No longer a must-have? Why some Singapore malls are swapping cinemas for gyms and tuition centres
SINGAPORE: Gyms, indoor basketball courts, tuition centres and possibly, a restaurant with an immersive experience – these are some examples of tenants that have either taken or will be taking over former cinema spaces in Singapore malls.
Once seen as anchor tenants with their ability to attract footfall, cinemas are facing challenging days with the rise of streaming services and evolving consumer preferences.
Cinema closures have regularly made the news in recent years. Cathay Cineplexes, owned by listed entertainment firm mm2 Asia, raised further alarm when news broke in February that it owed millions in rent to mall landlords.
The struggling chain has shuttered two outlets – West Mall and Jem – this year, adding to a string of closures since June 2022.
The tough environment has also claimed two casualties outright – WE Cinemas, formerly known as Eng Wah Cinemas, and Filmgarde Cineplexes both threw in the towel over the past year.
And not all the spaces freed up by these closures have occupied by other cinema operators, as malls appear increasingly open to exploring alternative uses.
'There's been a shift in how mall operators view cinemas,' said Dr Samer Elhajjar, a senior lecturer in marketing at the National University of Singapore's (NUS) business school.
'The pandemic accelerated a trend that was already brewing – people are consuming more entertainment at home, on-demand. This changes the value proposition of cinemas.'
NEW PLAYERS
At the Parkway Parade shopping centre, Cathay Cineplexes had an outlet with seven halls for about six years, up until August 2023.
The space on level seven has since been transformed into an education and enrichment hub, as its operator calls it. Within is the Scholar Basketball Academy, a training school with several indoor basketball courts, and math enrichment centre Think Academy.
Parkway Parade's general manager Joey Teng said: 'We monitor, adapt and refresh our tenant mix to meet the evolving needs of shoppers, which may differ across precincts.
'It is important to make sure our offerings remain relevant for our visitors and provide not only their ideal tenants but differentiators from surrounding locations.'
Perhaps more significantly, The Cathay along Handy Road, once home to one of Singapore's oldest cinemas, no longer has one.
The iconic building, which held a soft opening in end-March after two years of renovations, now has PSB Academy as a key anchor tenant, with the private educational institute taking up the entire fifth floor.
Elsewhere, the six-storey mall offers a 24/7 gym along with a range of health and wellness, beauty, homeware and education-related businesses, including arts and performance schools.
Hoardings seen within the mall in May also showed the Nanyang Technological University Alumni Club and Sheng Siong supermarket among others.
Cathay Organisation, the owner of The Cathay, declined to comment for this story.
At Leisure Park Kallang, the space vacated by Filmgarde Cineplexes is set to become an 'immersive dining' venue, two tenants told CNA last month.
The mall owner did not respond to CNA's request for an interview. But the Singapore Tourism Board earlier announced that Hidden Worlds, an 'immersive dining experience themed around ocean conservation', will open at Leisure Park Kallang later this year.
West Mall and AMK Hub also plan to overhaul the cinema spaces formerly occupied by Cathay Cineplexes.
West Mall owner Singland said it was 'actively in discussions with potential tenants to explore opportunities to introduce new offerings'.
Link Asset Management, the asset and property manager of AMK Hub, said it has since last July 'embarked on asset enhancement' for level four of the mall, where the cinema was previously located.
It said it was reconfiguring the space and repositioning the tenant mix to better serve the community.
At Seletar Mall, the cinema space previously occupied by Shaw Theatres could see new offerings. When announcing its closure last December, Shaw said the mall's management had 'alternative plans for the space'.
CNA reached out to the owner of Seletar Mall but did not get a response.
A CONTINUING TREND
Experts reckon both shopping mall and cinema operators will continue to assess their business operations amid changing consumer behaviour.
Challenging market conditions mean that cinema operators are not always willing to take over legacy cinema spaces, unless the location shows strong potential, said NUS' Dr Elhajjar.
Mall operators too are becoming 'more pragmatic' and will prefer tenants, such as gyms and co-working spaces, that can deliver footfall throughout the day, he added.
While cinemas still hold the ability to attract foot traffic, the 'noticeable structural change' in consumers' viewing patterns will likely nudge mall operators to seek better-performing and higher-paying tenants, said Mr Vijay Natarajan, vice president of equity research at RHB Bank Singapore.
Cinemas generally pay lower rents due to the large space they lease over a longer period, and the hefty upfront investment in soundproofing and fitting out the space with tiered seating and audio-visual systems, according to industry experts.
A February DBS report said rents charged by mall operators are 'typically lower on a per-square-foot basis, typically one-third average rental rate a mall commands'.
Yet it is also no walk in the park to repurpose and lease out former cinema spaces due to their unique attributes.
Apart from size, these spaces tend to come with high ceilings and are located in parts of the mall - such as the top floor or in the corner - which lack a prominent facade.
This rules out traditional retail or food and beverage (F&B) tenants who rely on a visible frontage to attract walk-in customers, said Mr Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield.
On the other hand, learning or enrichment centres; gyms; and activity-based businesses like indoor playgrounds might be more of a fit, he added.
Mall operators also consider a tenant's ability to bring in footfall, and enrichment centres rank high in this regard.
'When parents bring their kids to enrichment centres, they will need to hang around for a few hours, which means they will eat, have coffee or shop around, making them a good replacement,' Mr Wong said.
Having gyms and experiential F&B operators as replacement tenants is also a 'smart move', said Dr Elhajjar.
The former brings people into the mall at off-peak hours, while the latter taps on the evergreen pull of F&B.
'While they may not replace the entertainment value of cinemas in a traditional sense, they serve a more functional role in the new mall ecosystem as they keep people coming back regularly,' he told CNA.
STILL 'RELEVANT'?
That said, the current situation is not dire enough for landlords to see cinemas as a risk and to be replaced entirely, experts said.
The delayed rental payments by Cathay Cineplexes are unlikely to snowball or even become uncollectable, said Mr Natarajan, citing how rental deposits typically required by landlords can be used to offset defaults.
In some cases, leases are also backed by underlying corporate guarantees.
It can also make more financial sense for a replacement tenant to be from the same trade.
Tenants are usually required to restore the rented space to its original condition at the end of a lease. Depending on the size and complexity, reinstatement of a former cinema space can 'take a few months and easily cost a six-figure sum', said NUS' Dr Elhajjar.
Mall owner Lendlease echoed this, noting how having a replacement tenant from a similar trade will allow both the landlord and tenants to 'reduce capital expenditure and ensure stable income and cashflow'.
The mall owner said it continues to view cinemas as 'a relevant tenant' that adds to the variety of options in its premises.
'Key cinema operators in Singapore have expanded their offerings beyond traditional movie screenings to accommodate corporate and event bookings," said Mr Guy Cawthra, chief executive officer of Lendlease Global Commercial Trust Management.
"This demonstrates the versatility of cinema spaces.'
Lendlease Global Commercial Trust Management is the manager of Lendlease Global Commercial REIT (LREIT), which is the landlord of malls such as Jem shopping centre.
LREIT had terminated its lease with Cathay Cineplexes in March due to rental arrears amounting to some S$4.3 million (US$3.4 million).
An instalment plan to settle the outstanding owed has since been agreed upon, the landlord told CNA.
Shaw Theatres will now take over the 47,000 sq ft cinema space previously occupied by Cathay.
Hopes are high for the new cinema, whose official opening date has yet to be confirmed.
'Shaw Theatres at Jem will be the only cinema operator catering to the Jurong East catchment," said Mr Cawthra.
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