Because it provides high-paying jobs and tends to recycle old commercial buildings for creative space, the entertainment industry is among the most desirable economic drivers for cities and states.

Digital technology revolutionized the way entertainment professionals work, bringing about a convergence of media, entertainment, and technology that allows creative companies to downsize their workspace and locate wherever they please.

“Technology has made a huge difference,” observes Jim Jacobsen, a founding partner at Industry Partners, a Santa Monica, California, brokerage firm that specializes in creative space. One thing it did was facilitate decentralization of the studio system, he says. For example, JBFilms, owned by producer Jerry Bruckheimer, at one time required hundreds of thousands of square feet of space to accommodate its huge creative staff. Now both the JBFilms television and film divisions occupy just 30,000 square feet (2,800 sq m) on Tenth Street in Santa Monica, Jacobsen says.

Computer-generated imagery (CGI) and motion capture technologies enable filmmakers to create specials effects and insert actors into digitally created scenes, which reduces use of soundstages and shooting on location, points out Willie Schmidt, vice president of Studio Operations at Raleigh Studios Playa Vista. “Filmmakers can do so much more [in less space],” he says. These technologies allowed director James Cameron to produce about 85 percent of Avatar in 20,000 square feet (1,900 sq m) of space at the Hercules Campus at Playa Vista, a media and entertainment complex at the new 1,087-acre (440-ha) Playa Vista mixed-use community adjacent to Marina del Rey, California.

Given this flexibility, companies engaged in entertainment and new media activities are clustering in districts with interesting, edgy architecture and attractive lifestyle amenities and services.

Creative clusters are a highly desirable economic driver because they have a positive impact on a city’s economy and urban renewal goals. Entertainment companies provide high-paying jobs, with salaries of $60,000 and up. Also, like artists, they recycle old industrial buildings, often initiating the transition of deteriorating commercial districts to hip, desirable neighborhoods.

For real estate professionals, the key to creating more clusters is an understanding of the type of environments that attract creative companies, says Jeff Pion, vice president in the Century City/Beverly Hills office of Los Angeles–based CB Richard Ellis. “If you look at where creative companies are going, they have redeeming qualities and locations where people want to live and work,” he says.

Communities in the Los Angeles Westside region are attractive because they offer desirable lifestyle amenities and proximity to a major international airline hub, Los Angeles International Airport. “It’s about lifestyle,” Pion says. “Playa Vista has lots of outdoor amenities, and in Santa Monica you can bicycle on the beach. In addition, Los Angeles is situated at the gateway to the Pacific Rim and has a robust airport with service to anywhere in the world.” He also notes that the region has significant intellectual capital, including seven academic institutions focused on the creative arts, and thus a large pool of skilled creative professionals.

Santa Monica has probably benefited from decentralization of the studio system more than any other Westside community. Pion notes that Santa Monica is attractive to the creative class because it offers a classic southern California lifestyle, a seaside location, recreational opportunities, and a variety of restaurants at which to entertain clients. It also is located near communities where many entertainment professionals reside, including Malibu, Brentwood, Pacific Palisades, and Venice.

A significant number of entertainment companies have already recycled existing commercial buildings throughout the city. For instance, actor Tom Hanks and producer Gary Goetzman, partners at Playtone Productions, repositioned the old Santa Monica Seafood Company building on Fifth Street as a home for their company. Santa Monica also has a growing creative cluster in the 140-acre (57-ha) area around Bergamot Station, a rail stop that served passengers until 1953. In 1994, the city converted the 1875 station into an art museum and the site’s five ­corrugated-steel warehouse buildings into art galleries.

kirkspace_1_351The city plans to build a new train station to accommodate the Exposition Light Rail system, which will link Westside cities to downtown Los Angeles and is scheduled to reach Santa Monica in 2015. The new rail station will be the centerpiece of Bergamot Transit Village, a transit-oriented development (TOD) the city has planned for the area.

