As competition for Hollywood soundstage space intensifies, a new production complex is being established in Arizona.
The state financiers behind Desert Studios say they plan to break ground this year on the first phase of a new full-service studio development project that will include 12 soundstages of 40,000 square feet each at a cost of approximately $ 300 million.
After playing a role in the approval of a $125 million tax incentive program for film and TV projects, Desert Studios on Friday unveiled plans to build a total of 52 soundstages on a 320-acre site in Buckeye, Arizona. The project is estimated to cost $900 million, the lenders say.
Construction of the complex is a gamble on demand for film and TV studio space in Arizona and the Southwest amid a global crisis, though supply has increased recently due to content spending cuts. The state launched a tax credit capped at $75 million this year, rising to $125 million by 2025. Productions must film on a soundstage of at least 10,000 square feet or do all post-production in a qualified facility if it relies on shooting on location to qualify for the incentive program.
Desert Studios partner and general counsel Justin Davis says the credit shows that “Arizona has the right environment to support the entertainment industry” and “finalizes how the state can compete with others who have similar incentives.” He adds that the programme, particularly the soundstage component of the credits, was a “key component in our decision-making process”.
The 12 soundstages that will be built in the first phase of construction can each be divided into two 20,000 square foot stages. Support facilities will also be built, including production offices connected to each stage building.
The production hub includes assembly/post-production, equipment rental, set construction, craft services, and catering buildings, along with a backlot and other production-related structures. The next three phases have plans for additional phases and support facilities.
Davis emphasizes the favorable location of the site. “We have the Buckeye airport just a few miles away,” he says, noting that the studio will be only a four-hour drive from Los Angeles.
Desert Studios purchased the land just west of Phoenix from Arizona-based real estate investment group Belmont Partners. The company obtained $54.3 million in financing from an Arizona private investor to buy the land, says Davis, who declined to name the investor. He adds that he expects to secure debt and equity from institutional investors in the next 60 days.
The company bills itself as a company “dedicated to building studio production complexes in Arizona.” Partner Ruben Arizpe is a former vice president of contract finance at Disney, in addition to similar positions at Paramount and Sony.
Desert Studios was instrumental in the approval of Arizona’s tax break. “The demand (for stage space) is huge,” says Davis.
The announcement comes as states in the Southwest continue to compete for productions. By 2025, Arizona will join only a handful of other states in a nine-digit cap. Projects incorporated in the state are eligible for a 15 to 20 percent cost refundable tax credit, in addition to a 2.5 percent increase on labor costs for hiring Arizona residents or if they are a long-term tenant of a qualified production facility. A position that spends $15 million in the state may qualify for a tax break of between 17.5 percent and 22.5 percent, depending on local residents hired for a return of at least $2.5 million. New Mexico and Louisiana are already popular destinations for film and TV productions.
Texas lawmakers are considering a bill that will supplement the existing grant program with a new, unrestricted scheme targeting productions of at least $15 million. The measure was passed unanimously by a House of Representatives committee 8-0.
