The Dream Suburb Eating L.A.

Joel Kotkin, a contributing editor to Opinion, is a senior fellow at the Pepperdine Institute for Public Policy

After years of honoring high-toned British dramas and edgy East Coast independents, Hollywood has rediscovered Los Angeles. Not only is "L.A. Confidential" up for several Oscars Monday night, but this year's nominations also are dominated by retro-Hollywood spectaculars like "Titanic" and traditional star vehicles like "As Good as It Gets."

The rediscovery of the local film industry's creative prowess comes at a time when economic and cultural forces may be reversing the entertainment industry's longtime shift away from the city's historic core. For the first time in decades, new production facilities are either under construction or planned throughout Hollywood and even around the edges of downtown itself, while the hottest residential zones for industry types are 1920s vintage neighborhoods like Hancock Park, Los Feliz and the Hollywood Hills.

"L.A. is a relatively new city and, for us, the '20s and '30s were the classic period," says Tim Clawson, head of production for Hollywood-based Propaganda Films and new homeowner in Hancock Park. "You see a movie like 'L.A. Confidential' and you realize what a great city this was once and you want to help it be that way again, to reconnect with that past."

Early on, the movie industry followed the classic Los Angeles pattern of multipolar development. Although east Hollywood was the industry's birthplace, the early studios established themselves in then-distant Burbank and Culver City. By the 1940s, most of the industry's elite had left then-middle-class Hollywood for the beach, the Valley or Brentwood. "You can't explain Hollywood," author Rachel Field said. "There isn't such a place. It's just the dream suburb of Los Angeles."

This "dream suburb" has expanded to include large swaths of Southern California. Sparked by the creation of three new commercial networks and an explosion in cable television, both the industry's output and employment have doubled over the past decade. Although the spectacular job growth appears to have slowed because of consolidation and cost-cutting, the industry's job-growth rate, overall, has been every bit as spectacular as that in Silicon Valley.

Yet, unlike Silicon Valley, where growth led to ultrainflated real estate and labor costs, the entertainment industry's '90s expansion unfolded amid a generally weak economy. This allowed entertainment companies--and executives--to snap up formerly pricey Westside real estate or cut good deals with business-friendly cities like Burbank and Glendale.

These conditions are changing. While the entertainment industry adapted to its new girth, the remainder of the region's economy sprang back to life. Last year's job growth in Los Angeles County, roughly 100,000, largely came from other sectors that traditionally occupied prime space in Westside high-rises and "class A" industrial spaces. Perhaps most critical is the rebirth of high-wage, white-collar service employment. In 1997, Los Angeles County picked up nearly 30,000 business-service jobs like accountants, advertising types and consultants. Software-related employment grew by more than 10%, adding roughly 4,000 jobs. Large gains were made in management and engineering services. Even the long-suffering FIRE sector--finance, insurance and real estate--added several thousand new positions.

Solid job growth also has occurred in the high-end manufacturing sector. More than 6,000 new jobs have been created in the aircraft, defense-electronics and computer industries. This new spurt of non-entertainment growth has accelerated the Westside's dramatic real-estate recovery. Apartment rents in Santa Monica, for example, have risen by 18% since 1994, more than twice the countywide average; home prices have grown even faster. Similarly, commercial rents in favored spots like Century City are rising 20% annually.

These kinds of cost pressures are pushing some entertainment and multimedia companies toward districts like the Miracle Mile, where square-foot costs are as much as 30% to 40% lower than those further west. As a result, the Mile, after nearly a decade of decline, is experiencing a mild resurgence. It is already home for many powerful industry icons--the Hollywood Reporter, Variety, Actors Equity, E! Entertainment Television. Now, Digital Planet, a major entertainment-oriented website developer, has joined them, moving from Culver City.

Hollywood has stopped hemorrhaging industry-related employment as well. Capitol Records, American Cinematheque, Pacific Title, Panavision, CNN, Klasky Csupo, Industrial Light and Magic have all announced expansions in the area. Long-vacant buildings along Sunset are filling up with small, independent production companies. Hollywood Center Studios, located in the Santa Monica Boulevard corridor, is building two new sound stages and more than 40,000 square feet of office and support space.

Developers and investors associated with the industry's expansion on the Westside or in Burbank, such as Jerry Snyder and Frederick Smith, are prospecting Hollywood for buildings to upgrade and rewire. "There is much more upside going into Hollywood now than you can find investing on the Westside. If I had 10,000 square feet of class A space in Hollywood," says Rob Waller, vice president of CB Commercial's entertainment division, "I could sell it in a minute."

More surprising still are plans for sound stages around downtown Los Angeles, including a complete campus of six stages and office space adjacent to the old Unocal building. There are more tentative plans to build several stages at the Taylor Yards just north of the central city. These developments reflect not only lower costs, but the growing popularity among movie makers for downtown locations, which now account for more than one-third of all their L.A. area shoots.

"Downtown," says Chris Ursitti of Hollywood Locations, one of the partners in the Unocal project, "is the world's greatest back lot. It can give you looks that can approximate any city in the world. You can make the old Herald Examiner lobby into the Russian Tearoom or turn the old Robinson-May building into a bathhouse."

To be sure, the industry's drift eastward doesn't presage established entertainment companies abandoning their cushy beachside digs. Matthew Miller, principal at Metrospace/Cresa, which represents A-list entertainment firms like DreamWorks, contends that the industry's elite players will continue to migrate away from the ethnically diverse, "urban," older sections of Los Angeles. New studio, sound stage and other entertainment-related projects in Culver City, Santa Monica, Manhattan Beach, as well as Playa Vista, underscore the Westside's continuing appeal at the top of the industry pyramid.

Yet, Miller concedes that the talent that drives the industry--writers, directors, producers, digital artists--are flocking to older neighborhoods like Los Feliz, the Hollywood Hills and Hancock Park. These areas, with their vintage "L.A. Confidential" looks as well as much lower prices, are experiencing what one broker calls "a huge influx" of entertainment types. Not coincidentally, these same neighborhoods are close to much of Los Angeles' edgy theater, nightclub and restaurant scenes.

Hancock Park, Los Feliz, Hollywood, much less downtown, may never replace the Westside as the preferred locale for the industry elite. But the growing interest in these historic neighborhoods may ultimately help the entertainment industry discover the sense of tradition, history and style often seen as missing from Los Angeles. At long last, nearly a century since its founding, the city's "dream suburb" may be finally ready to embrace L.A.'s enduring urban reality.

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