Shopping Malls’ New Product: Fun

Shopping Malls’ New Product: Fun

Shopping Malls’ New Product: Fun

Many U.S. malls are experimenting with entertainment-focused tenants

Go-kart racing, indoor rope climbing and laser tag aren’t activities typically associated with back-to-school shopping, but that is what some shoppers at a Syracuse, N.Y., mall are doing.

Entertainment offerings at malls have generally been limited to dining and maybe a multiscreen movie theater alongside the main draw of traditional retailers. But many U.S. malls, like Syracuse’s Destiny USA, are experimenting with entertainment-focused tenants more likely to be found in an amusement park than a shopping center.

Among the newcomers: high-tech golf driving ranges, skydiving simulators and “escape rooms,” in which players are locked and challenged to find a way out by looking for clues and solving riddles.

These attractions are keeping people in malls longer, landlords say. “Guests stay here for over six hours,” said Marc Strang, corporate marketing director at Pyramid Management Group, which owns and operates 15 malls in addition to Destiny USA.

They are also spending more money. Destiny USA sells day passes ranging from $38 to $48 for access to a number of its attractions which include laser tag, immersive adventures, glow-in-the-dark miniature golf and an outlet of the Build-a-Bear chain.

Food and entertainment currently account for 22.1% of the space leased in malls, compared with 19.2% in 2012, according to data from CoStar Group Inc. This year, Pyramid has 49 entertainment tenants which account for 9.6% of leasable area in its portfolio, up from 16 tenants and 4.3% of its portfolio in 2010.

“We’re aggressively rolling the entertainment across all the other properties,” said Mr. Strang.

Malls’ reinvention as entertainment hubs is partly a response to the increasing competition online shopping poses to their traditional tenants, many of whom are scaling back. Macy’s Inc. said in August it is planning to close 100 stores, or about 15% of its locations, amid sliding sales.

At the same time, investors are betting on the entertainment trend, with some of them showing decent profits. Consider, for example, EPR Properties, a real-estate investment trust based in Kansas City that focuses partly on building state-of-the-art movie theaters and golf entertainment complexes next to or inside shopping centers.

EPR reported revenue of $236.8 million in the first half of 2016, compared with $200.7 million in the same period of 2015. The company’s shares, which this year hit a record high of about $85, have risen 39.5% in 2016, compared with 11.7% for the broader equity REIT index.

“We’re starting to see the recognition of this now. We do a lot of business with the mall guys,” said Gregory Silvers, chief executive officer at EPR, which got its start in 1997 building theaters. “They say, we’ve got a lot of department stores, we need something that’s going to be a traffic generator.”

EPR’s projects include a family entertainment center adjoining Oakbrook Center, a shopping mall in Chicago. It also has developed state-of-the-art movie theaters in malls across the country, including in Lycoming Mall in Pennsylvania and NorthEast Mall in Hurst, Texas.

EPR’s movie theaters used to be standard multi-screen complexes. Now they are introducing luxury recliner seats and gourmet dining options and they offer their big screens for private gaming parties.

Another big EPR tenant is Topgolf Entertainment Group, a firm that operates driving ranges that allow players to hit golf balls containing microchips that track each shot for point-scoring. The ranges typically also offer drinking and dining as well as features such as live music.

EPR has built 20 of these ranges, half of them in large spaces next to shopping centers. They cost about $18 million to $24 million each to build, Mr. Silvers said.

Of course, amusement attractions aren’t the panacea for the mall industry. Space vacated by a department store sometimes has to be demolished to make way for the new entrants because their designs don’t work as entertainment space. It also remains to be seen if the new tenants will draw customers to shop in stores nearby.

But it is clear to many in the retail business that entertainment will play a critical role in the future of malls. “I’m not sure anything is ever a sure win but certainly being at the forefront of consumer trends, as the industry is, is essential to staying relevant,” said Tom McGee, chief executive of the International Council of Shopping Centers, a trade group.

Some businesses are retooling old ideas.For example, EPR has worked with new bowling operators like Pinstripes, Punch Bowl Social and Main Event to develop new alleys in malls and other locations that feature more upmarket dining options and sometimes include other games such as bocce and minigolf.

New concepts include iFly, an indoor skydiving simulator. The Texas-based company SkyVenture LLC currently has 37 facilities around the world that charge about $60 for two flights for first-time customers, according to its website. Its locations include City Centre Mirdif, a mall in Dubai.

Bangkok, Thailand-based Escape Hunt Operations Ltd, one of the biggest operators of escape rooms, initially focused on attracting businesses that wanted to use the games as team-building events.

More recently the company has been trying to broaden its customer base, eyeing 25-to-40-year-olds and families with teenagers. Part of this strategy involves finding more locations at shopping centers.

“Traditionally, we did not consider [shopping centers] as rental costs were prohibitive, but recently we have tried harder to secure such spaces,” said Paul Bart, Escape Hunt Experience’s chief executive.

Escape Hunt has six locations in the U.S., including a mixed-use building in Houston and a Dallas strip center.

Shopping Malls’ New Product: Fun

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Hollywood’s Banner Year at the Box Office Masks a Procession of Flops

Hollywood’s Banner Year at the Box Office Masks a Procession of Flops

Megahits, such as ‘Star Wars,’ pushed total ticket sales to a record in 2015, but many films struggled to find an audience.

Hollywood had its biggest year at the box office in 2015, thanks to a handful of blockbusters that left a whole lot of duds in the dust.

