Friday, May 24th, 2019 May24th2019

Sell for More News: Your next tenant may be an Esports Lounge

Published on May 24th, 2019

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.

 

Esports are organized multiplayer video game competitions.  Esports Lounges are where players congregate to host the competitions, to eat, to drink and to socialize.  And many think there’s a place for them in your commercial property.

As commodity retail increasingly shifts towards online, both chain retailers and regional malls are growing their leisure sections, specifically geared toward “competitive socializing.” Activities include mini-golf, darts, ping-pong, and the locations often serve food and alcohol.  These kinds of tenants take up around 32% of the leisure market…while Esports take up around 7%.

But that figure is expected to increase.  Last year, Walmart became the first major grocery chain to open esports locations in its stores. Retail centers are also increasingly being transformed into “town centers,” with a blend of retail and entertainment.

It remains to be seen how big the impact is, but there certainly will be an impact.  Retailers are experimenting with a lot of different things, and one of those experiments is Esports lounges.

Esports lounges possess the potential to be successful in any market.  PLAYlive Nation, a social gaming lounge, currently operates 96 locations across 17 states. Meltdown Bar, an eSports and gaming bar, operates locations in nine countries, including Canada (but not the US). Ignite Gaming, a gaming lounge, has two locations in Illinois.

Only 2% of Esports lounges are located in malls, though that number might increase in order to take advantage of mall foot traffic.

An Esports lounge is generally a third of the size of a typical Dave and Buster’s, averaging around 10,ooo SF.

But they aren’t cheap to open.  It’s more expensive to open an Esports lounge than it would be for a lot of other types of retail.  You’ve got to buy a bunch of high-end gaming computers.  You’ve got to buy nice ergonomic chairs.  You’ve got to put in screens and all that costs money.

Typical revenue models for these concepts are either pay-per-hour or memberships, similar to gym memberships that grant customers access to the whole space.

Our sense is that standalone Esports lounges are attractive because they offer high-end gaming systems, food and beverage, and a place where friends can gather and game together.  It remains to be seen whether that is going to be successful within a larger retailer. It’s only an experiment at this point.

Along with Esports, developers are also building Esports arenas. The largest facility in the U.S., Esports Stadium Arlington in Arlington, Texas, takes up around 100,000 SF and seats 2,500 fans. A 450-seat Burbank Studios arena in Burbank, Calif. takes up around 60,000 SF.

The world is changing.  The wealthy commercial real estate owner will adapt.

 


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About Beau Beach, CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 414.324.4938, 615.603.9770, click to schedule a call or Beau@ProwessIRES.com