Several Operators Are Scouting for Space Vacated by Shuttered Retailers, Restaurants
While Americans are eager to shed their pandemic pounds, U.S. gym chains are looking to bulk up with new locations.
As vaccines are doled out nationwide and state and local business restrictions are eased, gym chains are eager to cater to pent-up demand for activities outside the home and a return to regular fitness routines. But they will be competing against other types of tenants seeking to capitalize on the same opportunities for vacated space, including grocers and discount clothing retailers.
“The fitness chains are doing their planning on the assumption that people want to work out in a gym again, and they’re getting tired of lifting 5-pound bags of sugar in their living rooms,” said Chris Wilson, executive vice president for brokerage JLL in Los Angeles.
Wilson, who heads the brokerage’s national retail agency leasing, told CoStar News that Southern California is one of several major markets where gym chains are scouting for new locations to build out their footprints. That’s even as the gym industry comes off one of its worst years because of pandemic closings and capacity restrictions.
The list of chains actively looking nationally to expand — with space requests totaling tens of thousands of square feet — includes EOS Fitness, John Reed Fitness, Club Fitness, Crunch Fitness, UFC, Planet Fitness, Gold’s Gym and Barry’s Bootcamp, Wilson said.
Depending on the impacts of approved and pending federal stimulus programs, Wilson said he expects pent-up demand to ratchet up spending on things like trips to the gym over the next six to nine months.
Similar to the aftermaths of prior economic downturns, Wilson said gym chains will likely be welcome additions especially for smaller independent operators of retail centers — comprising 30% to 40% of all U.S. center owners — hit by lost revenue from permanent closings and rent deferment requests by restaurant and retail tenants during the pandemic.
But in many markets, the gyms will be competing for that vacated space with national retail chains catering to discount-focused shoppers. The list of those actively scouting major markets nationwide includes clothing retailers TJX, Ross Stores and Burlington, craft supplies seller Hobby Lobby and discount grocer Aldi.
The pandemic, for instance, has done little to stop the small-format Aldi’s aggressive nationwide expansion that started five years ago. The grocer announced in February it plans to open 100 new U.S. stores this year, focusing on states including California, Arizona, Florida and others in the Northeast.
Seeking a Rebound
The gym chains’ appetite for expansion remains intact even after that industry experienced one of its worst years on record, joining restaurants among the nation’s hardest-hit businesses amid closings and capacity restrictions brought about by the pandemic.
As of Dec. 31, roughly 6,800 or 17% of all gyms and health clubs had closed permanently because of the pandemic, according to the International Health, Racquet & Sportsclub Association, an industry trade group.
In Southern California, the epicenter of U.S. fitness since the 1934 founding of Santa Monica’s Muscle Beach, signs of gym expansion are not hard to find.
In just the past two weeks, John Reed Fitness opened a 33,000-square-foot gym and exercise studio in downtown Los Angeles and Chuze Fitness opened a 45,000-square-foot facility in the Inland Empire city of Fontana.
At San Diego’s 200-acre, master-planned Civita residential community, developers announced that LA Fitness would soon be opening a 37,000-square-foot gym as part of a newly completed mixed-use apartment complex.
Cory Brightwell, CEO of Carlsbad, California-based Chuze Fitness, said initial strong attendance at the Fontana location indicates that customers are comfortable with returning to gyms that now enforce stringent health and sanitation measures in response to the pandemic.
“We have begun to rekindle and reignite our growth pipeline, though we remain vigilant and are not accelerating too quickly just yet,” Brightwell said in an email to CoStar News. “Our hope is to ramp back up to opening 8 to 12 new locations per year beginning in 2022.”
Chuze will be scouting properties where it can add to its current 31 gyms located in California and three other Western states.
“There have been some instances of increased vacant box opportunities and we expect those to continue to grow in the coming 12 to 18 months,” Brightwell added. “Real estate opportunities still seem to be regionally driven based on the continued fallout of COVID-related business closures.”