The Writers Strike and Studio Real Estate: What Will Happen?
Fresh off overcoming COVID-related production shutdowns, studio developers and owners confront uncertainty from the weeks-long work stoppage
By Aaron Short June 8, 2023 3:17 pm
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When screenwriters and television writers voted to strike in mid-April after contract negotiations with Hollywood production companies soured, film studios on both coasts found themselves caught in the crossfire.
On May 2, Writers Guild of America members formed picket lines at several Los Angeles studio headquarters after the Alliance of Motion Picture & Television Producers refused to grant mandatory staffing minimums, guaranteed weeks of employment, and higher wages.
But unionized writers also targeted several production facilities in New York and Los Angeles with a goal of shutting down filming on active movie and TV shoots. Members of other unions, including actors, Teamsters and stagehands, often joined in solidarity to halt work on set.
During the first week of the strike, writers and other affiliated union members disrupted shoots for “American Horror Story” and “Daredevil: Born Again” at Silvercup Studios in Long Island City, Queens. A few days later, picketers interrupted filming of “FBI: Most Wanted” at Broadway Stages in Greenpoint, Brooklyn, and demonstrators marched in front of Steiner Studios at the Brooklyn Navy Yard.
Writers also swarmed the Chicago studio where “The Chi” was being filmed; set up a pre-dawn picket line at a Fox Studios lot in Los Angeles where Hulu was shooting “Interior Chinatown”; and tailed actor Aziz Ansari, who was filming a Lionsgate comedy in Southern California. The union even interrupted NBCUniversal and Fox’s upfront presentations previewing their fall seasons and forced Netflix to move its in-person event at the Paris Theater on May 17 to a virtual one.
So far the WGA strike has succeeded in halting scores of shoots. The number of film and television projects in the Los Angeles area fell 54 percent this year from the same period in 2022, and no scripted TV shows had applied for permits during the first week in June, according to FilmLA, the official film office for L.A. and Los Angeles County. Most of the shows currently being produced are either reality programs or independent films, neither of which require union labor.
The strike also injected instability into a sector of the commercial real estate industry that already experienced significant interruptions of production during the pandemic. Some developers finishing construction on new soundstages have to delay signing new shows until the strike is resolved. And Hollywood studios that signed long-term, 10-year leases at production facilities could shift to more seasonal arrangements.
“Renters of soundstages are continuing to pay their rent, but developers aren’t so enamored with those leases anymore,” Carl Muhlstein, who analyzes the entertainment industry and commercial real estate for JLL Los Angeles as executive managing director, said. “Some of the developers lost their pricing power but now it’s going to return. The studios don’t want to be caught paying for empty stages.”
Some investors are already feeling the pinch. Los Angeles-based Hudson Pacific Properties, whose portfolio includes media and tech office space, saw its office revenue in the first quarter dip compared with the first quarter a year ago, and overall operating income fell from the same period last year. The economic uncertainty is likely to continue, prompting HPP to suspend its funds for operations outlook for studios for the rest of the year, Commercial Observer reported.
A prolonged strike could have devastating economic consequences. The most recent labor action in 2007 that lasted 14 weeks cost the California economy $2.1 billion and 38,000 jobs.
That’s coincidentally the number of motion picture jobs that existed in New York City in 2013. The figure quintupled to 185,000 by 2019 while the amount of wages those jobs generated rose from $4.9 billion to $18.1 billion over that six-year period, according to the New York City Mayor’s Office of Media and Entertainment.
With the film and television industry comprising 6.5 percent of New York City’s gross domestic product, the economic pain is being distributed across the entertainment sector. The labor action has sidelined myriad ancillary industries, including Teamsters, caterers, carpenters, seamstresses, and hair and makeup professionals who depend on productions for their revenue. Most have backed the writers. The union representing actors authorized a strike this week while directors reached a tentative contract with film and TV studios. At the same time, some studios have shifted some productions to Canada, the United Kingdom and other countries.
“A lot of these players have global platforms, so London, Toronto and Vancouver are booming, and there’s still access to hundreds of thousands of hours of content in their libraries,” Muhlstein said.
New York-based production facilities have been left in the lurch. But their owners aren’t staking out positions in an increasingly bitter labor dispute for fear of angering either party. Jason Hariton, chief real estate officer for the MBS Group, which co-owns Silvercup and Kaufman Astoria studios, declined to comment on the strike. Steiner Studios Chairman Doug Steiner wouldn’t comment and left town for several weeks on vacation. A spokesperson for Broadway Stages said the company was optimistic a “fair resolution” would be reached soon.
“We value the contributions of the entire cast and crew who work together to create successful productions and believe in equitable compensation for their efforts,” the spokesperson added.
The studio production business remains stable despite intermittent interruptions from the pandemic and the writers strike. Broadway Stages has invested $245 million over the past five years in its studio facilities in Brooklyn and Queens. Vornado overcame local opposition to convert Pier 94 into a 212,000-square-foot film studio on Manhattan’s Far West Side by the end of 2025. Soundstage owners also got the New York state legislature to nearly double its film tax incentive from $420 million to $700 million in this year’s state budget, which had the backing of the motion picture association and entertainment unions.
Manhattan Councilwoman Julie Menin said the tax incentive will help studios continue to expand throughout the city.
“Clearly, from the real estate side there’s a lot of vacant space around the office sector,” Menin, a former commissioner of the Mayor’s Office of Media and Entertainment, said. “We need to be creative about vacant office space that is adaptively reused and repurposed. We want to do everything we can to support expansion of existing stage space and attract new stage space to the city.”
