1、Entertainment concepts expand to meet growing appetiteEntertainment report 2023Flight ClubExecutive summary1.Entertainment spending is growing.In Q4 2022,spending on dining out in the U.S.grew by 13.7%year-over-year.Spending at amusement parks and arcades grew by 20.6%year-over-year.2.Entertainment

2、concepts are opening new locations to meet that demand.We have identified 9.1 million square feet of new entertainment space slated to open in the U.S.and Canada within the next two years.3.Eatertainment concepts,which feature food,drink and multiple games under one roof,will open the most locations

3、.Virtual Reality(VR)and Competitive Socializing(a single game along with food and drink)concepts have the second and third most openings planned.4.Economic obstacles may hinder planned growth.Many entertainment concepts are expensive to build;the biggest hurdle in negotiations between landlords and

4、tenants is the amount of money the landlord will contribute in upfront construction dollars.Rising interest rates have limited the opportunities to profitably borrow when funding new construction.Consumers want fun experiences and entertainment concepts plan to open new locations to give them what t

5、hey want.But to get to lease execution,many hurdles must be overcome.PutteryContentsMore than 9 million square feet of new entertainment on the way01 0502What landlords want 1103What tenants want 1504Economics of an entertainment lease 2005A selection of growing concepts 25People just want to have f

6、unagainAs the pandemic fades into the past,consumers are spending more on food and fun.A growing number of entertainment concepts are hoping to meet this demand.For this report,we identified entertainment concepts in the U.S.and Canada,with a particular focus on those with multiple locations and pla

7、ns for expansion.We also conducted interviews with more than 30 real estate developers,investors,architects,brokers and entertainment operators.This report contains a summary of our findings.01 Smart Destinations,Flickr(CC BY-SA 2.0)More than 9 million square feet of new entertainment on the way?Ame

8、ricans are spending more on experiencesAfter a socially isolating pandemic,its no wonder that people want to get out and have a good time.Americans total recreation spending will grow by 10.2%in 2023.*Entertainment concepts are expanding to meet the publics growing desire for novelty and fun.*Source

9、:IBISWorld ForecastSource:Census BureauYear-over-year change in sales Q4 2022?Coming soon:hundreds of new entertainment venuesWe identified 503 entertainment concepts with multiple planned or existing locations.Some are regional chains with modest ambitions,but many have national and international e

10、xpansion plans.Our 2023 tally of U.S.and Canadian entertainment concepts identified 9,102,300 square feet of new planned openings within the next two years.Over 9.1 million square feet of entertainment planned for U.S.and CanadaExisting square feet(in millions)Percentage of planned openings(in squar

11、e feet)Source:JLL ResearchA guide to entertainment tenantsWeve identified eight categories of expanding entertainment concepts1.Art installations and selfie museums:Ticketed installations often meant as backdrops of social media posts.Some are more artistic,with compelling installations and displays

12、.(Examples:Museum of Ice Cream,Meow Wolf)2.Bar arcades:Vintage arcade games in an unpretentious but comfortable bar.(Examples:16-Bit Bar+Arcade,Ground Kontrol)3.Competitive socializing:Single game or activity with elevated F&B options.Usually catering to a 21+crowd.(Examples:Puttshack,Flight Club)4.

13、Eatertainment:Houses a variety of games and activities under one roof,along with food and drinks.Many target families during the day and 21+at night.(Dave&Busters,The Rec Room,Velocity Esports)5.Escape rooms:Players solve a series of puzzles within a given time.Often occurs in highly themed environm

14、ents.(Examples:Escape the Room,The Escape Game)6.Esports:Places for gamers to gather and watch or play games like League of Legends,Overwatch and World of Warcraft.Can be a small esports lounge or a large arena.(Examples:Contender Esports,Belong Gaming Arena)7.Trampoline parks and kid zones:A play a

15、rea for kids and families.Attractions can include trampolines,foam pits and zip lines.Food is not elevated and tends to include burgers and pizza.(Examples:Sky Zone,Kids Empire)8.Virtual Reality:A space that provides headsets and gaming stations to people who want to experience computer-generated wo

16、rlds.(Examples:Sandbox VR,Zero Latency VR)Most entertainment venues fall into two size ranges1.Larger footprints:with average sizes ranging from approximately 25,000 to 32,000 square feet.Eatertainment Art installations and selfie museums Trampoline parks and kid zones Competitive socializing2.Small

17、er footprints:with approximate sizes of 4,500 to 8,500 square feet.Esports Bar arcades Escape rooms Virtual realityAverage size of entertainment conceptsTypeAverage size(SF)Eatertainment31,855Art installations and selfie museums28,286Trampoline parks and kid zones26,484Competitive socializing25,072E

