The Orinda Theatre Square is not changing hands – at least for now.
“We are not selling it right now,” said Mark Hutchinson, executive vice president of Dunhill Partners, which owns and manages the retail center that includes the iconic Orinda Theatre. “We are very happy to own it for the next five years.”
Dunhill, a Dallas-based real estate investment firm, which has owned the Theatre Square lifestyle center for 10 years, was said to be shopping the property to potential suitors in recent months as time was about to expire on financial lending agreements used to acquire the retail and office complex.
But Dunhill has decided to secure new financing for the retail center and was expected to close on a new loan by mid-July, Hutchinson said. The value and terms of the loan were not disclosed.
The new loan agreement means Dunhill will continue to manage and lease the 87,000 square-foot mixed-use real estate development that features the 84-year-old art deco Orinda Theatre movie house as its center-piece crown jewel.
The theater business that occupies the cinema portion of the retail center, which is owned by operator Derek Zemrak, will remain in Zemrak’s control for at least the foreseeable future.
“It’s business as usual for now,” said Zemrak, who has 18 months remaining on his current lease with Dunhill, with an option to renew for five additional years.
The future of Zemrak’s movie house business was less clear just two months ago.
As reported in the June issue of the Orinda News, Zemrak had an agreement to sell the business to Tommy Thomas, founder and former owner of an East Bay comedy club. But the sale of the theater business fell out of escrow, according to Zemrak.
The plan was for Thomas to expand the theater’s offerings to include more live entertainment, including concerts. Thomas successfully co-promoted a live concert performance of Starship, a successor to Jefferson Starship, last May.
It is no secret that the cinema industry is under attack by direct-to-home streaming content services and that the future of historic movie houses are in jeopardy.
The concept of converting treasured movie theaters into live entertainment venues provide them with a fighting chance to survive, and the Orinda Theatre is no different, which is why Zemrak pursued an opportunity to expand live music offerings in order to broaden revenue
potential.
“A lot of things are changing,” Zemrak said.
As movie screens are closing down across the country at a precipitous rate, Zemrak is willing to experiment with his offerings if it helps Orinda’s cherished movie palace survive Hollywood’s tectonic shift toward streaming.
Look no further than the historic Castro Theatre in San Francisco, where its owners, the Nasser family, have leased operations to a concert promoter, Berkeley-based Another Planet Entertainment. The theater is wrapping up a reported $41 million renovation and reconfiguration to accommodate concerts.
To be sure, there are no simple solutions to preserving the Orinda Theatre if the cinema industry continues its current downward trajectory. It may require more civic involvement.
Many folks already donate money to Zemrak’s operations to help keep his operations afloat. But an influential Orinda philanthropic organization, the Orinda Community Foundation (OCF), has explored options of trying to do its part to assure preservation of the theater for decades to come.
OCF, which is a 100% volunteer tax-exempt organization devoted to funding Orinda causes, made a bid to acquire the physical theater portion of the broader mixed-use center, but Dunhill declined the offer, according to Hutchinson.
The proposed deal, which in real estate parlance would require a “carve out” of the theater from the center, would invoke various complexities.
Nonetheless, OCF, which reported $2.1 million in net assets in fiscal year 2023 according to ProPublica, made a run at it.
“To the extent it was possible to carve out the theater (building), OCF expressed interest in obtaining that portion,” said OCF President James Keefe. “The Orinda Community Foundation is all about Orinda, and what could be more about Orinda than the theater. OCF will do whatever we can to keep (the theater) moving along as an important asset to this community.”
For its part, Hutchinson said Dunhill appreciates and supports the need for the theater to branch out to more live entertainment. Hutchinson went to the Starship concert and said he enjoyed the show and the crowds it brought to the Square’s restaurants and bars, but also expressed concern that the theater’s interior and seats might not be capable of sustaining some of the wear and tear that comes with a heavy dose of rock concert crowds.
He believes that there needs to be a “balance” to the live acts that perform there. Still, “I would love to see more,” Hutchinson said.
That said, and theater issues aside, job one for the center is to focus on filling its empty store fronts.
The total project, which is roughly half retail and half office space, is nearly 85% leased when including short-term leases.
The office component is mostly leased with more vacancies among the retail spaces, which are readily visible. About six months ago, Dunhill hired a new retail real estate broker, Stephen Rusher, executive director of The Econic Company.
The COVID-19 pandemic and the growth in online retailing has impacted the leasing of brick-and-mortar centers such as Theatre Square.
“It has taken us several years to build back the vacancy after the pandemic,” Hutchinson said. “We are very focused on this asset, and we want it to be a vibrant asset for this community.”
