Lights, Camera, Action!
The Russian film industry is catching its second wind. Beginning in 2000, the domestic film industry has been making a strong comeback, as interest in Russian films grows and modern cinemas are appearing throughout the country. Quite natural this trend has led to increased interest in investment in the construction of private film studios. This highly specialized segment of the commercial real estate market differs from others in that the investors are not aiming to recover there expenditures via subsequent sale or lease but rather through the creation of successful films.
At present, there is no manner by which to classify film studios, as this segment as such is only beginning to develop. Each new project creates new standards and represents new knowhow. Thus this article aims to provide a general overview of the major private film studios as well as other real estate projects in the film industry that are currently planned.
The forerunners
At the turn of the millennium the old Soviet fill studios (Mosfilm and Gorky Film) turned out to be unable to handle the increasing demand from Russian filmmakers and the advertising industry. In addition, the technologies provided by these studios had fallen behind the times and were not keeping up with modern trends.
Seeing the possibilities of this niche, the management of Media City decided to build a private film studio in Moscow. With the construction long finished, this studio has become the largest private film studio in Russia and has provided the facilities for the numerous popular television series.
“In 2002 we began to seriously consider the possibility of building a film studio in the Moscow region that would be in line with the cuttingedge trends in digital technology. We planned to build a complex of eight pavilions with its own decoration production department, storage for lighting and filming equipment and of course a small postproduction complex. When then came to the realization that filming outside the city is problematic, as some how 20003000 people would have to go to the studio on a daily basis. And this is what turned us toward finding a site somewhere in the city,” explains Dmitry Granov, general director of Media City.
The company’s founders considered a number of options: an old industrial site, a marketplace, etc. The investment required for the project pushed the company towards finding a place that could be purchased rather than leased. The decision was finally made to acquire a facility that was owned by the Moscow Ball Bearing Factory. The location was convenient as it is near the Third Transport Ring, Volgogradsky Prospekt and two metro stations.
The factory’s production facilities were moved outside the city and the comprehensive reconstruction process began. Stroykomplekt, which specializes in television and film facilities, took on the role of the general contractor and oversaw the conversion on the facilities into one suitable making films.
Today there are 9 pavilions of about 700 sqm each with high ceiling that provide a clearance of 5.8 m to the lighting fixtures. Each of the pavilions is equipped with all necessary infrastructure – dressing rooms, makeup rooms, decoration storage areas, etc. Media City also has several decoration production facilities that can provide for the needs of any film shoot. There are 28 editing rooms as well as a number of audio recording studios. The territory includes two outdoor filming areas that make it possible shoot outdoor scenes without leaving the complex.
The next phase of development at Media City’s studio will be the opening of four more pavilions with areas of just over 1000 sqm each and ceilings reaching 12 m. Such high ceilings are ideal for shooting films for the big screen, as they allow for a wide variety of shooting angles. The spaciousness also provides advantages in terms of decoration options. The pavilions will have acoustic dampening characteristics that are so important for filming large television shows.
Media City has invested $24 million to date in the project and plans to invest another $12 million to complete the four additional pavilions. These sums include that construction and equipment. “According to our business plan, the payback period should be about 5 years. However, if you look at the project from the point of view leasing out space to tenants, it would take much longer. This is because the cost of construction and equipping the pavilions is quite high. The costs are comparable to that of a class B+ or even class A office center. But Media City offers its tenants not just empty pavilions but a whole range of services, equipment, premises, infrastructure, etc. And in this manner we can speed up the payback time,” explains Dmitry Granov, adding that the company is considering the purchase of a neighboring site that would another 20,000 sqm to the complex.
Image above all else
Another private film studio has appeared at the TechnoPark Kozhevniki office center developed by Ecooffice Group. The studio between the Garden Ring and the Third Transport Ring not far from the Paveletskaya metro station on a 5.8 hectare lot.
Over the past two years the territory of the technopark has been actively used for filming numerous music videos, advertisements, television series and artistic films. The studio occupies approximately 5000 sqm, including two shooting pavilions of 1000 sqm with 10m ceilings. About 2500 sqm is used for set production, producers’ offices, casting companies and editing facilities. The remaining space is used for makeup rooms and R&R areas.
These types of facilities come with special needs. They require powerful climatecontrol systems and highcapacity power supply. Heat savings in buildings with such high ceilings is provided by special insulation in the walls and ceilings. Autonomous power stations provide a reliable and powerful electricity supply. “The beams that support the roof must be able to handle a heavy load, as highlevel catwalks are installed for the lighting crews,” explains Oleg Bochenin, head of client services at Ecooffice.
