The effect of film production studios on housing prices in Atlanta,the Hollywood of the South

Abstract

Governments compete to attract film productions to their communities, expecting them to provide economic benefits directly through local purchases and employment and indirectly through publicity and image building. Atlanta, Georgia, has become a large film production hub, partially because of a state tax credit programme. As a result, permanent production facilities have been established that may influence surrounding real estate prices. Convenience and a desire to live among other creatives may encourage actors, technical workers and support staff to live nearby, and the film industry cachet may attract additional residents, increasing house prices. However, if the facilities are perceived to be similar to other industrial operations, they may negatively affect surrounding house prices. We investigate film production studios’ effect on residential property values using housing sales data and information on film production studios’ location, size and year established. To mitigate bias from the potential endogeneity of studios’ location choices, we augment the standard hedonic pricing framework to incorporate proximity to a film production studio and construct treatment and comparison groups. Using a spatial difference-in-difference framework, we find that while houses located closest to film production studios tend to sell for lower prices than houses further away, the discount is not attributable to the studios. Instead, the establishment of a new studio, especially a large one, is a positive event in the housing market. These findings have important policy implications for local governments in making decisions about film industry incentives and facilities’ site selection as possible drivers of redevelopment.