more people being out of date on what the actual law is. Our message has been clear: New Mexico’s open for business.”

And Raleigh Studios Michigan felt the impact when that state’s hugely popular incentive scheme was capped, initially at $25m a year but now with the possibility of an increase to $50m.

The change “definitely has shaken up the momentum that was created earlier on,” says Michael Newport, Raleigh’s VP of marketing and client development.

The drop-off in business caused Raleigh to come up short on a February bondholder payment connected with the studio (the shortfall was covered by a state retirement fund). But the studio, Newport says, is currently hosting its first feature since January - New Line thriller Category Six -  “so there is some activity.”

The upshot of the New Mexico and Michigan situations may be that studio developers will now start to look at more than just local incentives when it comes to selecting new studio sites. Currently, at least a couple of studio plans are being considered for California, which has an incentive but one that’s considered less attractive than those in many other states.

In California, “the tax incentive is helpful but it’s not why the industry moved here,” says Valerie Draeger, president of Triliad Development, which is currently looking for investment partners for a planned $170m facility near Los Angeles.

The real point of building in California, Draeger suggests, would be to give the local industry a facility that’s better suited to the digital age than existing studios built many years ago. “An updated studio that can meet all the technological changes is something that has some value here in California,” she says.