A drive-in theater is installed in the parking lot of Brookfield’s Park Meadows shopping center in Lone Tree, Colorado, just outside of Denver.
Source: Kilburn
Parking lots, of all places, are becoming major sources of income for some mall owners during the coronavirus pandemic.
Brookfield Properties has signed an agreement with entertainment company Kilburn Live to convert the parking lots of several of its shopping malls in the US into movie theaters, with movies and virtual concerts, and many consumers are looking for outdoor activities to participate. during the Covid -19 crisis. So far, they are at five Brookfield locations in Denver, Dallas, Houston, Minneapolis and Woodbridge, New Jersey. More are on the way, according to the two companies.
Because these deals are structured, Kilburn is essentially a Brookfield tenant, just like Macy’s or Nike, who pays the rent to occupy the outdoor space, explained Michelle Snyder, director of marketing for Brookfield’s retail arm.
“If we can’t rent the mall, we’re going to rent another space,” he said in an interview, referring to organizing large-scale events. “We actually have tons of ideas for our parking lots.”
Creativity comes from the complexity of the pandemic, leaving retail real estate owners struggling to find solutions.
Many cinemas remain closed, for example. In some states, closed shopping malls are also closed. In California, for example, Governor Gavin Newsom has ordered shopping centers to close again this week in 30 counties on the state’s watch list, representing 80% of California’s population, with Covid-19 cases in increase. Meanwhile, New York shopping malls require high-quality air systems that can filter the coronavirus before they can reopen, under the command of Governor Andrew Cuomo.
Many consumers are also cautious in their approach to returning to stores, restaurants, and entertainment venues, even when these spaces can operate again. They look for things to do outside, where social distancing is easier to practice.
“People are desperate to leave home,” Snyder said, adding that Brookfield has installed food kiosks around the entrances for people to order in the food court and then eat while watching a movie. Recently, one of the drive-ins hosted a Garth Brooks country music concert.
Other mall parking lots across the country house food trucks, serve as Covid-19 test sites, and serve as curb pickup destinations, among other uses.
“It comes down to the director of real estate,” said Elliot Nassim, president of Mason Asset Management, which buys struggling shopping malls with New York-based investment firm Namdar Realty Group. “If you have good real estate, you have the potential to do a lot with it.”
“We have a full specialized leasing team now just focused on parking and ancillary revenue,” he said.
A new source of income, from parking lots, is likely to be a welcome deferral for homeowners who are faced with the new reality that several of their tenants are paying less rent or not paying rent in full during the pandemic.
Simon Property Group, the largest mall owner in the United States, is suing Gap Inc. for not paying the rent. Nordstrom has said it is “modifying” its rental payments through January 2021. Several other retailers have said they are taking advantage of the pandemic opportunity to renegotiate leases for better deals.
Other retailers are closing stores permanently. This includes a wave of bankruptcy retailers like JC Penney, RTW Retailwinds, and Brooks Brothers.
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