Money Growing: The Film-Mania Zone

Cinemas in shopping centers are a usual phenomenon; it is enough to just study the capital’s listings. In choosing where to watch a new film, many people prefer screens in shopping and entertainment centers. Developers now place a cinema in almost every new shopping center.

The format of shopping and entertainment centers is winning increasing popularity. Experts explain this by the fact that buyers are already bored of just going shopping and looking through the same shop windows in search of what they need. Pleasant emotions and entertainment are necessary. Cinemas in shopping and entertainment centers are an original magnet. It is not a surprise, that all new films are first released in them.

Major of arts

At the start of the 1990s the Russian film distribution service faced serious problems: people had stopped going to cinemas, satisfied with watching films at home. Cinemas became empty, and as a consequence, areas in many of them were rented out to various shops or markets offering consumer goods. Many experts connect the revival of interest in cinema with the opening of cinemas within the structure of shopping complexes alone. An important factor was the new equipment of cinema chains, for example 4D format, 3D sound, special effects (smells, etc.), etc. Visitors of shopping centers are happy that having done their shopping they can get acquainted with the new releases in the cinema world.

According to Roman Sokov, director of the consulting department at Becar Commercial Property Moscow, the development of cinema chains on areas in capital and regional shopping centers is growing. Multi-screen cinemas are the same anchors as food supermarkets, electronic and household superstores and DIY chains. “This is caused by the appeal of the given entertainment to consumers,” Mikhail Gets, vice president of strategic development at Blackwood explains. “A cinema forms a huge stream of visitors to a shopping center, comparable possibly only to flows formed by a hypermarket,” Elizabeth Estrina, head of the consulting department at Praedium agrees.

Andrei Dmitriev, deputy director of the consulting department at Penny Lane Realty, pays attention to the fact that because competition on the shopping center market is growing, every developer tries to add side benefits to a project and raise its appeal to both tenants and to visitors. "Here again a cinema acts as such an advantage,” he notes. In the opinion of Aydar Galeyev, director of the consulting and research department at MIEL Commercial Real Estate, cinema chains are of interest to proprietors of shopping centers, and play an important role in forming the image of the project due to the popularity of the brand.

The most famous cinema chains that operate in shopping and entertainment centers are Formula Kino, Каrо Film, Lyuksor, Pyat Zvyozd, Kinostar De Lux, Cinema Star, Cinema Park, Paradiz, Kinomax, etc. And the biggest multiplexes are located in the Mega Teply Stan shopping and entertainment center where there is a 12-screen Kinostar De Lux cinema, and in the Evropeisky shopping and entertainment center that opened at the end of last year, where there is a 9-screen Formula Kino cinema. In the Ramstor Kapitoly center there is a Каrо Film cinema located on the second and third floors and includes eight screens. In 2007, Karo Film opened a 10-screen cinema in the Shuka shopping and entertainment center.

Olga Yasko, head of the analytics department at Colliers International says that currently in Moscow there are 59 shopping centers, 26 of which have cinemas in them. And this evidently shows the importance of the given format for the development of retail in the capital. According to Gets, cinemas operate in the Mega, Rio, Atrium, Evropeisky, Global City shopping centers, etc.

According to Knight Frank, currently in Moscow there are 89 modern cinemas (331 screens), 40 of which are 1-screen and 2-screen cinemas and 49 are multiplexes that include three or more screens. There are currently 3.15 screens per 100,000 inhabitants at the moment in Moscow. In comparison the UK has 5.7 and Germany 5.9.

Counting on comfort

Galeyev thinks that under conditions of strong competition in the cinema market, unsuccessful location of a shopping and entertainment center can considerably reduce the appeal of the premises for a cinema chain. The difference between cinemas located in shopping and entertainment centers and usual cinemas located in specially constructed premises is their capacity and number of screen halls. As a rule, in city cinemas the number of halls is limited to two, sometimes three. In shopping and entertainment centers there are usually multiplexes – cinemas with many screens. And this means that a multiplexes provide attendance that is impossible in an old cinema.

Classic cinema halls are intended for the simultaneous viewing of a film by several hundreds of customers whereas a multiplex hall may contain only a few tens of chairs. A new service that has extended in shopping and entertainment centers is VIP halls. These are small halls with only several rows of comfortable adjustable armchairs. For example in Ramstor Kapitoly the VIP hall seats 18 people.