Hines, a Houston-based developer, paid $73 million for a 7.1-acre (2.9-ha) brownfield site on 26th Street at Olympic Boulevard in Santa Monica that was formerly occupied by a Paper Mate manufacturing plant and has proposed a public/private partnership with the city to develop the Bergamot Transit Village project. The proposed TOD would have about 1 million square feet (93,000 sq m) of residential, retail, and office space, and would provide open space for parks and nearly 2,000 subterranean parking spaces. The plan, however, has generated criticism from both residents and city council members, who contend that the project’s footprint is too large for a village and that its design is not appropriate for the city.

Local artists initiated the transition of the Bergamot Station area to a creative enclave more than 20 years ago, converting industrial buildings into studio and gallery space. Over the past decade, industrial and low-rise office buildings in the Bergamot area, which encompasses both the Bergamot Transit Village and mixed-use creative districts, have attracted a wide variety of other creative companies, including design, media, and entertainment firms. Building exteriors have been restored to their original condition and interiors redesigned as contemporary office and creative workspace, notes Peter James, senior strategist in the Santa Monica Planning Department. “Behind the frosted-glass windows and crumbling facades are state-of-the-art studios and incredible interiors.”

Brian Curtner, a principal at Toronto’s Quadrangle Architects, who designed a new Toronto headquarters for Corus Entertainment, believes that creative people prefer to recycle older buildings because “they like taking something and giving it a new life.” Architect Rick Cortez, principal at RACDB, a design/build firm in Culver City, California, that specializes in design and buildout of creative space, suggests that creative people value authenticity—evidence that something real took place before they arrived. Unlike conventional office tenants, he says, creative people easily visualize design concepts and understand that a sincere design involves the way materials are used, rather than just what is used, and value saving a 60-year-old window or one old beam. “If I can storyboard it and show them other buildings we designed, they pick up on it fast.”

He explains that one- and two-story office buildings are attractive because creative people embrace interaction with the environment, and these buildings have walk-up entries, windows that open, and street-level parking. These people often bike to work and like entering the building from the landscape, Cortez notes. They also like outdoor space for patios, picnic tables, or other seating and recreational amenities, such as a volleyball court.

Cortez is currently working with Jacobsen, the leasing broker, to prepare space for new tenants at Lantana Entertainment Media Campus, a 12-acre (4.9-ha) property on Olympic and Exposition boulevards in Santa Monica. Formerly occupied by aerospace contractor McDonnell Douglas, the 530,000-square-foot (49,000-sq-m) complex includes five buildings, one of which is owned and occupied by the National Academy of Recording Arts and Sciences, presenter of the Grammy Awards. Tenants in the other buildings, which are owned by Houston investment firm Lionstone Group, already include Steven Bochco Productions (NYPD Blue, Hill Street Blues), Imax Corp., NBC Universal Television, and Revolution Studios.

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Creative companies are using their workplace to create brand or identity, Pion says. “When people visit, they want the space to speak to who they are. They want nontraditional space, not [space] on the third floor of a high rise.” These companies want to create a comfortable atmosphere where people want to come to work, he adds. Designs, therefore, have open floor plans and gathering places such as a café or a commissary, or outdoor seating to foster collaboration, discussions, and sharing of ideas.

Creative companies also want their facilities to reflect a commitment to sustainability, Pion says. “Some LEED [Leadership in Energy and Environmental Design–certified facilities] are going in, and others are building to LEED criteria but not seeking certification,” he notes.

“Our office space says much about us and the way we work,” says Ben Hampshire, managing director for the Los Angeles–area office of the Mill, a London-based special effects company. “Our facility provides an inspirational environment to work in and blend. We want open space where people can get together and collaborate, and it has to be visually stunning.

“Creativity is incredibility important,” he continues. “We have 60 employees, and everyone is on the same floor to facilitate communication. Separation slows down communication and prevents ‘happy accidents’—those unplanned things that happen in passing. Good stuff comes from communication. Communication happens when people aren’t separated.”

