Only three out of 13 shuttered theaters in Central Florida have reopened under new ownership and new management in the past 18 months with the remainder in limbo. Dallas-Fort Worth-Houston has only experienced a half dozen cinema closings but owners in those markets are quickly converting the properties to other retail uses.
Vaughn Miller, president of Dallas-based Henry S. Miller Commercial's retail division, attributes the quick conversions to the area's demographics. He tells GlobeSt.com's Southwest bureau chief Connie Gore, "What do people do in Dallas and Fort Worth? They shop. They eat out. And they go to movies."
Willing buyers are waiting in the wings for shuttered cinema properties, brokers say. "It's good real estate," Greg McDonald, executive vice president of Dallas-based Weitzman Group, tells Gore. But anyone attempting a conversion should expect to pay $25 per sf to fill in the floor, McDonald says, unless it's similar to the bookstore venture in the former Houston movie house. At that site, rows of bookshelves line the sloping floor in place of seats.
In metro Orlando, however, the scenario is far different. No closed movie houses have been converted to other retail uses so far, notes John M. Crossman, senior vice president and retail services director, Trammell Crow Co.
About 500,000 sf out of an estimated total 650,000 sf of shuttered movie house space has been sitting vacant, waiting for a suitable user, since December 1999, according to GlobeSt.com research based on published individual theater closings.
"It's a very serious problem," Crossman tells GlobeSt.com. "The results could have been much worse if more product would have come on line."
Even if the closed properties could be retrofitted at a reasonable cost for other commercial uses, Crossman questions where the tenants would come from.
"Theater spaces are (usually) large anchor tenants typically with limited visibility," the broker says. "This means that there are only a handful of categories of tenants that would consider the space."
Crossman suggests demolition instead of re-construction is often the best cost-effective route to follow with out-of-business movie houses.
But Robert Wilson, a senior executive in the Orlando office of Birmingham, AL-based Hoar Construction Co., isn't giving up on cinema conversions altogether. He brings up a planning element sometimes missed in early considerations: parking.
"Theaters are parking intense," Wilson tells GlobeSt.com. And that's a plus for the conversion side.
"In my opinion, a typical 35,000-sf to 50,000-sf cinema requires enough parking for a 75,000-sf to 100,000-sf, five-story building," he says. "If the demolition of the cinema costs $10 per sf ($500,000) and the (new construction) cost of the office building is $65 per sf, the total construction cost (excluding land cost and soft costs) is still less than $100 per sf," he reasons. "And the use is much better."
In Portland, OR, Mark New and Steve Neville of New & Neville Real Estate Services, agree with Hoar's Wilson that parking is probably a closed cinema's biggest plus, along with signage. A sloped floor is the greatest cost hurdle, New tells GlobeSt.com's West Coast bureau chief Brian Miller. Crow's Crossman adds that finding use for closed cinemas in Central Florida and across the country "could be the biggest challenge facing the retail industry this year--and the person who finds the solution will be well-compensated."
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