Hollywood’s real estate giant is feeling the weight of an industry in flux.

S&P Global has downgraded Hudson Pacific Properties—parent company of Sunset Studios—to a speculative-grade “B” rating, citing sustained headwinds across both its studio and office portfolios and a cloudy outlook on liquidity.

The news underscores the current volatility rippling through the Los Angeles production ecosystem. Once flying high on the momentum of its Sunset Bronson deal with Netflix and a $360 million acquisition of Quixote Studios in 2022, Hudson Pacific now finds itself navigating a drastically reshaped landscape. S&P’s May 28 report pointed to “ongoing studio and office headwinds” and warned of “refinancing challenges” ahead.

Hudson Pacific’s studio portfolio—once considered among the crown jewels of Hollywood real estate—was just 73.8% leased as of Q1 2025, down from 76.9% a year prior. Compounding the issue, the company and its partner Blackstone recently paused plans for a UK studio expansion, shelving what would have been Sunset Studios’ first international outpost.

The timing couldn’t be tougher. Los Angeles is in the midst of one of its steepest filming slumps in recent memory, brought on by last year’s dual strikes and a broader pullback in content spending as streamers chase profitability. Meanwhile, production volume continues to shift toward states and countries with aggressive tax credit programs—a trend that’s putting pressure on California to expand or reform its own incentive offerings.

“The company’s EBITDA has declined as operating performance within its office and studio segments has remained weak,” S&P analysts noted, citing “evolving industry dynamics” and the chilling effect of elevated interest rates.

While Hudson Pacific remains a cornerstone of the LA studio landscape—with Sunset Bronson, Sunset Gower, and Sunset Las Palmas still active—the downgrade serves as a stark reminder: even the biggest players aren’t immune to the shifting economics of production.

As industry stakeholders push for stronger California incentives—and with growing momentum for a federal film tax credit—the next few quarters will be pivotal in determining whether legacy players like Hudson Pacific can adapt and rebound.