18、sports8,214Bar arcades8,213Escape rooms5,768Virtual reality4,772Source:JLL ResearchSocial media drives foot trafficSocial media is an inexpensive way to get the word out.Your 3rd Spot opened in Atlanta in November 2021.Management estimates that 70%of new visitors heard about the concept on Instagram

19、 and TikTok,where the#your3rdspot hashtag has over 2 million views.Popular entertainment TikTok hashtags include:HashtagNumber of views#chuckecheese 2.2 billion#topgolf 1.7 billion#meowwolf 359.8 million#museumoficecream 105.8 million#sandboxvr 73.9 million#roundone 63 million#puttshack 19 million#p

20、uttery 3.5 million#andrettikarting 448,500#contenderesports 188,700#skyzonetrampolinepark 169,400Source:TikTok,May 2023 Museum of Ice Cream,Phillip Pessar,Flickr(CC BY 2.0)What landlords want02 16-Bit Bar+Arcade,Steven Miller,Flickr(CC BY 2.0)Landlords want a proven team and conceptLandlords see eve

21、ry lease as a risky proposition and are looking for indicators that a certain concept will be a success at their location.Existing locations of the same concept with strong average unit volumes.An executive team with a history of executing successfully.If the concept is a new one,its especially impo

22、rtant that the team has had success with other concepts in the past.A strong business plan,marketing plan and pitch deck.Landlords want a creditworthy tenantMore than one landlord said that as compelling as a concept might be,thats not enough.Tenants also need good credit or cash in the bank.And if

23、the concept has a strong parent entity,the landlord would like that group to sign the lease.Landlords also look to the private equity and venture capital groups that fund the growth of some new concepts.If that group has a successful portfolio of other companies,it makes the tenant more appealing to

24、 the landlord.When Puttshack received$150 million in growth capital from BlackRock in 2022,the money and credibility of the investor combined to make the tenant more appealing to landlords.Landlords want a tenant that fits within the project visionGood fit with existing tenants:Does the tenant appea

25、l to the kinds of people that the owner sees as the desired visitor demographic?At what time of day will the concept be busy?Does that complement or conflict with other tenants?Consistent activity:Many owners would like to see their centers active for as long as possible.They may hope to have a mix

26、of tenants,with some attracting kids and families during the day and adults in the evenings.Exclusivity:Landlords may avoid concepts with other locations nearby or too many other similar concepts in the area.Landlords want longevityOne visit isnt enough.Landlords want visitors to leave with the desi

27、re to return.Your 3rd Spot offers 80+experiences under one roof,which guarantees no visitor can try everything in one trip.Chicken N Pickle hosts a variety of pickleball leagues throughout the year.Landlords want operators to continually keep things fresh.VR concepts can bring in new games and exper

28、iences at a regular cadence.Sandbox VR will launch a new fantasy experience“Seekers of the Shard:Dragonfire”in June 2023Landlords in tourist areas may overlook replayability.Art installations and selfie museums,for example,have less return visitors and may find more success in a tourist area.Your 3r

29、d SpotWhat tenants want03 Mack Male,Flickr(CC BY-SA 2.0)Entertainment concepts want to be where the people areThe exact type of people?Well,that depends on the concept.Many concepts rely on corporate events for significant revenue.Theyll want to be in office corridors.Areas where tourists flock are

30、popular with some concepts.Nearby residential populations are especially desirable to those looking for repeat customers.Families with young children are needed for trampoline parks and kid zones where they will host many a birthday partyFulton Market District,ajay suresh,Flickr(CC BY 2.0)Tenants lo

31、ve good companySophisticated entertainment tenants recognize the gravity created by a cluster of concepts.The area becomes a powerful draw,and its popularity helps make all tenants more profitable.The mixed-use Grandscape development near Dallas,TX hosts a growing cluster of entertainment concepts i

32、ncluding Andretti Indoor Karting,Immersive Gamebox,The Escape Game and Puttery.Concepts coming soon include Sixes Social Cricket and Cosm.Entertainment concepts also like to be located near bars and restaurants.Sixes Social CricketUrban and tourist clustersUp and coming urban districts with a reside

33、ntial,retail and office mix are known for their concentration of popular bars,restaurants and boutiques.Concepts with an elevated food program work best here.Examples:Seattles South Lake Union,Atlantas West Midtown,Chicagos Fulton MarketCentral business districts are best for happy hours and corpora

34、te buy-outs.They often attract tourists and locals in the city for a night on the town.Tourist districts are especially good for more pricey concepts,as well as those with a lower rate of repeat visitors.Examples:Las Vegas Strip,New Yorks Times SquareArena districts have popular stadiums as an ancho

35、r.The best of them are surrounded with popular food and entertainment.Examples:Chicagos Wrigleyville,Hollywood Park in Inglewood,CAResidential clustersLifestyle centers and mixed-use developments are popular for entertainment,competitive socializing and escape rooms.Examples:The Domain in Austin,Eas

