As competition for Hollywood soundstage space heats up, a new production complex is moving forward in Arizona.
The state’s backers behind Desert Studios say they are planning to break ground this year on the first phase of new full-service studio development project that will include 12 soundstages of 40,000 square feet each at a cost of roughly $300 million.
After playing a part in the passage of a $125 million tax incentive program for film and TV projects, Desert Studios unveiled plans on Friday to build 52 soundstages total on a 320-acre site in Buckeye, Arizona. The project will cost an estimated $900 million, its backers say.
Construction of the complex is a bet on demand for film and TV studio space in Arizona and the Southwest amid a global crunch, though supply has been increasing recently in the wake of budget cuts to content spend. The state launched this year a tax credit with a cap of $75 million, increasing to $125 million in 2025. Productions must film on a soundstage of at least 10,000 square feet or do all post-production at a qualified facility if it relies on location shoots to qualify for the incentive program.
Justin Davis, partner and general counsel for Desert Studios, says that the credit shows “Arizona has the right environment to support” the entertainment industry and “rounds out how the state can be competitive with others that have similar incentives.” He adds that the program, specifically the soundstage component of the credit, was a “key component in our decision-making process.”
The 12 soundstages to be built in the first phase of construction can each be divided into two 20,000 square foot stages. Support facilities, including production offices connected to each stage building, will also be constructed.
The production hub will include editing/post-production, equipment rental, set construction, craft services and catering buildings along with a backlot as well as other production-related structures. The three next phases have plans for additional stages and support facilities.
Davis stresses that convenient location of the site. “We have the Buckeye airport just a few miles away,” he says, noting that the studio will be just a four hour drive from Los Angeles.
Desert Studios bought the land just West of Phoenix from Arizona-based real estate investment group Belmont Partners. The company obtained $54.3 million in financing from a private investor in Arizona to purchase the land, says Davis, who declined to name the investor. He adds that he expects to secure the debt and equity piece from institutional investors over the next 60 days.
The company bills itself as a firm “dedicated to building studio production complexes in Arizona.” Partner Ruben Arizpe is a former vice president of contract finance at Disney in addition to serving similar roles at Paramount and Sony.
Desert Studios played an instrumental part in the passage of Arizona’s tax incentive. “The demand [for stage space] is huge,” Davis says.
The announcement comes as states in the Southwest continue to vie for productions. In 2025, Arizona will join the ranks of just a handful of other states with nine figure caps. Projects that shoot in the state are eligible for a refundable tax credit of 15 to 20 percent of expenses in addition to a 2.5 percent bump on labor costs for hiring Arizona residents or if they’re a long-term tenant of a qualified production facility. A feature spending $15 million in the state could be eligible for a tax break 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 both popular destinations for film and TV productions.
Texas lawmakers are considering a bill that will supplement its existing grant program with a new, uncapped scheme targeted at productions of at least $15 million. The measure has unanimously passed through a House of Representatives committee 8-0.
