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South Florida scene flooded by megaplexes

By David Altaner

David Altaner is a business writer for the Sun-Sentinel, Fort Lauderdale, Fla.

Megaplex theaters are going up in Florida's Broward county at a frantic pace, but to fill three daily shows at each of the county's proposed screens, each man, woman and child in the county would need to attend 35 movies a year.

Broward County, Florida, is getting a flood of new megaplex movie theaters -- possibly the highest number per capita in the country.

Movie theater companies have proposed, started building, or recently built 12 megaplex movie theaters -- a megaplex is defined as a theater with 14 screens or more -- with a total of more than 240 screens for this suburban South Florida county, which includes Fort Lauderdale. That's a staggering 45,000 seats.

Miami-Dade County to the south has another 110 screens looking down on at least another 20,000 seats, while Palm Beach County to the north boasts 135 screens with about 24,000 seats.

That's a lot of popcorn.

One real estate veteran calls the pace of movie theater construction "mind-boggling," and "amazing." Maybe too much so.

"We are going to be over-movied, absolutely," said Beth Azor of Terranova Corp., a Miami retail and office leasing company.

But the builders of the megaplexes say they're not worried.

"What they're going to do is put the smaller theaters out of business," explained Michael Swerdlow, a Hollywood, Fla.-based developer who has built three shopping centers anchored by Regal Cinemas megaplexes, and who plans two more.

On June 19, his company opened Las Olas Riverfront, a downtown Fort Lauderdale entertainment center with 274,000 square feet of gross leasable area that is anchored by a 23-screen movie theater with 4,700 seats.

The others are Cypress Station, 234,000 square feet, in northern Fort Lauderdale, and Oakwood Plaza, 1.1 million square feet, in Hollywood, Fla., just south of Fort Lauderdale. Also planned are Westfork, Pembroke Pines, Fla., and Dolphin Mall, in Miami-Dade County, Fla. (See story, page 10.)

"The six-, eight-plexes are obsolete," said Hamid Hashemi, president of Fort Lauderdale-based Muvico, which is building one freestanding megaplex and another that will anchor a small shopping center, both in Broward County. The two will total 32 screens.

Even film industry officials admit the numbers are awesome. To fill three showings a day at each of Broward's proposed screens, each man, woman and child in the county would need to go to 35 movies a year. The industry's old standard of one screen per 10,000 residents would imply a limit of 140 screens for the county's 1.4 million residents. That is well below the 240 screens planned for megaplexes in Broward County, and that number does not include the older, smaller theaters, some of which are less than five years old.

Broward probably has among the highest per capita concentrations of theaters in the country, said Phil Zacheretti, marketing director for Regal Cinemas. Regal has nine megaplexes planned for South Florida, with four already open.

"It's like when Wal-Mart comes to town, you have five to six small stores," he said. "Two to three go by the wayside. That's the way things are."

But the megaplex industry is so new -- the first was built in 1995 in Dallas --that the industry has no clear vision where all this will lead, Mr. Zacheretti admitted. Some older theaters will be closed, some will be retrofitted, and others will become discount theaters, he said.

Regal expected to convert its Coral Springs 6 theater in the near-empty Coral Springs Mall into a discount, second-run theater in June at the same time it opened its new 16-screener, Magnolia Place 16.

Broward's growing population, its "snowbird" (winter residents) population, and its high number of tourists all make it attractive to theater owners, Mr. Zacheretti said. It is also a retail battleground, with retailing ranging from Neiman Marcus and Bloomingdale's to Fort Lauderdale's Swap Shop, one of the top flea markets in the country.

"Retail is nonstop," he said.

Then there's the year-round sunny weather.

"You can get out and do a lot of things," he said. "We built two theaters in Buffalo; they're doing great now, but we'll have to see the numbers in November."

Regal's Cypress Station 16 theater in northern Fort Lauderdale is in the company's top five in box office grosses, Mr. Zacheretti said.

Kansas City, Mo.-based AMC, isn't worried, either.

"So far, we haven't really run into a situation where there are too many megaplexes," said Joe Brock, southern marketing manager for AMC.

But all this growth means a tight squeeze for the smaller theater.

"It's a dinosaur, a thing of the past," said Jon Wray, owner of Inverarry Cinema Five in Lauderhill, in central Broward. But Mr. Wray, one of the few independent theater owners in South Florida, said he believes he can still make a living by finding a niche. He stays away from mass-market films like "Titanic" and "Independence Day." Instead, he programs black-oriented films such as "I Got the Hook Up" for the blue-collar blacks who live south of his theater, and films such as "Odd Couple II" for the seniors who live to the north.

But the going is still tough. "It's a battle; more of a battle than I've ever seen," he said.

Many of the smaller theaters will become discount, second-run theaters. Others will be converted into stores, predicted Joe Carosella, president of Retail Property Group, Fort Lauderdale.

However, Terranova's Ms. Azur argues the theaters will be very expensive to convert to retail because they have slanted floors. Somebody's going to have to get pretty creative to figure out how to fill all the empty space, she said. But one nontheater use would not require that the floors be leveled, she noted: "I would love to see them made into schools," she said.

If a megaplex moves into Mr. Wray's neighborhood, he will need to be creative. The chains are trying to blow away film fans with an enhanced movie-going experience. Muvico's Davie theater, called Muvico Paradise 24 Theaters, is expected to have an Egyptian theme, with a Nile River motif and hieroglyphics on the walls. It will anchor a small shopping center, to be called Paradise Park Entertainment Center, a planned 100,000-square-foot complex being built by Muvico.

In a new move for the industry, Muvico Paradise plans to offer supervised child care. Upon paying $4 or so per child, parents will be able to leave kids to play with computer games or Lego while Mom and Dad watch the movie.

All the new theaters have arena, or tiered stadium style seating, enhanced sound, and comparatively more exotic concession-stand food, such as pizza, cappuccino or chicken wings. The theaters will offer staggered showings, with the biggest hits playing every hour.

On the financial side, the same fixed costs are spread over more screens at a megaplex. And bigger chains get more leverage with Hollywood. The megaplexes generate more than twice the profit as smaller theaters, according to analysts at the Irvine, Calif.-based securities firm L.H. Friend, Weinress, Frankson & Presson, which follows theater companies.

But some wonder whether the industry's projections are too rosy.

The theater industry figures the megaplexes are so desirable, people will drive past two or three conventional theaters to get to a megaplex.

But Ms. Azor is not so sure. "I question whether people are going to want to do that, once the novelty wears off."

Kevin Kuzio, an analyst at KDP Investment Advisors based in Montpelier, Vt., also has his doubts. While megaplexes in the right locations are very strong draws for shopping centers, he thinks their appeal might wane.

"Once in a while you get a Sundance notion -- small is beautiful," he said, referring to actor-director Robert Redford's festival of independent films. "If people wanted an intimate experience, these megaplexes could hurt."