Providing insight into the select, specialty property types of EPR Properties.

April 2014

Success Story: NC Music Factory

Entertainment / Entertainment Retail Centers /

Success Story: NC Music Factory

The NC Music Factory revolutionized the Charlotte music, entertainment, and nightlife scene.

With its “park once, enjoy a multitude of entertainment” approach, the NC Music Factory appeals to busy consumers who choose its variety over many other options. Noah Lazes, co-founder, President of ARK Group who operates the NC Music Factory explains what has made this concept successful, trends that affect its success, and what could come next.

How is the NC Music Factory an entertainment destination?

“Society has moved to people enjoying being able to park and then walk to many entertainment and food and beverage options. It’s much harder to make an entertainment venue work as standalone businesses if people don’t have the ability to traverse from one to another by foot.”

What makes mixed-use entertainment properties durable?

“Restaurants, night clubs and bars come and go. That’s a fact. But successful entertainment districts are there for the long run. If you look at successful districts, the names change but the venues are still there generating cashflow, often at higher rents with each new tenant. They get re-invented with each new operator. The landlord of a successful entertainment district is in some ways in a more stable position than the landlord of an outdated office building or big box retail space that’s had its run.”

What do you do to help the property succeed?

“We often do events or promotions that aren’t designed to be profitable, but are designed to stimulate business within the district. We might have a barbeque festival on Tuesday night, then a crawfish boil on a Wednesday. There might be a fashion show the next night, and then the next day a farmers market and the next day a car show. We’re trying to bring people to the district. You do those things not necessarily to generate revenue for the landlord, but to generate people, which generates business for the tenants, which consequently generates revenue for the landlord.”

How do anchor properties like movie theatres play into the Entertainment Retail Center (ERC) concept?

“Critics have said for a long time that the movie business will move to the home theatre. But they keep doing bigger numbers every year. Why? It’s an experience that interacts with the public. That experience has been made better in movie theatres as well over the years. Everything from food and beverage on down has improved. Some of our projects involve movie theatres, which are destination driven.”

“As entertainment districts evolve, they make a natural evolution to what the public wants. Ultimately, it’s about being able to socialize or being entertained in a fun and safe environment.”

What do live performances add in terms of value that other entertainment properties may not be able to offer?

“Live performances are critical. They’re constantly changing the property, helping to keep the properties fresh. We’ll combine to have more than 500 bands perform in a given year and more than 330 comedy shows. It can invigorate a location. If you have a good venue and district where audiences can eat, drink, and do other things outside of the actual performance, you’ve got something that’s unique and has staying power.”

With a wide audience appeal, right?

“It’s a broad spectrum of talent. It might range from an all-female audience, a young audience to an older audience. Audiences change based on the talent and our audiences span many demographics. These destination-driven draws are critical to the success of entertainment districts.”

In what ways do you keep your properties fresh?

“We do our best to stay up to speed on the latest and greatest concepts across the country. These districts are specific to the markets where they’re located. The key is that districts have enough options that people will want to go to a given district or area rather than going to only a certain venue.

“Our district is big enough that someone could say, ‘I’m going to the Music Factory and I’ll figure out what I’m going to do when I get there.’ They don’t have to come only for one of the talent-driven acts, though they do help.”

What advantages does an ERC enjoy over a traditional restaurant or entertainment offering?

“Most restaurants don’t get a second chance. If a customer doesn’t like the food or service experience, it’s very hard to get them to come back. The nice thing about our district is that if a popular band is playing at The Fillmore, that customer is coming. You get a second shot to get them to come in and eat. If they like the food, maybe they come back a third time, and they don’t come because of an act but specifically for the food and beverage experience.”

So food and beverage is a key contributor to the durability of these properties?

“As long as you can keep the health and the integrity of an entertainment district fresh, the district can run for a lifetime or more. In our minds, food, beverage, and entertainment is more stable than office, residential, or retail alone. When those centers become dated, they’re very hard to re-invent. Entertainment districts thrive on reinvention.”

Is this a concept that can make it into more cities, or are there unique limitations?

“We absolutely intend to take it on the road and we’re doing it right now. We think it can be exported to many cities. We all know cities want the NFL and an arena with an NBA team or Major League Baseball team. We all know what type of effect those teams can have on a city. But even the best teams barely draw 1 million people in a year. A good entertainment district can do over 3 million people annually. If you want to add traffic and people to an area, an entertainment district is, in some ways, a better option than major league sports.”

How does that sort of mass appeal affect the community?

“The whole creative class of ‘Live first, work second’ is real. And they want to be where there are fun things to do. That’s why Austin, Texas has been so successful. There has been a lot of study on what entertainment does for a city beyond sales and property taxes. It helps to recruit big corporations who want their employees to have the quality of life that they enjoy.”

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