- Brookfield Properties has signed a deal with entertainment company Kilburn Live to turn the parking lots at a number of its malls in the U.S. into drive-in theaters, hosting movies and virtual concerts.
- The creativity stems from the complexity of the coronavirus pandemic, leaving retail real estate owners scrambling for solutions.
- A new revenue source, from parking lots, is likely a welcome reprieve for landlords coping with the new reality of a number of their tenants either closing for good, paying less rent, or not paying rent altogether during the pandemic.
Parking lots, of all places, are turning into bigger sources of revenue for some mall owners during the coronavirus pandemic.
Brookfield Properties has signed a deal with entertainment company Kilburn Live to turn the parking lots at a number of its malls in the U.S. into drive-in theaters, hosting movies and virtual concerts, with many consumers looking for outdoor activities to participate in 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.
As these deals are structured, Kilburn is essentially a tenant to Brookfield, just like Macy's or Nike, paying rent to occupy the outdoor space, explained Michelle Snyder, chief marketing officer of Brookfield's retail arm.
"If we can't rent the mall, we are going to rent other space," she said in an interview, referring to hosting large-scale events. "We actually have tons of ideas for our parking lots."
The creativity stems from the complexity of the pandemic, leaving retail real estate owners scrambling for solutions.
Many movie theaters remain closed, for one. In some states, enclosed shopping malls also are closed. In California, for example, Gov. Gavin Newsom has ordered malls closed again this week in 30 counties on the state's monitoring list, which represent 80% of California's population, with Covid-19 cases on the rise. New York malls, meantime, require high-quality air systems that can filter out the coronavirus before they can reopen, under Gov. Andrew Cuomo's orders.
Many consumers also remain cautious in their approach to returning to stores, restaurants and entertainment venues — even when these spaces are allowed to operate again. They're looking for things to do outside, where social distancing is easier to practice.
"People are desperate to leave home," Snyder said, adding that Brookfield has set up food kiosks around the drive-ins for people to order from the food court and then eat as they watch a movie. Recently, one of the drive-ins hosted a Garth Brooks country music concert.
Other mall parking lots across the country are hosting food trucks, serving as Covid-19 testing sites and serving as curbside pickup destinations, among other uses.
"It boils down to the principal of the real estate," said Elliot Nassim, president of Mason Asset Management, which is in the business of buying distressed malls with the New York-based investment firm Namdar Realty Group. "If you have good real estate, you have the potential to do so much with it."
"We have an entire specialty leasing team now just focused on the parking lot and the ancillary income," he said.
A new revenue source, from parking lots, is likely a welcome reprieve for landlords coping with the new reality of a number of their tenants either paying less rent or not paying rent altogether during the pandemic.
Simon Property Group, the biggest mall owner in the U.S., is suing Gap Inc. for not paying rent. Nordstrom has said it is "modifying" its rent payments until January 2021. A number of other retailers have said they are using the opportunity of the pandemic to renegotiate leases for better deals.
Other retailers are closing stores permanently. This includes a wave of retailers that have filed for bankruptcy such as J.C. Penney, RTW Retailwinds and Brooks Brothers.