Western Real Estate Business

AUG 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

Issue link: https://westernrealestatebusiness.epubxp.com/i/1012778

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Page 35 of 42

www.REBusinessOnline.com Western Real Estate Business • August 2018 • 33 The exciting world of virtual real- ity arcades — now called VRcades — are some of the hottest location- based entertainment options making an appearance in today's retail cen- ters. They are the future, opening up in malls and stand-alone retail spaces all around Los Angeles. Greenlight Ventures is a virtual and augmented reality market intelligence firm that projects location-based VR experi- ences across many sectors will be a billion-dollar business worldwide by the end of the year, growing to $12 bil- lion in five years, according to Clifton Dawson, the company's CEO. Customers travel to location-based entertainment options like these be- cause the virtual reality systems for the home are very expensive at about $1,000 per set. Each person needs a set, in addition to the costly games. IMAX VR opened a virtual reality center in 2016 at 157 S. Fairfax in Los Angeles. The concept absorbed about 6,000 square feet of a 12,000-square- foot, two-story building that was con- structed in 1992. Tickets at IMAX VR start at $10 for 10 minutes of a begin- ner game. Retail rents in the Greater Los An- geles area have increased 4.7 percent year over year ending at $2.54 per square foot, triple net, in the first quar- ter of 2018, according to CBRE's Los Angeles Retail Market View. Howev- er, the retail rates in West Los Angeles are much higher at $8.17 per square foot, triple net. Retail rates in parts of West Los An- geles have some of the highest rates in the country in areas like Rodeo Drive in Beverly Hills, Abbot Kinney Bou- levard in Venice and the 3rd Street Promenade in Santa Monica. The 3rd Street Promenade in Santa Monica has a triple-net rate of $11.86 per square foot, according to the Downtown Santa Monica Market Re- port for the first quarter of 2018. The vacancy rate at the 3rd Street Prom- enade is 9.5 percent. The vacancy rate is mostly due to high lease rates and e-commerce. The Promenade had an average per-day pedestrian foot traf- fic of about 26,000 people in the first quarter, the report notes. A virtual reality company called THE VOID recently leased retail space vacated by the defunct American Ap- parel Brand in Santa Monica at 1220 3rd Street Promenade. Stores at the Santa Monica Promenade are staying vacant for longer periods of time as a result of the high lease rates. THE VOID VRcade is scheduled to open in the 3,500-square-foot space in Septem- ber. VRcades have only been around for a couple of years in the United States. In 2016, there were about 1,000 loca- tions in North America, according to an article in Forbes magazine titled "Can VR Save the Movie Theater, or the Mall?" THE VOID has two locations al- ready open in the Los Angeles area. One is located in the Downtown Dis- ney shopping center at 1580 S. Disney Drive in Anaheim. The retail space is about 3,500 square feet next to Dis- neyland. The location is extremely popular with crowds on the weekend waiting to play the Star Wars-themed virtual reality game that the Walt Dis- ney Company helped produce with THE VOID. THE VOID also has a 3,500-square- foot location in the Glendale Galleria with another coming soon to Holly- wood. The space will be about 3,500 square feet, according to Dayne Stone, who works in guest services at THE VOID's corporate headquarters in Lindon, Utah. "It's a good sign of the demand," he says. The company is also planning five more locations across the country. Another VRcade in Santa Monica is Castle Steps Games at 716 Colorado Ave. in the downtown area just a few blocks away from the 3rd Street Prom- enade. It opened in the first quarter of this year, leasing 4,400 square feet on the bottom floor of a two-story retail building. The average monthly lease rate for retail in Santa Monica (excluding the Promenade) is $7.36 per square foot, triple net. The area's vacancy rate is 6.1 percent, according to the Down- town Santa Monica report. Castle Steps Games create their own games like THE VOID. The cost to play is $28 per person for a 30-min- ute game called LA DeadZone. Multi- players of up to four people can play at once. Castle Steps Games is also available for private corporate bookings. Their games help companies like Snap, Inc. and other local tech start-up employ- ees practice team building skills. "When virtual reality is done well it creates high-impact experiences at a caliber of its own," says Bryce Davis, creative director at Castle Steps Games. "With multiplayer free roam, virtual reality becomes a shared social experience that thrives in the current market, especially for the Millennial de- mographics. With the low build cost, I see this industry growing at a rate comparable to Es- cape Rooms." Escape Rooms are another excit- ing new location- based entertain- ment where a team of people must solve the clues to find their way out of a locked room. They are yet another concept leasing vacant commercial retail space all around Los Angeles and throughout the U.S. n REUSING VACANT SPACE IN SHOPPING CENTERS By Lee S. Segal, President and CEO, Segal Commercial Properties in Los Angeles Segal IMAX VR opened a virtual reality center in 2016 at 157 S. Fairfax in Los Angeles. A virtual reality company called THE VOID recently leased retail space vacated by the defunct American Apparel Brand in Santa Monica at 1220 3rd St. Promenade. W H A T ' S B U G G I N ' Y O U ? Pest Control for Professionally Managed Properties OFFICE RETAIL INDUSTRIAL RESIDENTIAL Eco-Friendly Solutions | Serving Southern California Pest Control Pigeon Control Termite Control Rodent Control Bee Control Gopher Control 1.877.522.2377 | www.AccessExt.com

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