Lease bouys city’s hopes for downtown theater - SanTan Sun News SanTan Sun News

Lease bouys city’s hopes for downtown theater

September 13th, 2021 development
Lease bouys city’s hopes for downtown theater

By Ken Sain, Staff Writer

The City of Chandler’s hopes to turn a major downtown intersection into an entertainment hub may not be dead yet, but thanks to the pandemic, they initially seemed to have suffered a blow.

City officials expressed concern about the future of Flix Brewhouse’s theater at Chandler Boulevard and Arizona Avenue during a City Council meeting late last month. At the time Council agreed to the theater’s sale to AZ Management and Investment, LLC.

Flix and CEO Allan Reagan filed for bankruptcy last October and court documents show they owe more than $70 million to creditors, mainly banks.

“We would prefer it remain a movie theater,” city Cultural Development Director Kim Moyers told Council at the time. “We want some sort of entertainment use. Downtown has a lot of great restaurants to go to.”

It looks like Moyers got her wish.

On Sept. 7 – two weeks after the Chandler Council meeting – the global real estate services firm Cushman & Wakefield announced that AZ Management & Investments, which bought the movie house for approximately $7.1 million, has leased it to LOOK Dine-In Cinemas Monrovia.

Cushman & Wakefield’s Eric Wichterman, Brent Mallonee, Mike Coover and Chris Hollenbeck represented DT Chandler in the transaction and found the new cinema tenant for the buyer.

Eric Wichterman, Cushman executive managing director, shared Moyers’ vision, stating, “Our mission was to pair this state-of-the-art, special-use theater and brewery building with a qualified new ownership that would either occupy the facility or an investor that believes in the future of the cinema industry.”

LOOK Dine-in Cinemas is based in Monrovia, California, and was formed just two months ago by Brian Schulz, the founder of another high-end eat-in cinema chain called Studio Movie Grill.

Last October, Studio Movie Grill, which owned 33 movie houses, filed for Chapter 11 bankruptcy. The Dallas-based company, according to reports, had received a $75 million investment two years ago and was expanding rapidly until the pandemic hit. At the time of bankruptcy, court documents showed Studio Movie Grill had $100,000 in cash.

“I am honored to have the opportunity to provide three more California communities with jobs that pay fair wages, and a space for each neighborhood to come together for great cinema experiences,” said Schultz in a statement when he formed LOOK Dine-In. “I firmly believe in the magic of going to the theater so I hope that after a year of isolation that we start to see more and more communities going back to the movies.”

Chandler City Council signed off on the the Flix sale because it had granted a Government Property Lease Excise Tax to the property. That’s a tax incentive given in exchange for bringing in jobs or specific types of businesses to a desired location.

Any new tenant of the building seeking to do something other than a movie theater would have to get Council’s approval to maintain the GPLET.

Texas-based Flix opened the Chandler theater in December 2018 to much fanfare.

It promised a unique movie experience, combining a theater, microbrewery, and restaurant and was to be the anchor for the 77,000-square foot Overstreet development. Flix had a concept similar to Alamo Drafthouse Cinema, which opened in south Chandler in 2016.

As it did to movie theaters across the country, the pandemic devastated the industry. Many theaters remained closed for months as major studios delayed releasing films and government shutdown orders were in force to curb the virus’ spread.

Flix tried to reopen in September  2020, but could only keep its doors open a couple of months before announcing it was closing again.

Both Flix’s and Alamo’s national chains filed for bankruptcy protection last year.

While Flix initially filed for Chapter 11 bankruptcy last October with the intent of reorganizing its finances, some banks owed millions have asked the court to order the company liquidate all its assets, court records show. The bankruptcy case has not yet been resolved.

The case marked a major change in Flix’s fortunes.

In 2018, Flix was eyeing revenue totaling $50 million – an increase well over the $35 million in revenue it reported in 2017.

It projected $100 million by 2000 as it continued opening new theaters in Oklahoma and Texas.

Though some pundits predicted last year the rise of Netflix and Amazon streaming services would doom movie theaters, Reagan told local reporters there was room for both movie theaters and streaming services to thrive.

Flix completed a $13 million funding earlier in 2018 and had another $13 million in capital committed.

It also was the anchor of the much-ballyhooed Overstreet project, which city officials in 2018 said would spark a major rejuvenation of downtown Chandler.

Cushman & Wakefield in December announced that the 31,804-square-foot Overstreet building, comprising two separate ground-level retail spaces with a contiguous second floor of office spanning across an interior street between the retail, was acquired by Overstreet Project, LLC, a Nevada company, for $12.3 million.

“Overstreet is a rare mixed-use property situated in one of the most sought-after markets in the greater Phoenix area, and offering stable, long-term tenancy,” said Wichterman.

“The project is ideally positioned at a hard-corner location along Arizona Avenue, the area’s main thoroughfare, with access from three roadways in the center of Downtown Chandler, an eclectic ‘urban’ environment containing hip restaurants, shops and entertainment venues,” he noted.

Overstreet Chandler consists of approximately 58 percent office and 42 percent retail space, Cushman & Wakefield said in a release, adding:

“The property features cutting edge architecture and interior improvements and also includes a large digital media billboard that wraps the corner of the neighboring building. A 350-stall, five-story public parking garage provides on-site parking.

“The property is 100 percent leased to a high-quality, synergistic tenancy including a breakfast hot spot, Mexican food, burgers, tea, ice cream and an industry leader in healthcare reimbursement on the second floor.”

What happens to the former Flix building is important for Chandler’s future. “That corner is not as active as it was before,” Moyers said. “We would like to rejuvenate that area. Certainly, there’s a hole there.”

She said since it’s a relatively new building and designed specifically to be a theater and brewpub, that would be their preference for a new tenant. But with Flix out of the picture and Alamo already having a similar business just down the road, it removed the two leading chains as possible tenants.

“There are other groups,” Moyers said. “The movie industry as a whole is redefining itself because of COVID. There are some smaller chains that are coming in and trying to make their marks.”

She had told Council the city wants whatever happens to the building to be related to entertainment if it’s not possible to remain a theater.

“The property is currently fully constructed as a theater, and there is quite frankly a lot of capital investment in that building that is specifically tailored to a theater,” said Kevin Mayo, Chandler’s planning administrator.

Moyers said it would be a waste for it to be anything other than a theater.

“It’s less than 2 years old; it’s in pristine shape,” Moyers said. “It would be a shame.”