What Changes When Repurposing Entertainment Venues

By Susan Mcguirl and Cameron Smith

Entertainment venues, including indoor arenas, concert spaces and theaters closed en masse at the outset of the COVID-19 pandemic. But indoor spaces are some of the last to reopen, as many entertainment venues cannot operate economically with less than 80% to 90% capacity.

While some businesses pivoted to streaming events or parking lot concerts to generate revenue, many owners traded in their General Liability (GL) policies for less-costly Vacant Premises policies. This bare-bones policy covers catastrophic incidents such as fires or floods, with limited GL coverage.

Some arenas with ample parking space and good internal egress have been used for COVID-19 testing and vaccination sites. However, risks for mass testing and vaccination sites are both greater and new to entertainment, often increasing premiums. For venue owners and operators who cannot afford the increased costs, the organization administering tests and vaccinations should be leveraged to assist.

While some owners hope for government grants, it’s not an option for all venues (nor is the federal grant process going smoothly). As a result, some property owners and promoters are reimagining their spaces altogether, such as converting some of their space to retail or hospitality.

Repurposing venues or not, changes are afoot

Entertainment venues that want to reopen will, initially, have to do so at reduced capacity. That will require facility upgrades, which could include a new seating plan, additional rest rooms or additional entrances to avoid close contact between patrons, making it likely that buildings will need remodeling before reopening.

In addition, entertainment venues that suffered damage during a prolonged vacancy may need to build a new sprinkler system, provide wheelchair access or make other improvements to meet local building ordinances that changed during the pandemic.

Building ordinance coverage, an extension to property policies, covers a facility for upgrades required by ordinances passed after the building was constructed. The challenge of building ordinance coverage is determining how much to procure. A rule of thumb is coverage equal to 25% of the property’s value.

The systems that probably need upgrading

When repurposing an entertainment venue, contractors, MEP consultants and local government inspectors will need to evaluate each of a building’s systems to determine if they can adequately serve their new purpose. You’ll want to consider the following:

  1. Fire and life safety systems protect the venue’s employees, patrons and assets, designed to control fires long enough to allow occupants to exit safely. These safety systems include understanding the fire hazards of each space within your facility, stairwells and emergency evacuation plans including exit and egress. These are high-priority systems for an entertainment venue and will need to remain so when repurposing a building to account for a high number of people passing through it.

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HUB International

HUB International is a leading North American insurance brokerage that provides employee benefits, business, and personal insurance products and services.