Make it Fit
April 25, 2018 | By John Cumbelich
In the past month or so, our firm has consummated leases with fitness brands CB Fit, Omni Fitness, F45 Fitness and The Studio. Over the same short period of time, we have also had discussions about current availabilities with Core Power Yoga, Orange Theory Fitness and Yoga Works. Each of these leasing transactions have occurred in the 1,500 – 5,000 SF range.
The growth of smaller fitness users like these has exploded, in part as a strategic response by these brands to the already robust store coverage of full-sized clubs such as 24-Hour Fitness, LA Fitness, Planet Fitness and Fitness 19, whose facilities can range from 10,000 to 40,000 SF.
As someone who has been involved in the development, sale and leasing of shopping centers since the 1980’s, I would observe that fitness brands today have become what video stores were in the 80’s and 90’s. With the adaptability of an amoeba to vacant spaces in various sizes and configurations, and with an offering that resonates across ethnic, age and income demographics, small format fitness concepts offer a much-needed combination of attributes to solve a landlord’s leasing challenges.
Fitness brands bring vitality to a retail center through the recurring patronage that they deliver from customers who take weekly classes or others that simply maintain a regular workout schedule. These retail stores do not require the expensive infrastructure of restaurants, yet their businesses can support market rents in first-class retail projects.
Having a hard time leasing tough second-floor space? No problem. A fitness brand’s customer doesn’t balk at a trip up or down a staircase when they are trying to increase heart-rate and burn a few calories.
As many of these burgeoning concepts have grown across multiple regions and gained scale, several brands can also now provide landlords with strong credit, regional and local advertising, and savvy leveraging of social media and internet-based class scheduling.
What’s more, a fitness customer frequently leaves their morning workout ready for a cup of coffee or smoothie, or perhaps lunch or dinner after working up an appetite on the stair-master. The presence of a successful fitness brand in a center allows landlords to create a leasing narrative for nearby vacancies that targets complimentary businesses that offer green drinks, healthy meals, footwear, sportswear, etc.
Clearly another factor in the ongoing evolution of fitness retail has been the increasingly upscale build-outs, world class fitness equipment and fancy locker rooms that often define these brands. Many fitness concepts have successfully positioned themselves as lifestyle brands that add a cache to the retail center. Clientele dressed in pricey fitness gear choose their health club as carefully as their Tesla, their smartphone or their single source, pour-over latte. Yesteryear’s fitness concept that had a warehouse feel, free weights, treadmills and stationary bikes has evolved into a polished studio of personal health, complete with classes, consultants, smart water, healthy snacks and a video screen where you can check how the S&P 500 performed while you worked out.
Perhaps best of all, both the fitness brand and the landlord can take comfort in knowing that their leasing decision will not be put at risk by the internet. Indeed, internet-resistant fitness brands of all sizes are one of the largest beneficiaries of the ongoing disruption in traditional retail, as spaces large and small continue to be recycled as brands like Radio Shack, Toys R Us and Payless Shoes disappear from the retail landscape.
While much has been made of the so-called retail apocalypse, let’s observe how smaller fitness brands illustrate perfectly that a new breed of market-driven retailing is helping the shopping center industry re-set itself to the evolving American consumer.
About John Cumbelich & Associates
John Cumbelich & Associates is a San Francisco Bay Area based firm that provides commercial real estate services to Fortune 500 retailers and select owners and developers of retail commercial properties. The firm's expertise is in developing store networks for retailers seeking to penetrate the Northern California marketplace and the representation of premier Power Center and Lifestyle developments.