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We are looking at a five screen theater in a lease agreement. It seems to me they want far too much.

What is the average going price for 19,500 sqft?

A few things to consider; 1) the theater has been dark for five years and 2) it would have to be a second run house.

ALso, no equipment/ Screens and seats is about it and even one of the screens is damaged beyond use.

Thanks,
Mark

it very much depends on the market and what you can gross where you are...... ????

Well it is in a suburb of a large metropolitan market. The 2004 census said the 5-mile population is 109,343 with an average income of $38,407.

I guess what I was asking, if people are willing to tell me is what others are paying per square for their leases. Also, how long a term?

Thanks,

Mark

Being that it's a previously closed theatre ... make sure you have an exit clause (maybe w/ 90 day notice). I would not play a flat fee for rent there. Instead, attempt to negotiate a percentage rent deal (10% of total revenues) or a management deal (LL pays you to run the theatre for them 3-5% of Revenues).

10% of total was precisely what I was thinking of goin in until I heard what they were asking.

May still go in with that as our first offer

A 90-day exit clause is one of the best conditions you can get written into your lease... especially if you're in an area where others control the business mix around you.

We were paying $8/ft/yr NNN for our place with staggered increases during the first two years, 5-yr initial and 5-yr renewal option. In our area, and with the business mix where we were, it was too much.
We had seats, screens and some equipment, though none of it would have lasted the lease.

This is a quote from "Ben Marcus" of Marcus Theatres about leases.

Own your own real estate. At the end of a lease, all you have is a pile of receipts and a landlord itching to raise your rent.At the end of a mortage, you have a real asset.

In going into this thing, think digital cinema technology first and foremost. This will enable you to operate beyond the second run movie status limitation. Next, plan it so all risk will be on the suppliers -- in this case, the Hollywood movie industry plus the manufacturers of digital cinema technology and other theatrical equipment. And yes, by all means aim to purchase the property rather than lease it. Have it so the suppliers pay the mortgage payments, but with it being you as the designated buyer.

For it sounds as if this theater is located where it holds great potential. But the suppliers must see this as well. For if they don't, where will that leave you?

Another thing that just crossed my mind, too, aim to convert it from a 5-screen multiplex to being a large single-screen theater only. Your patrons will love you for it! And aim to make it as classy as possible. Such as, have a large lobby area and the box office located there rather than out at the theater's entrance. I.e., never have it so those awaiting to buy tickets must stand in line outside. Don't charge high concession prices. Do not run commercials during the exhibitions. Finally, do not offer patrons anything that is a replication of what they can buy at other businesses nearby. For instance, keep the concession fare limited to just popcorn, soda (or juice) and basic candy. And try to synchronize exhibitions with nearby restaurants, who may wish to even partner with you if you agree to this.

Can you provide me more information on this matter?

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