Emptier Than Ever, LA Studios Cross Fingers For Film Tax Credit Boost

As assembly members in Sacramento, California, consider beefing up the state’s film incentives with an eye toward juicing the anemic state of production in Hollywood, soundstages in the Los Angeles area hit their lowest occupancy rate since 2016, when FilmLA began tracking.

LA soundstages were at 63% average occupancy for 2024, FilmLA President Paul Audley told attendees at Bisnow’s Los Angeles Studio Real Estate Conference, held May 29 at East End Studios’ Glendale campus. 

“As you know, that's below a return on your investment when your occupancy is at that level,” Audley said. 

Los Angeles’ soundstage occupancy in the first quarter was even lower, though Audley didn’t share a number. 

The issue is the result of not only the heavily publicized competition between filming locations nationally and globally to provide incentives for production but also the increased building of soundstages worldwide, Audley said.

In 2020, the United Kingdom had 3.5M SF of soundstage space, but by 2025, it had doubled to 7M SF. Georgia had 2.3M SF of space in 2020 but by 2025 had nearly doubled to 4.3M SF. 

“Some of their building projects have come offline, as they will here as well,” Audley said of the UK. “But they've really been doing advanced, modern, new stages very quickly in Great Britain, knowing the value that they're getting from the major features.” 

These out-of-state competitors were adding to their soundstage square footage as California’s entertainment industry grew vulnerable. Average annual occupancy in soundstages peaked in 2016 at 96% but remained in the 90th percentile range until after 2022, according to FilmLA. In 2023, average annual soundstage occupancy dipped to 69%. 

While Q2 isn't over yet, the early figures indicate some improvement over the dismal first quarter, but “not enough to make the difference,” Audley said. 

“2016 was our peak year,” Audley said. “It's been going down ever since, as it has worldwide. The Covid event was terrible. 2021 saw a bump of people recovering and doing a lot of production to catch up. It was a false number year.” 

The entertainment business has been reworking itself, decreasing the amount it spends on new shows, series and overall hours of content that it produces, according to an early 2025 report from Luminate, a data provider that tracks the industry.

“It's been an incredibly volatile few years, which all of us know,” East End Studios Managing Principal Jonathan Yormak said, pointing to the increase in interest rates, the pandemic and the ensuing inflation that led to a steep spike in construction costs, all of which had a devastating effect on soundstage development.  

Those factors, Yormak said, “taught our industry how to essentially offshore from Los Angeles to other parts of the world.” 

“All of these things have created a pretty volatile environment,” Yormak said. “I think where we find ourselves today is, hopefully, coming out of that storm.”

The film tax credits discussed now in Sacramento – in two bills in the legislature and the budget proposed by Gov. Gavin Newsom – are anticipated to give California and Los Angeles a competitive boost, but Audley said that the contraction in the industry might deliver another benefit. 

In some of the 120 jurisdictions that now compete with LA, Audley says there is a perceptible pullback on soundstages. 

“We're hoping – and fingers crossed – that because of a global reduction in the production of film and television, these other jurisdictions that are smaller and are trying to enter the marketplace by spending this money will pull back and pull out,” Audley said. 

“That'll help us, and it won't solve the problem,” he added. 

Still, Audley pushed for the continued construction of new soundstage properties, noting that California really won’t be able to lure anyone back without being able to offer the latest and greatest in soundstage product. 

“One of the things we hear back from major producers is, ‘We need modern, new, large stages in LA in order to come and in order to stay,’” Audley said.  

FilmLA’s latest report found 13 soundstage projects in progress, from those under construction now to those in the entitlement phase. Two projects, East End Studios’ Mission Campus project in Boyle Heights and Bardas Investment Group and Bain Capital’s Echelon Studios in Hollywood, are expected to be complete in less than a year. East End’s project is expected to open by the end of this year, and Echelon is slated to open in early 2026. Together, they would bring 10 new stages online, according to FilmLA. 

Audley said that those in the entitlement phase are the most vulnerable to being paused, with some exceptions, such as Hackman Capital’s Television City project in Fairfax and Hackman Capital Partners and Square Mile Capital Management’s Radford Studios complex in Studio City.  

“People have projects that were planned. For the most part, I suspect they're not going to get out of the ground, if they're sizable, without preleasing,” Yormak said.