Netflix Plans to Put Second Entertainment Venue in an Empty Mall Department Store
According to Linda Moss at CoStar News, "Streaming giant Netflix plans to open its second brick-and-mortar entertainment venue, announcing it will be at a Dallas mall and occupy former department store space, just like its first planned location.
The Los Gatos, California-based company said it will debut a Netflix House next year at Galleria Dallas in Texas and confirmed that another is slated for the King of Prussia mall in Pennsylvania. In March, CoStar News reported that Netflix House was coming to the Keystone State mall, but Netflix had declined to comment at that time.
Netflix House is "an experiential entertainment venue that will bring some of our most beloved titles to life," the company said in a statement. "Building on previous Netflix live experiences for 'Bridgerton,' 'Money Heist,' 'Stranger Things,' 'Squid Game' and 'Netflix Bites,' Netflix House will go one step further and create an unforgettable venue to explore your favorite Netflix stories and characters beyond the screen year-round."
The subscription-based video service has been experimenting with temporary retail locations and pop-ups related to its hit TV shows nationally for several years. But in October, Netflix said it would debut two undisclosed permanent brick-and-mortar locations featuring retail and entertainment tied to its most popular programming in 2025.
Other video content providers have tried to monetize — and generate interest and loyalty to — their programming with brick-and-mortar locations. Walt Disney Co., Universal and Nickelodeon have theme parks that offer experiences to visitors. Disney has stores selling merchandise, while Netflix has sold goods related to its franchises, including shows such as "Stranger Things," as well.
The new Netflix Houses also offer yet another example of how former anchor stores in U.S. malls are being repurposed for use by not only expanding retailers but healthcare facilities, housing and entertainment venues, so-called experiential retail that offers visitors activities to engage in.
'Expansive Spaces'
At the King of Prussia mall, owned by Simon Property Group, Netflix House is looking to move into a 120,000-square-foot former Lord & Taylor space. At the Galleria Dallas, owned by MetLife Real Estate, Netflix House plans to occupy a vacant Belk store that closed in 2020. The former Belk flagship has three levels and over 180,000 square feet.
"Netflix selected the locations because they are part of two of the most popular shopping centers in America, boasting hundreds of retailers, high-foot traffic, and proximity to major cities," the streaming company said in its prepared statement. "Both Netflix Houses will occupy former department store locations and span footprints of more than 100,000 square feet. Outside these expansive spaces, fans will be treated to some eye-popping sculptures and a mural mash-up of characters from their favorite Netflix titles."
The company is "leasing the entire footprint of the former Belk (Galleria Dallas) and Lord & Taylor (King of Prussia) department stores," a Netflix spokesperson said in an email to CoStar News.
Netflix briefly described some of the experiences that visitors can expect to find at Netflix House, which will include TV and movie screenings, stores selling Netflix programming-related merchandise, dining, sports and gaming activities, and virtual-reality offerings.
“At Netflix House, you can enjoy regularly updated immersive experiences, indulge in retail therapy, and get a taste — literally — of your favorite Netflix series and films through unique food and drink offerings,” Marian Lee, Netflix’s chief marketing officer, said in a statement. “We’ve launched more than 50 experiences in 25 cities, and Netflix House represents the next generation of our distinctive offerings."
Netflix is taking a page out of the books of its video competitors.
"Imagine waltzing with your partner to an orchestral cover of a Taylor Swift song on a replica of the 'Bridgerton set ' — and then walking around the corner to compete in the Glass Bridge challenge from 'Squid Game,'" Netflix said.
It added that "after pretending to fight for your life, you’ve worked up an appetite and want to get a bite. You see a nearby restaurant with food inspired by Netflix shows from around the world; the meal is memorable, but you still want to buy some 'Stranger Things' merch. Luckily, there’s a shop that sells that Hellfire Club T-shirt you’ve always wanted."
The development of Netflix Houses in Texas and Pennsylvania could have several implications for local property taxpayers in the surrounding areas. The transformation of former department store spaces into entertainment venues may impact property taxes both directly and indirectly. Here are some key points to consider:
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Increased Property Values
Enhanced Property Values: The conversion of large vacant retail spaces into vibrant entertainment venues can significantly enhance the value of the properties. As the attractiveness and foot traffic in these malls increase, the overall property values in the vicinity may rise. Higher property values typically result in higher property tax assessments, which can increase the property tax revenue for local governments.
Economic Stimulus
Economic Activity and Employment: Netflix Houses are expected to attract large numbers of visitors, boosting local economic activity. Increased spending at the malls can lead to more jobs and business opportunities. This economic stimulus can enhance the financial health of the local area, potentially leading to higher taxable sales and increased revenue from sales taxes. Although this is not a direct property tax impact, it can reduce the need for property tax increases to fund local services.
Commercial Tax Base
Diversified Commercial Tax Base: The repurposing of these large spaces ensures that the malls remain commercially viable and continue to contribute to the local tax base. A diversified and robust commercial tax base can help stabilize property tax rates, as it spreads the tax burden across more entities and reduces reliance on residential property taxes.
Potential for Infrastructure Investment
Infrastructure Improvements: The influx of visitors and the need to support these new entertainment venues might necessitate infrastructure improvements, such as better roads, public transport, and utilities. These improvements can be funded through increased property tax revenue or through special assessments. While this could initially raise costs, the long-term benefits may include increased property values and improved quality of life, which could offset the initial expenditure.
Tourism and Local Business Growth
Tourism and Business Growth: Netflix Houses can act as major tourist attractions, drawing visitors from outside the immediate area. Increased tourism can lead to more business for local hotels, restaurants, and other service providers. This uptick in business activity can result in higher commercial property values and, consequently, higher property tax revenues.
Short-term Construction Impact
Construction and Development Phase: During the construction and development phase, there might be temporary disruptions that could affect local businesses and residents. However, this phase also brings construction jobs and increased spending in the area, which can have positive short-term economic impacts.
Residential Property Impact
Residential Property Considerations: While commercial property values are directly impacted, residential properties in close proximity to these developments might also see changes. Improved amenities and increased local economic activity can make nearby residential areas more desirable, potentially increasing residential property values and property taxes. Conversely, increased traffic and noise could be a concern for some residents, which local governments would need to manage carefully.
Long-term Stability and Growth
Long-term Stability and Growth: Successful integration of Netflix Houses into these malls can contribute to the long-term stability and growth of the local economy. As these venues become permanent fixtures, they can help ensure that the malls do not fall into disrepair or become underutilized, which would negatively impact property values and tax revenues.
In summary, the introduction of Netflix Houses in Dallas and King of Prussia has the potential to positively affect property taxes in the area by increasing property values, stimulating economic activity, and diversifying the commercial tax base. Local governments and taxpayers may benefit from the increased revenue, which can be reinvested into community services and infrastructure, further enhancing the attractiveness and livability of the area.