The cost of leasing space at the film studio varies according to whether actual filming is underway or only preparation work (decoration, equipment installation, etc.) is taken place. In the first instance the rates are $1.101.20 per sqm per day, while in the second they are slightly lower – $0.70 per sqm per day. One pavilion can bring in from $20,000 to $50,000 per month.
But income is not the only thing a film studio can its proprietors: “We believe that the presence of a film studio adds a little flavor to our project,” Oleg Bochenin says.
The Start Film Studio
In the near future Intercapitalbank, which has financed several popular Russian films in recent years, plans to build its own film studio. At present the developer is in the process of choosing a site. “We plan to set up a film studio in either the Yaroslavl or Kaluga region. At the moment we are leaning toward the town of Pereslavl in the Yaroslavl region (about 100 km from Moscow). Initially we wanted to create a studio in Moscow, and we were planning for a facility of 10,000 sqm. But now we have realized that this would be too small, and so we are currently looking to build a studio of 50,000 to 100,000 sqm. The complex will include filming pavilions, a retailentertainment segment, a hotel for actors and guest, service infrastructure and housing for service personnel. Of course the studio is being built for our own projects, but we plan on leasing out twothirds of the space,” explains Alexei Alyakin, general director of Intercapitalbank.
Alyakin notes that it is much easier to resolve issues regarding utility hookups outside the capital. Additionally, filming is generally less expensive in the suburbs than in Moscow and shots of nature are easier to come by.
The investor sees the project as paying itself off within three years. “When thinking about cinema, you need to forget about the space. We don’t plan on making money by leasing squares meters. We want to offer a film groups a whole range of services – creation of the decorations, installation of equipment, lighting, editing, costumes, professional personnel, etc.,” Alyakin says. Investcapitalbank will invest its own funds into the project, which is expected to cost $100 million and start operations in autumn of 2007.
A studio for the Northern Capital
Construction is moving forward at full throttle on a large film studio in St. Petersburg. This project is being developed by Sistema. The project includes six film studios ranging from 450 to 850 sqm on a territory of 1.86 hectares. One of the unique aspects of the project is a pavilion for shooting underwater scenes. “This will be the first film studio in Eastern Europe with all film production possibilities,” say specialists at Sistema Mass Media.
The pavilions will have three floors and will include space for offices and cafes. “We were able to find an unfinished construction project and adapt it for the future filming pavilions. It is surprising that we are able to find a site almost in the center of the city that already had structure that completely satisfied our needs,” the press service of Sistema Mass Media says.
The selection of a site in St. Petersburg was not an accident. To begin with, the film production in the Northern Capital costs about 25% less than in Western Europe and 1015% less than in the budget studios of the Czech Republic, Romania and Bulgaria. According to specialists at Sistema, film production in St. Petersburg will be several times less expensive than in Moscow, which was one of the determining factors in choosing the studio’s location. “Secondly, in St. Petersburg, as opposed to Moscow, there are a large number of sites for film shots in a natural setting and the city can be used a wonderful historical backdrop. Thirdly, St. Petersburg has all of the necessary infrastructure: hotels, restaurants, an international airport, train stations, etc.,” the press service for Sistema Mass Media explains.
The project is expected to pay for itself within 35 years. The budget for the first phase is around $78 million. During the initial development phase the pavilions will be set up with bare walls. During the second phase the studio will be adapted for specific projects, including the pavilion for underwater scenes. The second stage is estimated to cost $20 million. Construction is already underway and is tabbed for completion in the first half of 2007.
“The lease rates will be determined upon completion of construction. But we can say now that they will be accessible for film groups, which will be able to relocate from their current locations in worn down factory buildings. The price determination scheme will be completely transparent. Anyone who wants to work in our pavilions will be able to look at the future website of the studio and see how much an pavilion cost to lease, with equipment or without,” explain representatives of Sistem Mass Media.
Tema Production, a Russian film company that is 75% owned by Sistem Mass Media, will occupy about 30% of the space at the new film studio. The remaining 70% will be offered for lease to both Russian and foreign production studios. The new studio will be designed to allow for the simultaneous filming of six to seven films. “The film studio will offer the full spectrum of operations necessary for shooting a film. It will be possible to carry out the entire production cycle here, from beginning to end,” emphasizes Mikhail Dunaev, general director of Sistem Mass Media.
Conclusion
Although this segment of the market does not function quite like the commercial real estate on the whole, it is continuing to rapidly develop according to it own rules. Media City has announced its intention of building a new film study in the Moscow region and thanks to Ecooffice two new filming pavilions will shortly be appearing inside the city itself. And, as the market forms, the lease rates for studio space may start to climb and move closer to those in the other segments, making the film studio niche something of interest to developers from outside this highly specialized industry.