When Allen Hubsch joined law firm Loeb & Loeb two years ago as a partner in the real estate division, he brought along 25 years of experience representing the owners of movie theaters and concert venues, and similar entertainment industry clients.
Hubsch is currently representing the owner of the Curran Theatre, in San Francisco, helping bring the Harry Potter and the Cursed Child stage production to that venue. He has also represented Russian billionaire Mikhail Prokhorov in connection with the acquisitions of the Barclays Center sports venue, in Brooklyn, N.Y., and the Nassau Veterans Memorial Coliseum, in Uniondale, N.Y. He says the theater business is more exciting than ever thanks to new trends.
How have theater venues gained favor among shopping center owners?
I can remember back to when motion-picture theaters were really not welcome, generally, in the core of retail centers. The traditional model of shopping centers was [that] if you [were] going to have a cinema, [then] motion-picture theaters used to be located on the outside of the ring road, or they used to be stand-alone theaters, because they were not part of a mixed-use [center] at all. Landlords were not looking for any motion-picture theater to drive traffic to their other tenants. That isn’t the case anymore. The most appealing locations for theaters are to put them in the heart of retail or in the heart of mixed-use centers, because it is an amenity that other tenants can enjoy and [also] a driver of traffic.
Do theaters stack up well against other forms of entertainment retail?
Theaters have a bit of an advantage over other newer concepts, like virtual-reality and bowling and ax-throwing venues, in that somebody else is supplying their content — and supplying it every single week. The downside is that the exhibitors are dependent on the quality of the content that is being provided, and that can vary from week to week or year to year. But it enables motion-picture exhibitors to be refreshed every week, and consumers are coming back, because they are getting a brand-new experience each time.
Do you see theaters continuing to evolve, and if so, how?
There is more of a luxury component to a lot of the food-service [providers now], and there are also technological advances with electric-recliner seating that give you more of a first-class feeling. New technologies like ScreenX and 4DX have emerged recently, and, of course, we have had IMAX for some time now, and that has continued to be successful. ScreenX is a technology that is coming and is exciting in its own way, where you essentially have screens on three sides of you.
Can you identify any challenges that theater owners face?
Their challenge, honestly, is the overwhelming number of opportunities that are available and [are] being presented to them by landlords, and [also] being selective about the locations that they choose to go into. Exhibitors are properly being judicious, careful and selective, and [they] are looking very hard at the demographics. About 20 years ago every major theater operator in the United States went into bankruptcy because of overbuilding. As a result, there are a smaller number of big operators who are more mature, exercise better judgement, are less susceptible to a feeding frenzy and are looking at the long term. These are long-term leases, and it is very expensive for the landlord generally to build a theater. It is not every landlord who wants a theater, but there are many who do, and there are many new developments being built where this is important to the development.
Are theaters not the right answer for every center, then?
It doesn’t work for every landlord, and I think I am generally impressed with what I see: that people are looking long and hard at their own real estate and their own market and making wise decisions about what is right for them. The exhibitors are also not going to be induced to do something that is foolish. I think we are actually in a good position where people are reacting not like lemmings, not in a panic, but are studying the questions and making decisions based on their own location.
What are some other trends you are watching?
There is a desire, a hunger for finding other kinds of experiential tenants. There are many ways to create an experiential center, and some of those are not necessarily entertainment centers — they are creating an entertaining center. … I think landlords would love to find more experiential tenants, but the irony is that it is hard. After almost 100 years, the motion-picture theater business is still a concept that is proven and continues to succeed. It is a question of content — and there is a difference between novelty and content. Novelty wears off, and content is constantly changing, so I think we are going to see more people trying very interesting things. And what is going to be interesting is seeing what works.
By Ben Johnson
Contributor, Shopping Centers Today