36、ton Town Center in Columbus,OH and Avalon in GeorgiaEnclosed malls are redefining themselves with food and entertainment.Class A malls often serve as shopping and entertainment hubs for their regions.Examples:Mall of America in Minnesota,American Dream in New York,Oakbrook Center near ChicagoSuburba

37、n residential areas with a concentration of young families are perfect for trampoline parks and kid zones.Mall of America,Warren LeMay,Flickr(CC BY-SA 2.0)Economics of an entertainment lease04Andretti Indoor Karting&Games,GrandscapeThe big hurdles for entertainment operators are the lack of availabl

38、e space,high interest rates and growing construction costs.Entertainment buildouts arent cheapLandlord contributions for construction are always a major point of negotiation for entertainment leases.Tenants in most entertainment categories will require costly construction.For categories like competi

39、tive socializing,tenants will ask for high tenant allowances.Those concepts with a restaurant component come with all the added costs of building out a kitchen.Tenant improvement allowances for an expensive concept could be up to$400 per square foot.Some tenants seek landlords to act as capital part

40、ners with them,wherein the landlord pays for the buildout and in exchange receives some equity in the business.But many owners dont have the needed capital to make this kind of investment and others see it as taking on too much additional risk.PutteryHigh rents required to offset tenant improvement

41、allowancesBecause of higher upfront construction costs which will be amortized over the lease term,the rents that some entertainment tenants pay will be higher than other retail tenants in the same market.The length of entertainment leases is often 10 to 15 years,with options to extend.Many leases i

42、nclude a fixed base rent,and an additional percentage rent that the tenant will pay if it successfully meets an agreed upon sales threshold.This agreement assures the tenant that theyll only pay a higher rent if business is a success.With interest rates still risingthe cost to borrow money to pay fo

43、r high construction coststhe landlord is forced to push up rents in order to make a profit.But these rents may be pushed higher than the market can bear.With high interest rates,the landlords or tenants that have money in the bank and can avoid borrowing are in the best position to get these deals d

44、one.Puttshack?Low availability and other challengesEntertainment deals can be expensive and complicated,with many hurdles to overcome.Availability of space is quite limited,especially in the most desirable areas.With national vacancy rates at historical lows,competition is bigger than ever.Economic

45、uncertainty still weighs on all parties,with the recent pandemic lockdowns still fresh in their memory.Slower economic growth could impact consumer entertainment spending.Co-tenancy clauses in the leases of grocery anchors at some open-air centers may prohibit tenants like arcades or bowling alleys.

46、Signing such a lease would require approval from the anchor tenant,which may be difficult to obtain.Retail real estate vacancy and average asking rents in major U.S.marketsSource:JLL analysis of CoStar data05 Escape room,David Hofmann,Flickr(CC BY 2.0)A selection of growing entertainment conceptsEat

47、ertainmentEatertainment concepts have multiple games and attractions under one roof.Legacy eatertainment leaders include Chuck E Cheese,Dave&Busters and Peter Piper Pizza.Many up-and-coming concepts are also moving in to take market share.There are 122 new eatertainment locations planned for the nex

48、t 12-24 months.At Andretti Karting&Games,the main attraction is high-speed multi-level indoor kart racing.But there are many other games and attractions found in these units which are up to 150,000 square feet in size.The Rec Room has ten Canadian locations full of arcade games,bars,restaurants,simu

49、lators and a live event venue.It is owned by Cineplex Inc.Fat Cats ninth location opens in Bluffdale,Utah in May.Each location features bowling,glow golf,an arcade and cinema.EVO Entertainment features arcades and cinemas,with four new Texas location coming in the next two years.blgrssby,Flickr(CC B

50、Y-SA 2.0)2.9 million square feet coming soonCompetitive socializingCompetitive socializing concepts focus on a single game and generally include an elevated bar and food program.Puttshack combines tech-enabled mini golf with food and drink.Proprietary golf balls track scoring and gameplay,freeing pl

51、ayers to enjoy the game with worry-free scoring.There are six existing and 13 new U.S.locations announced.Chicken N Pickle is one of many pickleball concepts in the market.Visitors to one of eight locations can play a round and then dine on a meal of wood-fired chicken.X-Golf has over 80 locations t

52、hat combine golf simulators with bars and popular pub food.Many locations are franchisee-operated.Flight Club offers tech-enabled darts combined with a restaurant and bar.The concept has five existing U.S.locations with more on the way.2.9 million square feet plannedTrampoline parks and kid zonesTra

53、mpoline parks and kid zones are often open in suburban second-generation retail boxes with less expensive construction build-outs.They are also more likely to be franchisee-owned.Sky Zone and Urban Air Adventure are the leaders in the space.There are 67 planned locations coming from a variety of nat

