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Developers Build Up Downtown L.A. as a Studio City

COMPANY TOWN

Production: This week, six sound stages open at 5th and Bixel streets, signaling more industry expansion beyond Hollywood.

July 21, 1999|MORRIS NEWMAN | SPECIAL TO THE TIMES

A group of downtown developers is trying to achieve what many real estate professionals consider near impossible: putting downtown on the map of the entertainment industry.

The developers, a group comprising Smith, Hricik and Munselle of Los Angeles, Hollywood Location Co. and Bristol Group Inc. of San Francisco, are opening six new sound stages this week on the campus of the former Unocal headquarters building at 5th and Bixel streets.

Known as Los Angeles Center Studios, the project signals the continued expansion of the entertainment industry beyond its traditional boundaries in Hollywood and Burbank. Hollywood's seemingly insatiable demand for production locales, in fact, has turned sound stages into a new type of speculative real estate.

Yet runaway development could lead to a glut of production space. Demand for sound stages has softened because of studio cutbacks and the siphoning off of production by cheaper locales such as Canada. A much-touted Culver City sound-stage project recently died for lack of financing. And slackening demand for sound stages was one factor in DreamWorks SKG's recent decision to scrap its Playa Vista studio project.

Los Angeles Center Studios is struggling to sign tenants in competition with 14 new sound stages in Manhattan Beach owned by Raleigh Studios, six others in Santa Clarita operated by Valencia Entertainment and Ray-Art Studios' eight stages in Canoga Park.

Brokers say a steady flow of television production was key to the successful launch of the year-old Raleigh Studios. Raleigh pre-leased five of its first 11 sound stages for five years to News Corp.'s Fox Television for such shows as "Ally McBeal" and "The Practice."

But so far, the downtown developers lack any such anchors. The developers report that two feature films have reserved space, but would not disclose details because of confidentiality agreements. They claim that a long-term deal with a major entertainment tenant is also forthcoming and said a television series is pending.

The developers plan an additional six sound stages to complete the build-out of the 18.5-acre complex. The developers would not disclose construction costs.

Carl Muhlstein, an office broker with Cushman Realty, said the new studios will attract independent productions shooting on location downtown that need a sound stage to complete their filming and production work.

"I don't see them attracting productions away from Hollywood, West Los Angeles or Burbank," he said, adding that the project is more likely to attract productions renting warehouses in Culver City, Santa Clarita and Woodland Hills that need additional support services.

Next door to the downtown sound stages, the developers are renovating the former Unocal headquarters as an office building for entertainment-related tenants. The former corporate commissary will soon serve as a cafeteria for production personnel. A 500-seat auditorium, where Unocal shareholders gathered for annual meetings, is being retrofitted as a high-tech screening room, complete with fiber-optic cable to send real-time video of the day's rushes to production officials in New York or Seoul.

The genesis of Los Angeles Center Studios is a decade-long saga of frustration and false starts. In 1988, a partnership of Smith's firm and Hillman Properties, a Pittsburgh-based developer, bought the Unocal campus from the oil company, which leased back the building from the new owners. The developers proposed a 5-million-square-foot office and hotel complex on the site, but lenders were uninterested in making a construction loan for office development at the height of the recession. In 1995, the partners proposed building a basketball and hockey arena on the site and explored buying the Kings hockey franchise. After that failed, Hillman withdrew from the project, Unocal pulled up stakes and left for El Segundo, and Smith contemplated demolishing the 1958 architectural landmark to make the land more attractive for a future buyer.

That is when Christopher M. Ursitti and Brian Brosnan, partners in Hollywood Location Co., entered the picture. "We realized that it was the right idea, at the right time, at the right place, and went forth with gusto," Ursitti said.

The partners had contacted Smith in search of new locations to lease to film studios after the former Hughes Aircraft hangars they had been using became the proposed site for DreamWorks' new Playa Vista studio.

Though corporate Hollywood has avoided downtown as a permanent address, film production crews have flocked to the area for years, in part because of downtown's varied landscape of high-rise buildings and gritty warehouses. Ursitti estimated that film crews spent 14,000 "shooting days" last year within a two-mile radius of the new sound stages. "More filming happens in downtown Los Angeles than anywhere else in the world," he said.

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