Shared space and collaboration are inherent in these organizations, says Curtner. “The mandate at Corus was to bring people out of their silos so they can collaborate across markets.” Corus owns several television and radio stations, as well as animation and children’s book publishing divisions. The key for designers is an understanding of what makes a space a creative environment, as well as supports brand or identity and meets a company’s goals and objectives, he says. “It’s what works for the people inside [the building]—inspires them and is uplifting.”

The three-story, 400,000-square-foot (37,000-sq-m) Corus Quay Building in Toronto has a five-story atrium that takes advantage of its waterfront view and provides lots of space and natural light as relief from cubicle workspaces. Concrete floors and exposed trusses provide a dramatic contrast to the bright, colorful interiors and whimsical design, furnishings, and finishing materials. Plus, foosball tables and a slide from the third floor to the first help create a playful, relaxed atmosphere that engenders communication and creativity, Curtner says.

In Santa Monica, the Mill has outgrown its facility and is moving into a 1950s-era manufacturing building at the Blackwelder industrial complex in Culver City, which has been repurposed as creative space by Cortez. The Blackwelder property has 25 small, architecturally distinct buildings, each of which gives the tenant an opportunity to create a unique identity, notes Jacobsen, the property’s leasing broker.

The Mill’s new facility has an 18,000-square-foot (1,700-sq-m) floor plate and a ceiling open to the rafters, exposing trusses and allowing plenty of natural light to enter. Cortez added a 6,000-square-foot (560-sq-m) mezzanine that will be used for meeting space and a rooftop deck for employee gatherings and parties.

Pion is charged with leasing the 452,000 square feet (42,000 sq m) of commercial space at the Hercules Campus in Playa Vista. The 28.2-acre (11.4-ha) property has characteristics creative companies prefer, such as architecturally interesting buildings, a location near the beach and airport, and access to recreational and retail amenities at Playa Vista.

kirkspace_9_200The Hercules Campus has ten deteriorating, 1940s-era office buildings that formerly served as the headquarters for Hughes Aircraft Company. The buildings are being renovated and repositioned as office and creative space for entertainment and high-tech media companies. The campus also has a seven-story redwood hangar that was home to Howard Hughes’s H-4 Hercules—better known as the Spruce Goose—an experimental wooden airplane. This facility has been converted into a movie studio operated by Raleigh Studios.

Wayne Ratkovich, president and CEO of the Ratkovich Company, which owns the Hercules Campus, points out that creative tenants have goals different from those of conventional office tenants. “Creatives like a casual environment where they can bring a dog to work,” he says. “They want to know if the wireless is hot outside and if there are picnic tables, a dog park nearby, and recreation. This is stuff we don’t hear from lawyers and other traditional tenants.” This concept of the workplace as a lifestyle is known as the “Google effect,” he notes.

“[Southern California] is blessed to have the entertainment industry because even in a poor economy, it thrives,” he adds. “We are preparing our buildings to receive those types of tenants.” Landlords who want to work with creative tenants need to listen carefully to what they want, he says.

The Google effect is not confined to the West Coast, but is spreading nationwide. For instance, a mix of artists and high-tech, media, design, and entertainment entrepreneurs has turned old warehouses in downtown Phoenix into creative space, notes Kimber Lanning, executive director of Local First Arizona, a business promotion organization. She cites a facility occupied by Moses Anshell, a marketing and advertising firm, as an example. “It doesn’t feel like a workplace,” Lanning says. “They have ping-pong, showers, and dogs come to work.”

kirkspace_11_200Phoenix also is experimenting with co-op creative space, such as CO+HOOTS, which provides entrepreneurs engaged in unrelated creative activities an affordable workspace and the opportunity to brainstorm with like-minded people.

Likewise, an empty 166,000-square-foot (15,400-sq-m) warehouse in downtown Detroit that once served as a Chrysler distribution center was a production studio for ABC’s Detroit 1-8-7 series.

