Hero Zone: Where Social VR Meets Real-World Revenue -
CoStar is reporting on a new JLL study that should change how operators think about their next lease negotiation. The headline finding: location-based entertainment has crossed from amenity to primary tenant category in retail real estate. JLL’s database is tracking 4,746 existing LBE venues across the US, and the brokerage is treating the category as a headline tenant class rather than a secondary draw to fill empty mall corners.
That’s a structural shift. It changes how landlords value LBE deals, what terms operators can negotiate, and how the next wave of venue expansion gets financed.
For most of the last decade, LBE was the tenant landlords called when they couldn’t fill a big box with a department store or a fitness chain. No build-out money, short terms, and the implicit understanding that the venue was there to drive foot traffic for the rest of the mall.
JLL’s data says that conversation is changing. Mall owners and shopping center REITs are looking at LBE venues like Sandbox VR, the trampoline parks, the competitive socializing brands, and the immersive entertainment operators as primary draws. People are coming to the property specifically for the entertainment tenant, and then spending money at the surrounding food and retail. That flips the value calculation. The LBE venue is the anchor, not the amenity.
When the landlord’s underwriting model shifts from “this fills a hole” to “this drives the property,” the deal terms shift with it.
If you’re an operator negotiating a new lease or expanding into a second or third location, this report is for you. The landlord economics have moved in your direction. Here’s what to package into your pitch.
Tenant improvement allowances. Anchor-grade tenants get anchor-grade build-out money. If JLL is telling its landlord clients that LBE is a primary tenant category, your venue design and TI ask should reflect that. Operators have historically self-funded too much of their venue build. Now you have data backing the case for the landlord to fund more of it.
Rent abatement during build-out and ramp. A 60-minute immersive experience venue doesn’t open on day one at full throughput. You’re hiring, training, marketing, and dialing in the operation for the first 60 to 90 days. Abated or reduced rent during that period is standard for anchor tenants, and it should be standard for LBE operators delivering anchor-equivalent traffic.
Percentage rent structures that reward growth. If you’re driving the property’s foot traffic, the landlord benefits from your success even before you cut them in on revenue. Negotiate a base rent that reflects current operations and a percentage rent structure that kicks in above realistic targets. Don’t let the landlord capture all the upside if your venue takes off, but give them an incentive to keep you there as the market shifts over time.
Co-tenancy and exclusivity clauses. Anchor tenants get protection. If your venue is driving the property, you should get exclusivity on competitive LBE formats within the same center, and your rent should adjust if the landlord lets the surrounding co-tenancy decay.
Longer terms with operator options. The flip side of anchor-grade terms is longer commitment. Landlords will want 10 or 15 years instead of 5 with renewals. That’s a fair trade if the build-out money, abatement, and rent structure are right. Make sure the options to extend are at your discretion, not theirs.
Anchor-grade terms come with anchor-grade expectations. Landlords aren’t handing out improved deals because LBE is fashionable. They’re doing it because the underwriting math works on specific operators delivering specific things.
Throughput. A venue running six guests per hour through a single experience isn’t an anchor. A venue running 80 to 120 guests concurrently through stream-through capacity, like the free-roam VR venues built for groups of six flowing through staggered windows, is. Package your throughput math the way a landlord understands it: guests per day, dwell time, average ticket, total revenue per square foot. Show how those numbers compare to the food court, the cinema, and whatever else is in the property.
IP that draws. A venue running generic content is harder to underwrite than a venue with named IP guests are actively searching for. Sandbox VR’s Netflix deals, the Black Mirror Experience at Phi Studio with Banijay and Univrse, the Warhammer and Far Cry deals at Zero Latency. IP brings its own audience to your door, which is exactly what the landlord is paying for when they treat you as an anchor.
Repeat visitation drivers. Anchors don’t get judged on opening month. They get judged on year three. Operators with AI-driven branching content, playability that varies outcomes per visit, and the kind of social experience that pulls alpha influencers in to bring their friends back have a story to tell about durable traffic. Operators relying on one-time novelty traffic don’t.
Operational polish. Landlords have been burned by LBE venues that opened beautifully and ran terribly. Show them your operating manual. Show them your staffing model. Show them what the guest experience looks like on hour eight of a Saturday with a full house. Anchor-grade rent comes with anchor-grade operating standards.
JLL recognizing LBE as a primary tenant category isn’t just better lease terms for individual operators. It’s a credibility marker for the category with the capital markets that finance retail real estate.
REITs, private equity owners of shopping centers, and family-office landlords all read JLL’s research. When the country’s largest commercial real estate brokerage tells its clients that LBE is a headline tenant class, that filters into how those landlords approach every LBE conversation. It also filters into how investors think about LBE operator expansion stories, because the unit economics improve when build-out costs come down and rent structures get smarter.
This is the kind of structural credibility that compounds. Netflix bringing IP to Sandbox VR a couple of years ago opened the door for studios. Banijay launching Black Mirror with Phi Studio and Univrse is opening the door for more studios. JLL classifying the category as a primary tenant opens the door for more landlords. Each of these is a separate gatekeeper saying yes, and the cumulative effect is an industry that’s easier to scale.
A few things worth tracking as this plays out:
The category spent a decade taking whatever lease terms landlords would offer because LBE was the tenant nobody else wanted. That era is ending. JLL is telling its clients that the operators delivering throughput, IP, and operational polish are anchor-equivalent tenants, and the deal terms should reflect that.
For operators building expansion plans for 2026 and 2027, this is a moment to recalibrate the pitch you walk into a landlord meeting with. The category just got an upgrade in how it’s perceived by the people writing the leases. Use it.
What did the JLL study find about location-based entertainment and retail real estate? JLL’s research, reported by CoStar, found that location-based entertainment has crossed from amenity status to primary tenant category in retail real estate. JLL’s database tracks 4,746 existing LBE venues across the US, and the brokerage is now treating LBE as a headline tenant class on par with other anchor tenants.
Why are mall owners more interested in LBE tenants now? Mall owners are seeing LBE venues drive primary foot traffic to their properties rather than just filling vacant space. Guests are visiting properties specifically for the entertainment tenant and spending additional money at surrounding food and retail. That shifts the value calculation from co-tenancy assist to anchor.
What lease terms should LBE operators negotiate for? Operators positioning as anchor-equivalent tenants should ask for tenant improvement allowances, rent abatement during build-out and ramp-up periods, percentage rent structures tied to growth, co-tenancy and exclusivity protections, and longer terms with operator-controlled renewal options.
What do LBE operators need to demonstrate to qualify for anchor-grade terms? Operators need to show high throughput across concurrent groups, IP that draws guests on its own, content and operating models that drive repeat visitation, and the operational polish landlords expect from anchor tenants. Generic content and low-throughput formats won’t qualify for the improved terms.
How does this affect LBE expansion strategy? Better lease terms improve the unit economics of new venue openings, which makes expansion more financeable. Operators who package their pitch to match how landlords now value the category will capture better deals than operators who walk in with a generic ask. The category-level credibility also makes capital easier to raise for expansion.