But the runaway success of “Star Wars: The Force Awakens” and “Jurassic World” raises questions about the overall health of the movie business. The problem: More films that don’t have the muscle to be megahits are struggling to attract any audience at all.

Last year’s ticket sales in the U.S. and Canada totaled $11.1 billion, up 7% from the previous year and surpassing the record of $10.92 billion set in 2013, according to Rentrak. All of the growth, however, occurred at the top of the heap.

The five most successful movies of 2015 grossed $2.47 billion, accounting for 22% of the year’s total box office. The previous high for the top five was $2.05 billion, or 19% of the overall take, in 2012.

For the other 129 films released nationally last year, the results were anything but impressive. They brought in a collective $8.65 billion, the lowest total for non-top-five movies since 2008, when ticket prices were 14% lower.

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Audiences have become “very binary” in their moviegoing choices, said Tom Rothman, chairman of Sony Pictures Entertainment’s motion picture business. “Either a film is relevant to them and penetrates the pop-cultural zeitgeist, in which case the upside is enormous, or it doesn’t rise to that level and they’re out altogether.”

A startling number of big-budget movies bombed in 2015, proving that no amount of marketing can pull audiences into theaters at a time when Netflix queues are long and social media spreads word about a stinker in a heartbeat. The year’s costly disappointments included “Pan” and “Jupiter Ascending” from Time Warner Inc. ’s Warner Bros., “Fantastic Four” from 21st Century Fox ’s Twentieth Century Fox studio, Walt Disney Co. ’s “Tomorrowland,” and “Pixels” from Sony. Until mid-2013, Fox was part of Wall Street Journal parent News Corp.

Last year also saw eight movies that failed to gross even $10 million despite full-fledged advertising campaigns, a record in recent years. In the past, spending $20 million or more to promote a film almost always guaranteed a respectable performance, said Chris Aronson, president of domestic distribution for Fox. But “there is no bottom anymore,” he said

Casting a big-name actor didn’t seem to help. The year’s sub-$10 million club included Fox’s “Victor Frankenstein,” featuring “Harry Potter” star Daniel Radcliffe; Warner’s “Our Brand is Crisis,” with Sandra Bullock; and Lions Gate Entertainment Corp. ’s “Mortdecai,” starring Johnny Depp.

Most worrisome to some in Hollywood is the disappearance of second-tier movies—those that aren’t blockbusters but are solidly profitable. Last year, 22 movies grossed between $100 million and $350 million domestically, down from 31 in 2014 and the fewest since 2006.

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From left, Ann Dowd, Sandra Bullock and Anthony Mackie in a scene from ‘Our Brand is Crisis.’ Photo: Warner Bros. Pictures

“Gigantic hits are actually becoming more common and the midsize hits are becoming rarer,” said Adam Goodman, a producer and former film group president of Viacom Inc.’s Paramount Pictures.

The movie industry’s troubles may stem from its heavy reliance on television advertising, as more people fast forward through commercials or abandon cable subscriptions. Some insiders also point to the growing quality of at-home entertainment options, be they on cable, streaming services or videogame consoles. But few doubt moviegoers’ habits have changed.

“Many younger people no longer feel compelled to go to the movies as an activity in general,” said Sony’s Mr. Rothman. “Instead, they go to see a particular movie.”

Overseas ticket sales, which rose an estimated 5% last year to $27.5 billion according to Rentrak, can help make up for losses at home. “Terminator: Genisys,” for instance, grossed $351 million internationally, compared with $90 million in the U.S. and Canada. But foreign box office more often exacerbates domestic trends. The top five domestic movies were all among the eight highest grossing internationally.

As they have for a number of years, sequels and reboots continued to rule the box office last year. The only exceptions that made the top 10 were animated features, such as Pixar Animation Studios’ “Inside Out,” and Fox’s surprise hit adaptation of best-selling book “The Martian.”

The trend toward sequels, reboots, computer-animated films and adaptations of comic books, toys or videogames is likely to accelerate in coming years as the major studios, increasingly focused on big-budget “event” movies they hope will become blockbuster hits, rely on formulas that have worked for them before.

There were about 27 such films last year, and nearly 40 are scheduled for release this year and in 2017. Some of them are new installments of successful movie series like “X-Men” and “Fast and Furious” while others, such as “Wonder Woman” and “Ghostbusters” are attempts to create or refresh big-screen franchises.

But there still are likely to be many times more bombs than blockbusters, unless movie attendance picks up. “You can get blinded by the success of certain sequels and forget about the years of development and fan growth it takes to grow a franchise,” said Mr. Goodman.

What’s more, the fact that the Amy Schumer comedy “Trainwreck” outgrossed a sequel to 2012’s smash hit “Ted” domestically shows that well-known titles are no guarantee of success.

WSJ

Hollywood’s Banner Year at the Box Office Masks a Procession of Flops

Best rooftop bars

One good thing about humanitys obsession with building enormous numbers of buildings?More rooftops, which means more rooftop bars.

Best rooftop bars – CNN.com.

 

Ballrooms Make a Comeback

Ballrooms Make a Comeback - WSJ

Ballrooms are once again taking center stage.

In a real-estate Cinderella story, a handful of homeowners across the South are transforming the seemingly dated concept of a ballroom into lavish spaces for everything from charity benefits to a playroom for the grandkids.

Ballrooms Make a Comeback – WSJ.