An additional service in the VIP hall is a waiter who will deliver your orders to the hall during a showing.

Sokov notes that an integral part of a modern movie centre is a food court. As a rule, cinemas open their own food court, which brings companies a significant income. "Opening food courts of other companies or off-site operators is not welcomed both by cinema chains and shopping complexes,” he emphasizes. The majority of cinema operators try to occupy film-goers that are waiting for a showing to the maximum. That is why an accompanying element of a cinema is an entertainment zone including slot machines and various attractions, children's rooms, and sports equipment.

Having created more comfortable conditions for visitors at cinemas in shopping and entertainment centers, cinema chains have received the most important thing - spectators, and shopping areas - buyers. According to Yasko, a multiplex in a shopping and entertainment center attracts 3,000 to 10,000 visitors daily. And they rarely leave a shopping complex without having spent money.

Don’t lose on space

According to Anna Kim, head of the PR and promotion department of МТ Development’s projects, cinemas within the structure of shopping and entertainment centers are now a standard component in the entertainment zone of such commercial real estate premises.

According to Irina Kirsanova, marketing director at Peresvet-Invest, practically all new constructed shopping and entertainment centers with a total area from 30,000 sq.m incorporate a cinema. Multi-screen cinema builders try to place them in the final zone of a visitors movement through a shopping complex. "This does not mean that the cinema should be at the far end of a shopping and entertainment center as there may be a situation whereby the potential client simply will not reach it,” notes Kim. Usually, cinemas are located on the top floors. But, as Kirsanova notes, Каrо Film, for example, considers offers on areas not above the third floor.

According to GVA Sawyer, the total area of a cinema directly depends on the number of halls. National chains mainly prefer to open cinemas with no less than six screens. In addition, the entertainment zone occupies from 300 sq.m and more. Gets thinks that a 6-screen cinema with 800 seats and two bars would require about 2,000 sq.m. Although according to Boris Asriev, president of Kinomax, the area for a multiplex in a shopping and entertainment center should be no less than 4,000 sq.m and have 6 to 12 screens.

"The number of halls depends on the throughput of the complex: there is no point building 12 screens when eight would be enough,” notes Kim. Titanic-Cinema has opened a 16-screen cinema in the Veipark shopping center (71st km of the MKAD), but as practice has shown, almost all the halls are never filled, says Kirsanova.

A considerable role is played by how well and correctly the halls are designed. According to Kirsanova, even though the majority of shopping and entertainment center developers use consultants and as a result of the development of the concept receive offers on zoning, the final decision is made independently. Therefore premises often mismatch the requirements of cinema chain operators.

"Developers draw up such "masterpieces," such parameters of a premises, that they do not match any standards at all,” says Asriev. “For example, they offer a hall in which can only fit rows with three seats and aisles where only one person can squeeze in. We make a complaint and the developers start to reconstruct the premises.”

According to Kim, the more correct the geometry of a premises, the easier it is to fit cinema halls and the corresponding equipment of which space is for the projection is vital, into it.

GVA Sawyer notes that a strict criterion is a grid of columns. This is explained by the fact that nobody in a cinema wants to look at the row in front, but at the screen. Yasko thinks that the preferable grid of columns is 12 by 24 meters. "The bigger the grid the better, as the width of the auditorium depends on the step of the columns,” says Kirsanova. Depending on the step of columns, the proportions and capacity of the halls are established. The optimum length/width ratio of a hall is in the range of 1.4/1.6, which experts explain first of all by the acoustic features of a premises. A premises with a height of less than 9 meters does not allow for a cinema in a shopping center.

Estrina notes that it is especially important to observe the requirements for loadings on overlappings and the thickness of walls in order to absorb the vibrations from the low frequencies on which modern multichannel Dolby Stereo and Dolby Digital sound systems work. According to Elena Shevchyuk, vice president of commercial real estate at GVA Sawyer, for a premises to accommodate a cinema the loading on the overlappings should be no less than 500 kg per sq.m. Galeyev says that exactly because of the necessity to observe the conditions put forward by the tenant (Imax cinema) in additional strengthening and fortification of constructions, in Ramstor City the deadline for opening the center was moved.

