Play Meter

PLAY METER: What are the key factors in
determining an arcade site?
DAUGHERTY: In recent years it's been made
pretty easy by just selecting a major regional mall,
a shopping center of 600 ,000 square feet or more.
Actually in most of the major regionals, they
average around one million square feet. And they
have anywhere from two to four department stores.
An enclosed mall is certainly preferable for an
arcade, though there have been some successful
locations in open shopping centers. The thing
against open shopping centers is that they aren't as
conducive to traffic as an enclosed mall where you
have an open entrance and can attract more families
and adults . Generally speaking, the major regional
shopping centers can qualify as being successful
locat ions without too many other qualifications or
demographics because it's safe to assume that a
major regional shopping center has to draw a
certain amount of traffic, and that's all we need . Of
course, there will be a big difference in income from
one shopping center to another, but by and large
the enclosed mall is the best bet.
PLAY METER: How do you find out where the new
malls are coming up?
DAUGHERTY: There are two or three ways. If
you're a member of the Internatioal Council of
Shopping Centers, you can get its bulletins, and
there are two or three shopping center trade
magazines. In addition, there's also a periodical that
lists nothing but shopping centers. It's called the
"Shopping Center Digest," published by Murray
Shor. It lists all the new malls in t he United States
and all those that are planned for the n~xt couple of
years. It has a breakdown by city and state and also
lists when groundbreaking is scheduled to get
underway , the overall square footage, and the
name of the developer. "Shopping Center Digest"
also runs lists of tenants who are looking for space.
But t he problem for anyone who gets this periodi-
cal is that they'll fmd it comes down to only about
twelve different developers who are doing most of
the work today. This periodical, I think, would be
the best place to start looking, and from there you
can start zeroing in on the area you want. After
that you have to find a way to establish a
relationship with the developer, some way to talk
with nim and present him with your proposal to
lease some of the space for your arcade.
PLAY METER: What chance does the little
operator have against the national amusement
center companies that dominate that market today?
DAUGHERTY: Actually, the little operator has
many advantages over the nationwide operator.
The big disadvantage for the little operator is the
guarantee on the lease. But, especially with the
smaller landlords, they are more interested in what
kind of operation is being run and so they'll take a
closer look. In fact, I've seen recently where some
landlords were not that impressed with some of the
national companies, where they didn't think the
design of their stores was that unusual, where they
said they didn't really rotate their machines, or
have that many new machines, or that the
PLAY METER, April , 1979
personnel running the store weren't in uniform.
And then they started looking for someone local
who would operate the store and be there all the
time, someone who would take more interest in it
than a national operation. So what the little guy
ought to do is get an artist to do some artwork.
Have the artist draw some good designs for a
storefront, and also design a uniform that makes
the personnel look more presentable. Uniforms, by
the way, are apparently a big thing for the
landlords. I know one landlord who plans on
including it in the lease. It's because they're
concerned mainly about the security.
PLAY METER: So then the little guy has a fighting
chance against the big national companies when it
comes to landing these sites?
DAUGHERTY: The worst disadvantage for the
one-time operator is the guarantee of the lease. A
second disadvantage he will have is never having
been in business in a mall before. But, as I said, the
one-time operator also has a lot going for him. As
much as the big companies say they rotate their
machines and have the latest equipment, I'd like to
beg to differ with them. They've got a lot of old
equipment in their stores. In fact, some of the
landlords are getting a little more sophisticated and
are beginning to ask the operators how they plan on
rotating or upgrading their equipment because
they've observed other amusement centers-even
the nationals-that don't do it that much. But back
to the little guy's problems. Guaranteeing the lease
is his big roadblock, and that's the advantage the
bigger companies have. They're offering a
signature. The landlords like this, but a lot of the
bigger developers don't need it. For a lot of the
smaller developers, though, they need those
signatures to get their mortgage . So this can make
it pretty difficult for the little operator. So,
actually, it's probably one of the first points that
should be considered when you get serious about
leasing space in a mall for an arcade. But then again
that gets back to your relationship with the
landlord. I've had other clients who have had a good
relationship with the landlord, and the landlord was
doing them a favor and letting them have the game
room, and they weren't concerned at all with the
guarantee on the lease.
PLAY METER: How long is the normal lease in a
shopping center setup?
DAUGHERTY: I recommend taking as many years
as you can, even twenty years. I would imagine that
the normal lease is around ten years, but some of
the landlords are even down to five years. But it's in
the best interest of the operator to go for the
longest term lease he can get because rents have
doubled in the last five years. If you're operating in
a small space in the shopping center and you find
out you've made a mistake, space value is such that
you wouldn't have much trouble selling the space
and getting out of the lease. On the other hand, the
landlord realizes how valuable his space is and how
much the rents are increasing, so the shorter the
term he makes the lease, the better condition he is
in to renegotiate.
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