The movie chain intended to anchor the newest downtown development in Manassas Park has pulled out of a deal with the city to build and operate the proposed theater adjacent to the new city hall building.
The original plan was for the city to transfer the downtown property to Cinema Cafe, a theater-restaurant hybrid chain with six locations across Virginia, free of charge. In return, the company would build the theater by 2023 or 2024 as part of an anchor for the downtown mixed-use development near city hall.
But City Manager Laszlo Palko said the chain cited inflation in backing out of the deal, leading the city to transfer the land to Norton Scott – the city’s selected private partner for the new city hall building and the 300 downtown homes that are also part of the development – to build a new theater complex and lease it out.
“What we had looked at with Cinema Cafe was an ownership structure … that usually was their business, but inflationary pressures are just changing that for theaters, where they’re not really developing brand new theaters. That’s not very common anymore, they’re just leasing them out,” Palko told InsideNoVa.
While inflation does remain high in terms of year-over-year price increases, the movie theater business also has still not recovered from the COVID-19 pandemic and the proliferation of streaming services with new and old films. The box-office smash “Top Gun: Maverick” helped boost ticket sales earlier this year, but they still lag behind pre-pandemic levels, and some experts say the industry currently has too many theaters around the country and that large movie chains will need to shrink their footprints to stay viable.
According to the New York Times, Cineworld – the owner of Regal Cinemas, the second-biggest chain in the country – is preparing to file for Chapter 11 bankruptcy, which would let the company break leases and downsize in general.
Manassas Park Mayor Jeanette Rishell said in a Facebook post that Cinema Cafe had retained the right to terminate the purchase and sale agreement with the city for any reason during its “study period.”
“There are ongoing negotiations to bring in the anchor in a manner that does not have them build the structure, but instead has the structure built by the current builder, and then the anchor rents from them,” she wrote.
Palko told InsideNoVa that the city and Norton Scott aren’t worried about filling the space, despite the bleaker-than-normal outlook for the theater business.
Cinema Cafe itself has even shown interest in leasing the theater, he said, but it’ll be up to the developer to find a tenant.
“Norton Scott’s now in the driver’s seat. They’re the ones who are going to construct it now and lease it out. We’re introducing them to different theater businesses, and we’re going to keep working with them to get the lease numbers structured correctly. Cinema Cafe is not the only option,” Palko said.
The theater was always planned to open later than other components of the overall development, and now, Palko said, it likely won’t start selling tickets until 2024, once the new Virginia Railways Express parking garage is open nearby. Homes that are part of the development’s residential component continue to go up, city staff moved into the new city hall building earlier this summer and the new library on the ground floor of the city hall building is expected to open Sept. 11.
Leases with Jirani’s to open a new coffee shop in the building and a Mexican restaurant to open next door are still in place.
But some may see signs of another commercial development not panning out for the city. Storefronts built nearby over a decade ago in another city-led development plan are still empty, though the residential market in the area has remained strong.
“This is very worrisome,” former City Council member Donald Shuemaker wrote on Facebook about the news. “We need the anchor for this development to be successful.”