The modern multiscreen theatre arose alongside the mall in the mid-20^th century. Catering to a consumer market with increasing disposable income, theatres became a staple, if not anchor, for a significant number of commercial developments. This link with in-person retail, along with their reliance on crowded spaces make the pandemic particularly challenging for theatres as well as their landlords, as the majority of theatres have been unable to profitably operate for the bulk of the year.

Trends in moviegoing

The composition of the moviegoing public has become increasingly concentrated in a small segment of younger consumers seeking a higher-end moviegoing experience since well before the pandemic, with these viewers making up a growing share of Canadian ticket sales. Of course, theatres are not sitting on their hands, and have recently sought ways to bolster both attendance and profitability directed at younger audiences. Theatres have attempted to expand attendance through subscription programs that mirror many streaming options, allowing for increased traffic and profits. Theatres such as Cineplex recently introduced VIP seats, food, alcohol, and drinks. Unfortunately, these programs were rolled out shortly before many theatres shut down due to the pandemic, and their effectiveness is still unknown. During the pandemic, though dependent upon pandemic controls, theatres have also sought to lease their venues for private screenings and events. It is unclear how rapidly and in what numbers audiences will return to theatres.

Opportunities and challenges for the industry

Multiplex theatres present landlords with few choices for a quick turnaround in redevelopment, often requiring a complete teardown if another theatre does not express interest in tenancy. While smaller or standalone cinema spaces present opportunity for repurposing as venues, community centers, or takeover by a different operator, they are similarly problematic given their specific use configurations. Given the cost and timeframe of repurposing theatres, recent closures have forced many landlords to extend lifelines to struggling tenants. While this situation is untenable in the long term, given their unique design and the potential for increased profitability through programs such as subscription passes and increased amenities, many are taking this course of action.

If a complete teardown is an option, development of theatre spaces within major malls or metropolitan areas to bring consumers closer to existing retail tenants is a possibility. Transitioning special purpose properties towards residential spaces and hotels are possibilities, while conversion to commercial office space is another. These redevelopments take advantage of the existing infrastructure such as ample parking and nearby amenities, with residential spaces presenting the most promising trend, offering stable revenue for landlords while providing captive consumers for local venues. Given typical ease of access and existing infrastructure, theatre locations are often prime locations for such redevelopment.

As consumer trends continue to shift towards online shopping and home entertainment, the redevelopment of theatres will present both a challenge and opportunity for landlords and tenants alike given their locations and specific designs. While it is uncertain how quickly and to what extent moviegoers will return upon the easement of restrictions, a certainty is that landlords will need to continue extending financial support to these unique operations until we roll out this pandemic.

Contact Creiland Consultants Realty today if you have large vacant space in need of repurposing.

Creiland Consultants Realty is a full service disciplined commercial real estate advisory firm based in Toronto, Ontario. The management team consists of Certified Commercial Investment Member (CCIM) with extensive experience in a wide range of asset classes across the Greater Toronto Area. We are here to support your goals and take pride in being a commercial real estate partner you can trust. Visit our website to learn more!