Before a shovel could even hit the ground, plans to develop a film studio in South Buffalo have been suspended because of ballooning costs and higher interest rates. Buffalo Studios said Tuesday that its founders made the difficult decision to put the project on hold because they were facing a deficit of about $5 million in cash, with higher interest rates deterring investors from putting more in. “The persistent economic headwinds made it apparent that the project required an official pause,” the company said in a statement. “While we remain hopeful that the project will be resumed and we can fulfill our vision to help entrench the entertainment industry in Buffalo/WNY while creating strong social impact, there is no set timeline at this juncture,” the company said. The news represents a partial blow to the growing local film industry and a setback for Buffalo Studios CEO Matthew Fleckenstein – a Grand Island native and veteran Hollywood writer and producer who has been nominated for Emmy awards. But while he said the decision was “very disappointing, very frustrating,” he also insisted it was not a death knell to the project. People are also reading… “We’re going to pause, take a step back and continue to monitor things,” he said. “As interest rates drop, hopefully, those investors will start coming back to the table.” The South Buffalo project, which would have been located across from the Tesla plant on South Park Avenue, is separate and unrelated to the Niagara Studios venture that is nearing completion on 3.7 acres at 1155 Niagara St., on Buffalo’s Upper West Side near Rich Products Corp.’s headquarters. That $50 million effort, which is being undertaken by British firm Great Point Media, envisions a 20,000-square-foot main studio and two smaller 5,000-square-foot studios, plus support space, in a 67,000-square-foot building. The property was acquired from Rich. Additionally, Buffalo Film Works completed construction of a fourth soundstage – one of the largest in the Northeast – to expand its complex at 370 Babcock St. The announcement by Buffalo Studios came just over three years after the team led by Fleckenstein unveiled plans for an $80 million venture on a 27-acre site at 1176 South Park, on the banks of the Buffalo River. The complex was expected to serve the television, film and gaming industries, and would also have served as a satellite campus for education and training opportunities for the University at Buffalo. It was expected to create 22 jobs. The campus would have consisted of 11 buildings and as much as 250,000 square feet of space, including six soundstages and four support buildings with features like a convenience store, daycare, and food and beverage offerings. And it would have resulted in the remediation and redevelopment of a brownfield site that formerly housed a steel mill. The project had been slated to start construction in spring 2021, with completion in late 2022. But the pandemic “wreaked havoc on materials and building costs,” while interest rates drove up financing costs, the statement said. That propelled the total cost to over $120 million, while hindering the financing effort, as investors “were pulling money off the table” and putting it in self-storage and multifamily apartment projects instead, Fleckenstein said. “It just made cash that much harder to find,” Fleckenstein said. “As investors got a little more conservative, they started to put their money in more traditional investments.” The group said they “worked with multiple investors, lending institutions and local stakeholders,” but without success. The team managed to raise over $100 million – mostly debt from a syndicate of local banks led by KeyBank – and received a $2 million economic development grant from the state. But it wasn’t enough. “The support is still there. We’re confident the demand is still there, particularly coming out of the strikes,” he said, referring to the now-concluded walkouts by Hollywood actors and writers. “If the opportunity presents itself, then we definitely are here to pick things back up.”
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