Do Multiplex Theaters Have a Future?
Between Streaming Services, COVID-19 And Gun Violence, It's An Open Question
I recently traveled to Northern Virginia to assess the real estate landscape for a future investment project, but this story is only partly about real estate. It is also partly about going to the movies.
Recent stories in the business press talk about Cineworld’s bankruptcy filing in Houston and how lawyers for Cineworld asked the bankruptcy judge to allow the company to terminate leases for unprofitable locations—each with multiple screens found in urban and suburban locations. At last count, Cineworld wanted to terminate dozens of leases under operators like Regal Cinemas, R.C. Cobb, United Artists Theatres, Hollywood Theaters and others. The Regal Cinema in Arlington, Virginia was one on a recent list that Cineworld asked to close.
I am as guilty as anyone. I stream movies at home on Netflix, Hulu and Amazon Prime, and I have not been back in a movie theater since the start of COVID-19. But on this trip, I had a free evening, was in Alexandria, and decided to go to the movies.
The decision was not that simple though. A few days before in Charlottesville, a University of Virginia football player shot and killed three of his teammates on a bus. And, the night before my theater decision, a night manager in Chesapeake gunned down six of his coworkers during the late shift at a local WalMart store.
Violence and gun violence are regular occurrences in America – there are shootings in workplaces, churches and synagogues, schools, bars and nightclubs, and a protest rallies. There are also shootings in movie theaters.
So in the wake of two Virginia shootings over the span of a few days, did I feel safe going to the movies? Did I feel safe going anywhere? And, to complicate my decision, I was also choosing between two movies: She Said, about the New York Times reporters who exposed Harvey Weinstein’s misdeeds and essentially started the #MeToo movement; and The Fabelmans, a semi-autobiographical film about Steven Spielberg’s coming of age in a Jewish household.
Would a shooter be more likely to be a misogynist or an anti-Semite? Which theater in the multiplex would be safer? This may all seem a bit out there and likely the product of the 24-hour news cycle talking relentlessly about gun violence where people gather. But was it? How many people stay away from movie theaters and other public venues out of fear of gun violence?
Anyway, I said this was a story about real estate. In particular, failing movie screen operators across America, and the implications for vacant movie theater space in shopping malls and in downtown venues. A multiplex theater can easily fill 60,000 square feet of space. Some are much larger. The theater in Alexandria I was considering had 22 screens.
So, after careful consideration, we went to see She Said. There were four people, us and one other couple, in the theater built for 140 patrons. The concessions were practically empty – no lines for popcorn or oversized sodas. The theater was desolate, the parking garage empty.
Between streaming services, COVID-19 and an epidemic of gun violence, the future viability of multiplex cinemas is an open question. And how the closure of dozens of theaters with hundreds of screens will affect the many commercial developments that house the theater operations also remains an open question. These spaces are not easily converted to other uses, and there is no queue of theater operators looking to open new multiplexes.
In the Cineworld bankruptcy, the company asked the Bankruptcy Court to not only let it walk away from the leases. It also asked to abandon everything in the theaters without further obligation to the mall owners. It would be the mall owners’ burden to demolish the theaters, level the floors and build-out and re-lease the space.
I don’t know what the future of multiplex theater operations will look like, or if there will even be such a cohort in the future. I do know that the future is not looking bright for theaters, and that will impact existing retail real estate and future developments going forward.