I am going to switch gears a bit because it has been a while since I’ve written about commercial real estate. In our minds this time of year, CRE is inextricably linked to the current state of retail. Let’s talk a bit about the business of the entertainment retail center (ERC) or family entertainment center (FEC) sector, technically part of the hospitality industry. Think: Dave & Buster’s, Main Event Entertainment, Topgolf, and Drive Shack, just to name a few. FECs are typically large spaces of between 15,000 to 50,000 square feet (and bigger) which have become, across many cities in the U.S., anchors for large shopping and retail outlet areas. These venues are designed for families and groups of friends or colleagues to spend time together under one roof playing games such as electronic golf or mini-golf, laser tag, bowling, and arcade games while enjoying a craft beer or cocktail and high-quality restaurant fare.
The Urge to Eat, Drink AND Play
The more established FEC chains are expanding. The Dave & Buster’s chain, with its “Eat. Drink. Play” call-to-action will include over 120 locations across North America by the end of the year, marking a healthy 10 percent growth rate. Main Event Entertainment, another FEC based in Plano, Texas, has grown to 38 centers across the U.S. and Topgolf has grown to 41 international locations. All are great examples of growing, successful businesses in this segment. Just a few weeks ago, legendary toy company Hasbro announced it is getting in the game (pun intended) and will open a chain of entertainment centers featuring its iconic NERF brand.
Arcades to Bar-cades
NERF-wars aside, the growing use of virtual reality applications in every area of life from healthcare to entertainment illustrates that we want to be closer to the action. Combine this with the resurgence of retro-style social games on hand-held electronic devices and it does not take a leap of imagination to see how the more sophisticated arcade-style environments of the large FEC size footprint and even the small hipster bar-rooms, with craft beers on tap, act to draw in each demographic. Baby Boomers were kings of the Pac-man-filled arcades and Millennials grew up with their personal version of arcades on their devices. Take a look at activities like augmented reality “escape rooms” that have cropped up in droves. These already blur the lines between what we like to do for fun on our smartphones and how we socialize with friends and family. Millennial young professionals, especially, are flocking to venues like Topgolf for after-work meetups with colleagues because they’ve come to expect more for their entertainment dollar and lean toward experiential fun.
Encouraging Active Fun
Family entertainment centers are building on a trend for fun that takes participants from passive to active engagement, requiring an element of physical activity to toss a bowling bowl or swing a club. As though in some sort of conspiracy to help us get all our daily steps in, some of the high-tech activities in the more innovative FEC venues encourage people to meet others and act together to achieve gamified goals, such as at L.A.’s recently opened Two Bit Circus. A self-proclaimed “futuristic carnival,” the venue features a button wall game that forces patrons to band together and quite literally fling their combined weight at bunch of buttons to win.
The Bottom Line
While the economy is very strong, wages are taking their time to catch up but indeed increasing. The smart FEC players are capitalizing on multiple demographics and banking on repeat visits with their offerings. Families with children and adult groups of friends alike are compelled to find activities and experiences that will not cost a small fortune. An FEC visit can be economical outing (maybe about the same as a dinner and movie per person), while improving overall foot traffic and spending in the adjacent retail areas. It is not often that a commercial real estate sub-sector aims to offer something for everyone and genuinely hits a multi-generational sweet spot.