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Thursday, Sep 21, 2023

SPACE—Strike Threat Forces Local Space Crunch

Stacy Vierheilig, a broker with Charles Dunn Co. Inc., figures she’s gotten close to 20 calls in the last month or so from production companies looking for office space. That’s three or four times the number she typically gets in an entire year. But with three strikes threatening to cripple the entertainment industry next year, producers have stepped up the timetable for their projects. And as Hollywood rushes to get film in the can before the strike deadlines, even the real estate industry is feeling a ripple effect. “I’ve had calls from Disney, Warner Bros., CBS, Paramount, Miramax and some smaller production companies,” said Vierheilig. “We’re still getting those calls. It’s like, ‘Sorry, there’s nothing out there anymore.'” Not only are more shows in need of temporary space while the production scramble is underway, landlords are more reluctant than ever to rent to these tenants. “A lot of what would be short-term space is taken up by other shows, and with the economy, buildings we used to go to for short-term space are waiting for long-term tenancy,” said Robert Paulsen, a location scout for feature films.Each time a new film production begins, crews need office space for the administrative work involved and warehouse space for equipment storage for the duration of filming. Most films require 5,000 square feet to 6,000 square feet of office space for anywhere from three months to a year, depending on the production. A number of buildings in the East San Fernando Valley typically set aside odd-sized office space for such purposes, and since productions are usually staggered throughout the year, these landlords can often keep their smaller office spaces filled year-round. But three upcoming contract renewal deadlines, one in May for screenwriters and one in June for actors, has upset the traditional ebb and flow of this niche real estate market. Most in the industry believe that at least one of the unions will call a strike, putting a halt to any productions underway when they do. “Everyone and his brother is trying to get their productions done (before the strike),” said Bud Aronson, an independent location manager. Aronson considered himself lucky to have stumbled upon a suitable space in Burbank for the television movie of the week he is working on. “Through the years, we’ve all worked at different places, so we know (the buildings that rent short-term space to movie crews),” Aronson said. “We were fortunate, but it’s very tough now.” Location scout Paulson is working on such a tight schedule, he’s been looking for space for two movie productions slated to begin simultaneously in mid-January. Typically, based on the start date, he would begin seeking out space around the first of January but, because of the crowded market, Paulson began his search in November. “I’m working on a show shooting primarily in the Valley, so we could go anywhere in the Valley, but production wanted to stay in the East Valley,” Paulsen said. “As it got tighter, we widened the search. The producer was willing to go as far as Sherman Oaks and Glendale.” Not only is there more competition for space, there are also fewer landlords willing to rent out their offices on a short-term basis. When the real estate market is soft, any tenant will do. But now that vacancy levels are so low hovering under 5 percent in Burbank, the preferred location for many of these film producers landlords are holding out for long-term prospects. “The amount of landlords that have space are numerous, but they don’t want to lease it to short-term tenants,” said Trevor Belden, a broker with Lee & Associates. “The other thing is, production companies are hard on buildings. They pack a lot of people into a small space.” Adding to the woes of those looking for space, their business is the lowest priority for real estate brokers. They earn commissions based not just on the amount of space rented, but also on the length of the lease. “When they call me, if I have it and I have a landlord (willing to rent to them), I take care of them,” said Rob Erickson, a broker with Cushman & Wakefield Inc. “Otherwise, they go down the road.” Erickson, who estimates that he’s received about 30 percent more inquiries recently from film production tenants than he normally would, doesn’t even keep a running list of the prospects. “Times are too good,” he said “All you have is your time, and you need to use it on larger consideration deals.” Vierheilig keeps a list of production-friendly landlords and faxes it out to production companies who inquire about space. The prospective tenants are left on their own to check out the space and determine whether it meets their needs. “It’s kind of a waste of time, so typically we try and put them in our own buildings because it’s not enough commission to split it with another broker,” Vierheilig said. “But there are certain people I’ve dealt with over the years that I will go out of the way for.” The brokers say they haven’t yet received any offers of cash under the table for space, but some of Vierheilig’s prospects have tried other enticements. “I’ve been invited to quite a few movie premieres,” she said.

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