Since publication of Richard Florida’s book The Rise of the Creative Class in 2002, more and more state and local governments recognize the value of entertainment and media companies as economic drivers and are providing incentives to attract and support them.

Curtner says Toronto accepted and acted on Florida’s concept of the creative class and its importance to a city. “The city is invested in creative industries and will go out of the way to attract these organizations,” he says, noting that Toronto put up the $159.5 million needed to build the Corus facility.

Even with perfect weather and an attractive location, Santa Monica is not taking its advantages for granted, says James; the city continues to look for ways to attract and support its creative community. Santa Monica built a high-bandwidth fiber optics network, which it initially intended just for city use, Jones notes, but the network’s tremendous capacity has enabled the city to offer local businesses the opportunity to tap into this resource at a heavily discounted rate.

Because entertainment and new media companies require high bandwidth to transport large digital files to clients and media outlets, this constitutes an extraordinary draw for creative enterprises. The network’s ten-gigabyte capacity is ten times that provided by commercial telecommunications firms and costs less, says Jory Wolf, Santa Monica’s chief information officer. In addition, companies on the city’s network receive bundled internet service provider rates.

The film sector is a premium economic driver not only because it provides high-paying jobs, but also because it has a greater impact on the local economy than other business types, says Nick Smerigan, former chief operating officer at Mesa del Sol’s Albuquerque Studios in New Mexico. The film industry is a massive consumer, he says, spending huge amounts of money on materials to build sets and to house, feed, and entertain staff. According to Smerigan, every dollar spent on a film production generates $11 to $12 as it circulates through the local economy, compared with $2 to $3 for other business types.

With such high stakes, several states, including New Mexico, Louisiana, Georgia, Massachusetts, Texas, and Michigan, provide tax credits and outright cash rebates for in-state film production, and each has progressively upped the ante to gain a competitive advantage. Michigan currently tops the list, offering filmmakers up to 42 percent in tax credits for film production costs in the state, though the average is 35 percent, according to Christopher Baum, senior vice president for sales and marketing at Film Detroit, a division of the Detroit Metro Convention & Visitors Bureau dedicated to supporting film and television production in the three-county region.

kirkspace_12_351“Creative clusters can’t be forced,” contends Mike Daly, president of Mesa del Sol. Filmmakers go where there is a pool of skilled, creative professionals. Therefore, state and local governments are attempting to grow creative clusters by establishing programs to train workers for industry jobs and providing incentives to build and support facilities that offer services filmmakers require.

New Mexico provides a 25 percent tax incentive for films produced in the state. In addition, the University of New Mexico has established a film and media department and is building a new media campus across the street from Albuquerque Studios; a vocational college to train line crew is also in the works. The long-term plan for Albuquerque Studios calls for a studio village, with an estimated 50,000 square feet (4,600-sq-m) of retail space to support about 2,000 production workers.

The Michigan State Employees’ Retirement System invested $30 million in Raleigh Michigan Studios, an $80 million media complex in Pontiac that includes a 175,000-square-foot (16,300-sq-m) state-of-the-art film studio with nine soundstages and a defunct 360,000-square-foot (33,000-sq-m) General Motors office campus repositioned as creative space.

This project is injecting new life into a city that had fallen on hard times, notes Baum. With completion of the studio, he says, “Pontiac will take off like a rocket.” The new studio will make film production in the city a year-round business and generate about 1,000 new jobs, Baum says.

Detroit leaders, in fact, are extremely pleased with the performance of Michigan’s film incentive program. A recent analysis by Ernst & Young’s Washington, D.C., office found that in 2010 alone, the industry created 3,860 full-time jobs in Michigan with an average salary of $53,700 a year and generated an estimated $50 million impact on retail sales statewide, returning $6 for every $1 spent.

In reviewing the report, Larry Alexander, president and CEO of the Detroit Metro Convention & Visitors Bureau, noted that an $84.7 million investment had yielded over a half billion dollars in economic activity. “Sounds like a pretty good deal to us,” he said.