Can Netflix convert dead mall spaces like it converted the entertainment industry?

June 21, 2024

THE DALLAS MORNING NEWS | June 21, 2024 | Written by: Anna Butler

Galleria Dallas will be bring a never-before-seen experiential concept to a former department store space.

Landing one of the first Netflix House locations in the world is a feat. Where it’s landing is also an interesting story.

Terry Montesi of Trademark Property Co., the Fort Worth-based real estate firm that has managed Galleria Dallas since 2018, said earlier this week that trust is part of the equation in bringing the concept to the North Dallas mall.

That is because there are unknowns with a never-before-seen experiential concept like Netflix House.

It also marks another conversion.

When conversions are brought up in the real estate sector, those of the office-to-residential nature tend to make the most headlines, especially as vacancy rates in urban cores across the country climb and cities look for solutions.

But the idea of bringing together more experiences, residences, dwellings and other commercial product types alongside one another is also a common thread.

Many conversion efforts simply seek to add a mix of uses — and therefore users — to sustain foot traffic and provide reasons to stay at a destination.

A traditional backfill for a department store concept would have been another department store.

Netflix’s vision could not be more different than racks of clothing, the only shoe horns you’ll see for months, and cosmetics counters. Guests could shift from waltzing on a Bridgerton replica set before moving on to a Squid Game-inspired competition.

Netflix House at the Dallas mall, owned by Metropolitan Life Insurance, is taking a sizable chunk of space.

“It’s a greater than 100,000-square-foot user that will be experiential, it will be food-based, it will be vibrant, it will rotate,” Kevin Kessinger, president and COO of Trademark, said during a panel discussion on the conversion space at the National Association of Real Estate Editors Annual Real Estate Journalism Conference on June 19.

“All of that drives traffic to the center, which allows you to elevate food and beverage concepts and entertainment. To bring all of that together is really pretty compelling,” Kessinger said.

He shared a quip from a friend who said that the retail isn’t underbuilt, it’s under-demolished.

The phrase points to the quality location of many retail sites and malls.

Kessinger said the key to potential conversions is cooperative retailers that see the value and benefits that come from adding other uses, in particular multifamily, because it brings shoppers directly to their front door. The same goes for owners of retail assets, as well.

Netflix House is expected to open at Galleria Dallas in 2025. The other planned location is slated in King of Prussia, Pa., outside of Philadelphia.

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