Retail Operators Fear the Megaplex May Kill Smaller Venues and Trigger Vacancy Glut

Fort Lauderdale-based Muvico Theatres recently premiered its Palace 20 megaplex just off I-95 in Boca Raton featuring large screens, digital sound, stadium and love seats, gourmet food, valet parking and a top ticket price of $15. But it may have doomed the future of older six-screen to eight-screen theaters in the area.

For example, in Palm Beach County alone, six multi-screen cinemas have shuttered within the past year. Others may be threatened by Muvico’s soon-to-open 20-screen house at CityPlace in downtown West Palm Beach.

Moreover, what is said to be the overscreening of America may grow worse as excessive expansion undermines the financial stability of sizable exhibitors, say industry watchers.

“Theater owners who go bankrupt can cancel leases,” Beth Azor, president of retail specialists Terranova Corp. in Miami, tells GlobeSt.com. “Older multiplexes are often in shopping centers and there could be a glut of hard-to-fill footage. We’re talking about large spaces that would be costly to convert for say big-box retailers.” Azor has heard estimates of as much as $300,000 to convert a typical multiplex.

The list of suffering operators is growing. Carmike, the country’s third largest movie-theater group, has filed for Chapter 11 bankruptcy protection. Regal Cinemas, the biggest chain, had nearly $30 million of second-quarter losses or four times what it lost in the same three months of 1999.

General Cinema, with seven locations in the region, previously announced it may leave as part of a plan to concentrate operations in the Midwest and Northeast where it has a stronger presence. Even Muvico seems to be cannibalizing itself. When it opened the new 20-screen facility in Boca Raton, it closed an eight-screen location elsewhere in this city.