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NEW YORK CITY-”Everybody’s look and nobody has come up with a good creative use of these spaces,” Brad Mendelson, executive managing director at Insignia/ESG, tells GlobeSt.com about vacated movie theaters. “So far there’s been nothing that was fundamentally sound and worked. At least in my experience I haven’t found or heard of a sound solution.”

Theaters, he explains, are concerned with “marquis identity,” whereas stores are “frontage oriented,” seeking space to show their wares. When these cinemas fail, they take everything with them; they gut the places so no other theater can come in and take their market share.”

Mendelson notes that “these are really great spaces,” but are hard to adapt to other purposes given the physical requirements of the special use. “There’s degradation in the floors, the columns are irregularly placed, there’s stadium seating, etc.” He says businesses that might be a good fit for the unusual space, such as a gym, generally cannot afford the high rent. He explains, “In many cases the rent is higher for movie theater space because of the investment they had to make for the special conditions.”

Standalones, he says, are easier to market to new retail tenants than those in “entertainment centers.” “Most cinema property being reclaimed is really in secondary locations,” he adds. “You’re going to see a lot of big box retail space continuing to come onto the market in general, so moving these theater spaces ill become that much more difficult in many cases. These spaces will be returned to market through downsizing, cutbacks and restructuring of retail chains looking to unload space.”

He says that the entertainment centers are in the most danger. “They’re built around the theaters as anchors, but theaters aren’t successful as anchors,” he explains. “Smarter retailers in these centers signed tenancy conditions, stating they don’t have to pay rent if there’s no anchor in place. The theaters weren’t successful, and they didn’t generate revenue for the centers. People didn’t shop before or after the movie and for whatever reason it seems people didn’t eat before or after the movie at the restaurants near the theaters.”

Anchorless, and in many cases without rent-paying tenants occupying the spaces, owners face investing in redevelopment of the space. This is costly and can be a strain, particularly in these economic hard times.

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