'Mediocrity No Longer Works': How Family Entertainment Centers Draw In Mall Traffic

Ocean5, a 57K SF entertainment center, is a destination within a destination.

The complex is part of the next wave of experiential retail pulling people into malls. An anchor tenant within the Olympic Towne Center in Gig Harbor near Seattle, Ocean5 features a high-end farm-to-table restaurant, 22 bowling alleys with two VIP bowling suites, a 40-player laser tag arena, an arcade, a game room and five fireplaces where people can lounge. It also has meeting rooms to host birthday parties, corporate events and weddings.

As retail continues to decline and many landlords look to fill the void left by legacy retailers such as Sears and Kmart, these leisure and family entertainment venues are becoming popular anchor alternatives. Drawing customers into shopping centers will be part of the discussion at Bisnow's all-day Retail Series: West Coast Summit Sept. 26.

Ocean5 takes up a third of the 187K SF Olympic Towne Center, and the entertainment center is indicative of the current state of community leisure venues or family entertainment centers nationwide. 

It is big, bold and makes a statement, said White Hutchison Leisure & Learning Group CEO Randy White, whose company served as the project manager of the Ocean5 development.

“The bar is very high,” said White, referring to these types of entertainment centers. “It better be exceptional — the décor, acoustic, everything. It’s all about the total experience. It has to be unique and compelling or else people will just sit at home. Nowadays, no one ever has to leave home.”

Dave & Buster's, bounce houses, trampoline parks, escape rooms and glow bowling alleys, among many other interactive concepts, have become staples in malls and retail strips, bringing young adults and families into struggling venues. 

“What these entertainment concepts bring is a new energy in shopping centers,” JLL Director of National Leasing Holly Rome said. “It provides customers reason to come and drives traffic because it’s an experience. You can only get that experience there. You can’t buy it online.”

Susan Storey, a spokeswoman for the Orlando-based International Association of Amusement Parks and Attractions, said family entertainment centers are growing and changing.

The IAAPA worldwide represents 5,300 amusement-industry members. Family entertainment centers make up most of the membership, Storey said. She did not disclose how many family entertainment centers there are nationwide.

“Some have distinct niche markets — like Topgolf attractions — some have the traditional model of food, redemption games and arcade games like Chuck E. Cheese, Dave and Buster’s and GameTime,” Storey wrote in an email. “And some offer new experiences, like Two Bit Circus in LA, which is an FEC (family entertainment center) geared entirely to millennials. In many case, FEC’s (family entertainment centers) are even becoming mini amusement parks, often featuring a ride or two in their mix of entertainment offerings.”

Family entertainment centers take up anywhere from 5K to 40K SF to 1 to 5 acres.

The estimated attendance at family entertainment centers is 282,857 visitors annually, according to IAAPA’s 2017 FEC Benchmark, an annual survey. On average, visitors stay a little more than 2.5 hours, spend nearly $24 a visit and visit the venue two or three times a year.

White, the Ocean5 project manager, issued a word of caution — especially for landlords looking to fill large vacant commercial space in their malls.

“There is oversaturation in some markets,” White said. He said data on these types of operations varies city by city.  

His studies suggest the market is trending down because of changing consumer habits and a glut of other activities, such as local festivals. There are so many more things to do at home, too, he said.

That is why many of these new venues are evolving into something beyond the basic bounce house or miniature golf serving pizza and pretzels, he said.

“Consumers have gotten much more sophisticated,” White said. “The market has shrunk. People spend more time digitally today. You’re competing with social media and the couch. We have the big-screen TVs and now restaurant-quality type of food can be delivered to your home.”

White cited a survey conducted by YPulse that found 72% of millennials would rather stay in on the weekends than go out at night.

White said a successful venue has to be a premium experience. It would not only bring the community together through an interactive concept but also offer excellent food and beverage options and great customer service. Not just good, but excellent, he stressed. 

"Mediocrity no longer works," he said in a newsletter last year. "In fact good no longer works. The experience now has to be premium, what we call high fidelity, to get the consumer to come and spend their limited free time and discretionary spending."

It is sort of like other aspects of retail, White told Bisnow.

“The great concepts will do well. A lot of others will end up closing,” he said.

JLL's Rome was a bit more bullish on the industry. 

“I think it’s exciting for shopping centers to explore this,” she said. “Owners need to give new reasons for people to come in and shop in their centers.”

Hear more about the demand for experiential retail at Bisnow's Retail Series: West Coast Summit on Sept. 26 in Los Angeles.