According to Olga Antonova, a consultant in the department of shopping real estate at Cushman Wakefield/Stiles Riabokobylko (CW/SR), a premises should basically have the technical possibilities to accommodate a cinema. Cinemas are tenants with high current electricity consumption. According to GVA Sawyer, electric capacity at the rate of not less 70 watts per sq.m is necessary.

"Every cinema chain has a number of nuances and various concepts and that is why the location of screens, noise insulation and all the necessary equipment is done directly by the cinema company,” notes Sokov.

According to Kim, the engineering of cinema halls (heat supply, water and water drainage) is usually integrated into the general engineering networks of the complex. "But ventilation and air-conditioning are carried out under a separate scheme developed by the cinema, providing reserved capacities of both air exchange and cooling capacities,” she emphasizes.

During a showing it should not be stuffy in the hall. According to GVA Sawyer, air-supply systems should be designed and executed at a fresh air supply rate of no less than 20 cubic meters per hour per person in the halls and 60 cubic meters per hour per person in the foyer. Antonova adds that the ventilation and air-conditioning system should provide for the independent maintenance of temperatures in different zones: halls - each one separately, the foyer, the projection room, offices, and kitchen if stipulated. The cinema premises should have its own fire signal, fire fighting and smoke removal systems. "In zoning the space inside cinemas it is necessary to provide for fire escapes," Kirsanova also emphasizes.

To take a place

These days cinema operators often rent halls long-term for 10-15 years. "Shopping and entertainment centers are a practically risk free business-model, but not every company can create a successful cinema as a self-sufficient complex,” says Asriev. Yasko says the usual practice in the trading real estate market is to carry out a tender among cinema chains to rent premises in a shopping center. If a project is interesting in the market and the premises is professional with a good concept and location, competition between operators is significant. “For a landlord the key parameters in making a decision is the rental payments agreed with the potential tenant, the atmosphere-decoration of the cinema halls, the general zones, and the level of technology used by the chain,” she says.

According to Antonova, usually (but not in 100 per cent of cases), multiplex operators find premises independently.

As Gets notes, average rental rates for cinema chains in shopping centers with anchor status are $160 - $300 per sq.m a year.

According to CW/SR it is possible to find a premises for a cinema even at $100 - $250 per sq.m a year. “In addition to rent, tenants pay maintenance charges, but they are lower in comparison with operators of the shopping areas as some expenses are carried by the operator, i.e. cleaning the rented premises, security, engineering system servicing,” notes Shevchyuk.

The difference in rental rates depends on the location and type of shopping center, and also on the rented premises. “Proprietors of cinema chains consider the placement of cinemas in only large shopping and entertainment centers. Entertainment operators pay the lowest rates,” says Kirsanova. According to Galeyev, low rates are caused by a big area of a rented premise, besides cinemas are located on the top floors of shopping and entertainment centers, unprofitable for boutiques. “In having to invest significant funds in the equipment of a cinema, cinema chains are not prepared to pay high rental rates,” he says.

According to Yasko, a growth in rates for cinema operators has recently been observed. “This tendency is connected with increased competition in the given segment of the market, and with the active expansion of the main market players,” she explains.

More performances

According to Dmitriev, the prospects for development are directly connected with the development of shopping and entertainment centers. "While there is the need to create new shopping and entertainment centers, cinemas in them will remain a demanded anchor,” he emphasizes. According to Knight Frank, 2007 premises include a 3-screen Tsentrfilm cinema in Vremena Goda shopping center on Kutuzovsky prospekt and an 8-screen Rising Star Media cinema in the Mega Belaya Dacha shopping center. In 2008 Lyuksor cinema chain plans to open an 8-screen multiplex in the Galereya Moskvorechye shopping and entertainment center on Kashirskoye shosse, and Cinema Star plans to open a 12-screen cinema in a shopping center on Dmitrovskoye shosse and a 3-screen cinema in a shopping center next to the Universitet metro station. In 2009, a 10-screen Каrо Film cinema in the Paveletsky shopping center on the square of Paveletsky vokzal will open and other projects within shopping and entertainment centers are expected.

In Yasko’s opinion, the Moscow cinema market is approaching saturation. We may observe a decrease in the profitability of projects, and strict local competition between cinema chains when two multiplexes are located practically opposite each other. “It is necessary to consider the fact that cinemas are located not only in shopping centers, but also separately, and accordingly, saturation will occur even more quickly,” warns Kirsanova.