Desperate to increase the leisure element of major shopping centres, landlords up and down the country have been devising extension and refurbishment schemes designed to be anchored by a cinema.
A Savills report from last year says cinemas are the “holy grail” for leisure development.
Landlords want to increase the leisure offering in their centres because it extends their life and because shoppers increasingly demand it.
Land Securities bought X-Leisure in 2013 to help improve its leisure offering and the chief executives of virtually every major retail landlord have acknowledged the need to increase the amount of food, drink and entertainment on offer in their malls.
Cinemas give shoppers a reason to stay until late into the evening, increasing the chance they will eat and drink in the centre. Restaurants are therefore much more attracted to malls with a multiplex anchor, making cinemas an obvious target for shopping centre owners.
There are currently 743 cinemas comprising 3,947 screens in the UK, according to the Cinema Exhibitors Association, and JLL has forecast there will be “around 20 new cinema openings” in each of the next three years, adding 540 new screens.
But are landlords getting too swept up by the Hollywood glamour and creating a potential over-supply problem?
Netflix, Amazon Prime, Blinkbox and other online streaming services are increasingly competing for every movie-going pound.
UK cinemas attracted 157.5m visits in 2014, according to the British Film Institute, down by 5% on 2013 and 9% on 2012, despite the economic recovery.
Box office receipts have also fallen, despite an increase in prices, with the gross value of UK cinema tickets sold in 2014 at £1.1bn, down by 2% on the year before.
“There will always be examples of over-delivery in some markets,” says Rob Howarth, director of leisure at JLL. “But it should not be overstated – both cinema design and the context they locate in have evolved.”
Howarth believes some new supply is necessary to replace old stock, pointing to Milton Keynes, where the 30-year-old Point – the UK’s first Odeon multiplex – has become outdated, with its sloped floor and limited screen size.
Odeon is planning to replace it with a new IMAX facility at Stadium:MK which will be built alongside seven new restaurants.
Another issue that mall owners face is the small field of operators from which to fill the 60 new cinema sites.
“The main three operators are much more selective now,” says CBRE director of leisure Toby Hall, who suggests they are less willing to go head-to-head in local markets.
Howarth adds: “The larger multiplex operators will increasingly find it hard to find large enough catchments to target where there is not already a multiplex.”
But there is a potential solution.
Niche cinema operators such as Curzon, Everyman, Picturehouse Cinemas and The Light have all been expanding in the past few years.
“If a developer has a scheme and it needs a leisure anchor, then smaller cinemas are a good fit,” Hall says.
When Land Securities opened Trinity Leeds in 2013, it was Everyman, not one of the big three operators, which had prelet the cinema space.
Movie makers are hoping the rise of the niche cinemas, which sell themselves as providing a unique or premium environment will help persuade consumers to pay for – and not pirate – films.
“At various points developments in home entertainment have threatened the economics of cinema, which is why the experience aspect needs to always be two or three steps ahead,” says Phil Clapp, chief executive of the Cinema Exhibitor’s Association.
“We recognise that there is a challenge. There are fewer young people and more leisure choices, but it is about growing and engaging.”
