Defunct department stores across Florida are finding a new purpose as family entertainment centers.

Designed to cater to adults and children, these indoor amusement facilities host a range of activities, from miniature golf and bowling to go-karts and arcade games. The FEC market has become so popular that it is expected to grow to $70B over the next several years.

E8 Properties, an FEC operator and real estate developer, is making waves in this space, bringing its concept, Elev8 Fun, to five markets in the Sunshine State.

“We purchased our first location in 2019, just north of Orlando in Sanford, which was a former Sears,” E8 Properties partner and Managing Principal David T. Goldfarb said. “Three months later, we purchased our Tampa location, which also happened to be a former Sears box.”

From there, Elev8 Fun has scaled quickly.

After attending an ICSC conference a few years ago, Goldfarb and the E8 Properties team forged a connection with Simon Properties. This led to the creation of Elev8 Fun’s third and fourth locations in Jensen Beach and Miami, both of which are slated for delivery by the end of this year.

Elev8 Fun’s fifth location will be in Jacksonville at The Avenues shopping center. Goldfarb said the firm is preparing to finalize the purchase by the end of this month.

Each location was purchased entirely in cash and ranges from approximately 110K SF to 140K SF, he said. They feature dozens of arcade games, go-kart tracks, laser tag, bowling, billiards, ropes courses and mini-golf. Elev8 Fun also has a food and beverage component, with its Tampa location featuring trendy chains such as MrBeast Burger and California Pizza Kitchen.

This isn’t Goldfarb’s first experience with owning and managing an FEC. He founded Xtreme Action Park, an entertainment facility in Fort Lauderdale, in 2015. This facility served as the basis for Elev8 Fun, Goldfarb said.

“Xtreme Action Park was our first location in the family entertainment center world where we owned the real estate and operated as an FEC,” he said. “Before this, I had an arcade business called PrimeTime Amusements, which I sold in 2023 to H.I.G. Capital.”

Goldfarb said his team quickly realized that the Elev8 Fun concept stretched beyond games and amusements. It evolved into a targeted investment strategy that is solving one of commercial real estate’s toughest challenges: retail obsolescence.

“We stumbled into the real estate part of the business,” he said. “We didn't know when we first started buying these boxes that it had an extra real estate component to capitalize on.”

Goldfarb was referring to the parking lots that come titled to the parcel. Often, these former big-box retailers come with multiple acres of parking. This represents a massive, untapped real estate opportunity, which Goldfarb said has allowed Elev8 Fun to be monetized in a completely different way.

“We build Elev8 Fun in these former big-boxes, but in our parking lots, we can build freestanding buildings, whether it be quick-service restaurants, banks, office space or hotels” he said. “This is just one way we can value-add on top of operating Elev8 Fun.”

Elev8 Fun’s Sanford location in the former Seminole Towne Center came with 8 acres of parking, Goldfarb said. As a result, E8 Properties is in the process of building a Marriott hotel on a portion of its parking lot.

A Costco is being built in the mall’s former Macy’s box, he said, as well as hundreds of apartments nearby.

“What’s interesting about malls is that they’re typically in good locations in terms of access, and they have unlimited parking,” he said. “There’s a lot of acres to play with, so malls are going to be very different 10 and 20 years from today. We’re looking forward to participating in more up-and-coming mixed-use redevelopments as the premier entertainment anchor.”

Another crucial part of Elev8 Fun’s real estate strategy is co-tenancy, Goldfarb said.

Across its portfolio, E8 Properties purposely leaves a portion of each space open to lease to other companies that would complement Elev8 Fun, such as sports clubs, gyms or movie theaters.

At its Jensen Beach location, Elev8 Fun set aside about 20K SF for another entertainment use. A pickleball club, Diadem Sports, now occupies this space and is also slated to occupy 30K SF in Elev8 Fun’s new Jacksonville location.

“Our strategy moving forward is to continue to purchase these large boxes, convert them into entertainment centers and continue with this co-tenancy strategy,” Goldfarb said. “We’re looking for ways to optimize the Elev8 Fun footprint.”

In the near future, E8 Properties is eyeing more markets across Florida, as well as nationally, for new Elev8 Fun locations. It typically evaluates opportunities that have about 300,000 people within a 20-mile radius, and it only looks to purchase real estate outright, not lease.

Goldfarb said E8 Properties isn’t just looking at big-box stores to redevelop, either — it is looking at buying large-scale shopping centers.

“We feel like we could open as many as 18 locations across Florida,” he said. “We're going to be buying more of these department stores at this scale, and then eventually buy whole shopping malls to potentially redevelop them. There's so much underlying value there, but you have to find a way to activate it.”

This article was produced in collaboration between E8 Properties and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.