54、ional and regional brands.Kids Empire features play structures and climbing walls for kids and toddlers.The 11 U.S.and 11 Canadian Flying Squirrel locations have climbing walls,foam pits,trampolines,arcades and more.Sky Zone,Emma Knight,Flickr(CC BY 2.0)1.9 million square feet plannedVirtual reality

55、VR concepts are often owned and operated by local entrepreneurs or franchisees.They may not pay the highest rents,so landlords often use them to fill less in-demand space.Yet,there are several high-profile concepts making a splash in the VR world.Immersive Gamebox raised$20 million last year to fund

56、 100 new locations.Games are played within a projection gaming room.Titles include popular IP such as Squid Game,Shaun the Sheep,Angry Birds and PAW Patrol.Sandbox VR offers immersive location-based VR for groups of up to six,with 21 open locations in the U.S.and Canada.Zero Latency VR is open to gr

57、oups as large as 8 and offers a larger area within which players can roam.The concept has 18 U.S.and six Canadian locations.More than 400,000 square feet plannedArt installations and selfie museumsThese immersive destinations arent as ubiquitous as other entertainment concepts,but many are making wa

58、ves in tourist areas and across social media.Meow Wolf locations are massive explorable artistic environments which avoid easy description.Each of the three existing locations is a top tourist destination in its state.The fourth location opens Summer 2023 in Grapevine,TX.Museum of Illusion is a fran

59、chised edutainment concept with 21 locations in U.S.and Canada.They are built around interactive illusions meant to teach visitors about science and the human brain.At Illuminarium,visitors are surrounded by 4k laser projections,immersive audio and in-floor haptics,transporting them to African safar

60、is,outer space and Alices Wonderland.Open now in Las Vegas and Atlanta.Museum of Illusions,George M.Groutas,Flickr(CC BY 2.0)240,000 square feet coming soonBar arcades,escape rooms and esportsBar arcades and esports lounges are inexpensive neighborhood hangouts where regulars and first-timers share

61、similar electronic passions.But while bar arcades mix beer with video game nostalgia,esports lounges offer access to the latest titles and gaming hardware.Escape rooms appeal to all ages of friends and coworkers,looking for an interactive mystery to solve.16-Bit Bar+Arcade originated in Ohio and is

62、now open in nine Midwest cities.Escapology offers 60-minute challenges in which teams must solve a series of puzzles within a themed room.The franchised concept has 57 locations in the U.S.and Canada with three more coming soon.Contender Esports gaming centers offer multi-player esports gaming in 11

63、 cities with another 16 on the way.Belong Gaming Arenas offer casual esports and tournament play in six U.S.cities.Escape room players,David Hofmann,Flickr(CC BY 2.0)369,500 square feet plannedPop-ups fill space in prime urban corridorsTicketed entertainment pop-ups move from city to city with three

64、 to six-month temporary leases.They allow fans to walk through set recreations like the Central Perk caf and the Dunder Mifflin office.For example,Original X Productions The FRIENDS Experience opened temporarily in 2021 at The Shops at North Bridge on Chicagos Michigan Avenue.The Office Experience r

65、an at 540 N Michigan Ave for four months ending in 2022.Harry Potter:MAGIC AT PLAY ran for six months in 2023 at Chicagos Water Tower Place.The Office Experience has also popped-up in a former West Elm store in Washington DC and at Torontos Yorkdale Shopping Centre.Pop-ups are attractive to landlord

66、s,because they generate some income and activate vacant space.However,pop-ups generally pay below-market rents.Due to the short term of the leases,its unlikely that the landlord would contribute any tenant improvement allowance.Central Perk,William Warby,Flickr(CC BY 2.0)James CookAmericas Director

67、of Research,Retail,JLL JamesD.CKeisha Virtue Senior Analyst of Research,Retail,JLL Keisha.VEbere Anokute Manager of Research,Retail,JLL Ebere.AWilliam Schneider Senior Analyst of Research JLLWilliam.SHeli Brecailo Manager of Research,Retail,JLLHeli.BSaul Lua Analyst of Research,Retail,JLLSaul.LDiscl

68、aimerThe information contained in this document is proprietary to Jones Lang LaSalle and shall be used solely for the purposes of evaluating this proposal.All such documentation and information remains the property of Jones Lang LaSalle and shall be kept confidential.Reproduction of any part of this

69、 document is authorized only to the extent necessary for its evaluation.It is not to be shown to any third party without the prior written authorization of Jones Lang LaSalle.All information contained herein is from sources deemed reliable;however,no representation or warranty is made as to the accuracy thereof.Meow Wolf Refrigerator Portal,Larry Lamsa,Flickr(CC BY 2.0)