Film tax credit sparks significant interest in studio space

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New Jersey has seen some success in its efforts to reclaim its crown – or at the very least, mount a successful reboot – as the place to make movies, with a plethora of projects taking advantage of the Film & Digital Media Tax Credit Program.

Since the incentive was reinstated in July 2018, it’s been expanded several times. According to data from the New Jersey Economic Development Authority, which administers the program, from its inception through this past February, it has distributed awards to more than 60 projects amounting to approximately $263 million. And throughout 2021, returns on in-state production spending from filmmaking set a record, according to the Governor’s Office, surpassing $500 million.

One of the effects of that popularity among projects, which have included Steven Spielberg’s Oscar-winning “West Side Story,” and Netflix’s “The Trial of the Chicago 7,” is the need to house these productions. In February, Kearny Point Business Center welcomed its second soundstage in less than a year; last summer, Gov. Phil Murphy was on hand to cut the ribbon on the state’s largest studio, Cinelease Studios – Caven Point in Jersey City, which measures 70,000 square feet. According to the governor’s office, the location is “the first purpose-built facility of its kind in the state.”

But probably not its last.

Keith Hanadel is principal in charge of the Media & Entertainment practice at New York-based HLW, which has an office in Madison, in addition to locations in Los Angeles, London and Stamford. Though he was unable to discuss current work, HLW’s past projects in the Garden State include the CNBC building in Englewood Cliffs and work for Univision. And after more than 25 years of doing such work, Hanadel said there’s been a big increase in the volume of inquiries in New Jersey. According to him, starting “the year before COVID, all of a sudden the entire marketplace exploded.”

This isn’t the first time he’s seen an uptick in interest in the region. Back in the early aughts, Hanadel said HLW did a lot of speculative investigations for developers looking into the prospect of building film and stage facilities on the East Coast in New Jersey and across the Hudson in New York, but not one panned out. Now, not only is the volume cranked up, but Hanadel says the scale of these projects is also increased, signaling a change in the marketplace.

“At one point, people wanted to talk to us about renovating existing warehouses and other large-scale facilities into film facilities.” Now, Hanadel said, interest is building around, well, new buildings: “Which signals to me, people are willing to commit much more of an investment into the marketplace than they were before.”

“One of the great differences, I suspect,” he continued, “is the tax incentive program.”

Think big

The requirements for such large-scale production spaces aren’t all that different from another state sector experiencing record-breaking interest coming out of the pandemic: industrial commercial real estate. First off, there’s the footprint. In Jersey City, Cinelease Studios – Caven Point sits on 6 acres. According to Hanadel, lately the inquiries he’s seeing are for 15-acre sites, including six and eight stages at between 15,000 square feet to 20,000 square feet. But stages aren’t the only space that needs to be accounted for. There’s also mill space, he says, where sets are built, stage service space – including props, storage, and hair and makeup – and production offices. “A program with six stages could be … half a million square feet pretty easily,” Hanadel said. “That ideally you’d have, you know, 15 or 20 acres.” Once you start looking at putting a project like that on an 11- or 12-acre site, you need to be more creative with your design, he said.

Room to get around is also necessary. “The production itself is constantly moving from stage to location, to location to stage,” according to Hanadel and those moves are “supported by a series of big giant trucks.”

“There’ll be a dozen 50-foot trucks that are required for a production,” he said, and similar to how those trucks provide the accommodations of the home-base while out on location, they also have to be accommodated at the studio.

To lure productions, the state’s diversity of locations is often touted – beaches, cities and woodlands – and Hanadel agrees with that sentiment. “It’s a small, dense place with a lot of location—a lot of almost fixed sets if you will.” The state’s position next to New York City doesn’t hurt either. “Another reason that New Jersey has become attractive [is] the proximity to New York,” Hanadel said. Not only does that offer access to above the line talent – “stars,” so to speak – but it also offers access to a highly skilled labor force. Which is important, Hanadel said, because these “are all skilled jobs.”

When Cinelease Studios – Caven Point celebrated its opening, the studio said it anticipated annual productions would put 200 to 400 film crew technicians to work, in addition to supporting other ancillary businesses. But those aren’t the only kinds of jobs to consider: “The sealed workforce in terms of building these things, it’s also important,” Hanadel added, crediting New Jersey as the kind of place that offers access to that kind of advantage.

Location is nothing if you can’t get there, though – calling to mind another similarity between the state’s industrial real estate sector, with its last-mile emphasis, and the growing interest in setting up production spaces. Ideally a location will be attached or close to a major conduit – Interstate 95 or 295, for example – so that “the people that end up on the marquee” can get to and from a production facility in real time.

For your consideration

So building up the logistics of production in the Garden State requires space and access. But there are other issues and according to Hanadel, addressing those items is a group effort. Project teams, which include architects like HLW but also engineers across a variety of disciplines (mechanical, electrical, plumbing, structural and fire protection, for example) or acousticians tackle these elements collaboratively.

“[T]hose kinds of considerations [need to be taken into account], like the amount of power—they use a tremendous amount of power,” Hanadel said of these types of properties. And they use a tremendous amount of air conditioning, he added. At 10 Basin Studios in Kearny – the soundstage that opened in February – the facility offers a fully soundproof stage with 150 tons of soundproof HVAC and 7200 amps of dedicated electrical power, according to the Governor’s Office.

In the Golden Age of Hollywood’s studio system, you never left the lot. You showed up in the morning and everything you needed was on hand. That’s not necessarily the case nowadays, but like other sectors seeking to entice employees, or customers, building in amenities at these production spaces is gaining steam. Hanadel said he thinks that competition is going to be a big driver. “Certainly we are being asked more and more about providing the amenities in these kind of places.”

Those include more gathering spaces, food options and even retail. The latter poses a bit of a problem due to the security involved with keeping productions under wraps until they’re ready to be released. “[T]hat sort of thing between that public access and privateness is a complicated element,” he said. “How do you create amenities that are somehow helping the community, but at the same time, you know, secure? That’s a design piece that we’re all … working with.”

On its website, the New Jersy Motion Picture & Television Commission lists seven current productions filming in the state. According to its services directory, there are 45 studios or stages—mostly in Central and North Jersey, for now. Earlier this month, the South Jersey Film Office Cooperative opened to lure projects further down the state to Camden and Gloucester counties. Now the plot has been laid, and as studios engage companies like HLW to work out plans to set up shop in the state, New Jerseyans can stay tuned to see how the Garden State’s reboot gamble continues to play out. Hanadel is optimistic.

“Frankly, I think it’s really going to be a big growth industry in New Jersey in the next couple of years,” he said.