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Shopping Centers Today -> September 2005
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WORKING OUT
Fitness centers, once shunned by shopping centers, now welcomed
By Dakota Smith
Until recently, landlords considered gyms to be decidedly unhealthy for shopping centers. Gym goers took up valuable parking space while they worked out, then left without shopping, so they said.
Bally Total Fitness remembers those leper days only too well.
“We were told by shopping centers, ‘We don’t want you here,’ ” said Derek Andersen, senior director of planning and development at Bally Total Fitness. “We had to convince the landlords that we belonged in the centers.”
But many landlords are looking at fitness clubs very differently these days, considering them not only worthy tenants, but in some cases bona fide anchors as well. One-third of Rockville, Md.-based Federal Realty Investment Trust’s 105 shopping centers, for instance, currently have or will soon have a gym.
Next spring General Growth Properties will introduce a 29,000-square-foot Equinox gym at the upscale Village of Merrick Park, Coral Gables, Fla. Taubman Centers has a Bally Total Fitness at its Fairlane Town Center, in Dearborn, Mich., and a 24 Hour Fitness at its Sun Valley Mall, in Concord, Calif.
Those workouts can indeed work out for shopping centers, says Andersen, who notes that the landlord attitude shift began about five years ago. As exercising increasingly became part of the daily routine for many consumers, shopping centers realized they could tap into the habit.
Bally Total Fitness operates about 400 gyms under the Bally Total Fitness, Bally Sports Clubs, Crunch Fitness and Gorilla Sports names. Of the 66 gyms the company has opened since 2000, 54 are in an open-air, power or lifestyle center.
Bally units are going into centers that house national tenants. A Bally Sports is scheduled to open early next year at Downey Landing, a 400,000-square-foot power center under construction in Downey, Calif. The unit will join Best Buy, Linens ’n Things and Marshalls there. Besides basic gym offerings, the 35,000-square-foot fitness center will offer a juice bar, a shop selling fitness equipment and apparel, and a day care center.
The opening follows the arrival last year of a 30,000-square-foot Bally Total Fitness gym in Chicago’s Gateway Town Center, a 200,000-square-foot power center anchored by a Marshalls and a Dominick’s grocery store.
“We are offering 1,500 visits a day to the shopping center,” Andersen said. “We’re providing them with customers throughout the day.”
Like most gym chains, Bally places the majority of its fitness centers in open-air or lifestyle centers. The company also puts a handful inside regional malls, but these demand separate entrances because of their irregular operating hours, Andersen says.
Like most fitness club chains, Bally prefers to put its gyms on the ends of shopping centers so as not to tie up the parking spaces closest to the other tenants, says Andersen, and thus the chains are not especially demanding tenants. Furthermore, he says, Bally is happy to take second-floor or basement-level space in a shopping center, spaces not popular with most other tenants.
Adding to their appeal as tenants, the gyms’ busiest times are often the shopping centers’ slowest, points out William Horner, senior vice president of LA Fitness, which operates 125 gyms, more than 80 of them in shopping centers. The busiest periods for LA Fitness are between 6 p.m. and 7 p.m., Mondays through Wednesdays.
“Those are times when a shopping center may experience a slowdown,” Horner said. “We’re filling a vital hole for shopping centers by bringing in people during those times.”
Consequently, “the cannibalization of parking just hasn’t happened,” said Ruth Coan, a principal of The Shopping Center Group, an Atlanta-based retail brokerage firm whose clients include LA Fitness and Wal-Mart. “Instead, shopping centers are realizing the benefits of having gyms.”
In addition to drawing consumers, gyms are also increasingly used for back-filling empty boxes, Coan says. In Atlanta alone there have been at least a dozen instances in the past three years in which a gym has back-filled a former grocery or big-box store, she says. LA Fitness moved into two empty Harris Teeter grocery stores in shopping centers in Atlanta and is currently back-filling a Target in a Clearwater, Fla., shopping center. Last summer the chain back-filled a former Bradlees in a shopping center in West Palm Beach, Fla.
Gym Dandy
The notion that fitness club patrons park, exercise and then leave is false, say representatives of the chains. Gym goers are more than willing to mix shopping with working out, according to Horner. The fashionable character of contemporary workout clothing is among the chief reasons gym members are inclined to stop at a store after hitting the gym. “It’s perfectly acceptable to take a yoga class, throw on a wrap and go shopping,” Horner said.
And landlords are realizing that people who exercise tend to be affluent enough. Indeed, according to the International Health, Racquet & Sportsclub Association, the average household income among health club members last year was $68,000.
Some of the best tenants for a shopping center with a gym are grocery stores, drugstores and coffee shops like Starbucks, says Chris Weilminster, senior vice president of anchor leasing at Federal Realty. At Federal Realty’s Bala Cynwyd (Pa.) Shopping Center, a 35,000-square-foot LA Fitness operates near an Acme Market, a Delancey Street Bagel shop, a Moe’s Southwest Grille and an Olive Garden, all of which are popular with the health-conscious crowd, Weilminster says.
Even when gym goers do not shop immediately before or after a workout, they are inclined to return to a shopping center later, purely out of habit. “If someone needs to go to an eyeglass store,” said Weilminster, “they may think, ‘Oh, there is an eyeglass store near my gym; I’ll just go there.’ ”
If gyms are healthy for shopping centers, shopping centers are equally good for gyms. A gym located near services will definitely win out over a gym in an out-of-the-way locale, says Aaron Lieberman, vice president of development at Gold’s Gym International, which operates about 600 fitness centers in 43 states and 25 different countries.
Being in high-path, high-density locations is important, says Lieberman. “Other tenants of the center provide goods and services that our members can conveniently purchase during the same visit,” he wrote in an e-mail to SCT. “For example, you can quickly drop your dry cleaning on the way in for your workout and grab a cup of coffee after your workout is complete.”
Toned and tony
But the gyms still have some hurdles to leap, as it were. Given the choice, many landlords would rather lease to Target than a gym, says Bally’s Andersen, because of the expenses involved in soundproofing or the increased usage of water and air conditioning.
Every developer has a different attitude about gyms, says Weilminster, adding that he still sees developers reluctant to add a health club.
Some developers are attracted only to upscale gyms and the more affluent clientele they bring to centers. Fred Knapp, vice president of asset and property management at The Gale Co., the Florham Park, N.J.-based firm that owns Princeton Forrestal Village, Plainsboro, N.J., says Gale recently added a combined Can Do Fitness Center and Koi Spa to the retail-office complex. Because the 720,000-square-foot, village-style complex seeks to reposition itself as an upscale center, a regular gym would not have been appropriate, Knapp says.
“We wanted a stronger link to retail,” he said, pointing to the fact that the spa also includes a hair salon. “A singular fitness club would not interest us, because we were interested in attracting a more diverse crowd.”
The new gym-spa will be as important as any other tenant in drawing retail traffic, says Mark Harding, president of The Levin Corp., the exclusive leasing agent for Princeton Forrestal Village. “We’re really considering it to be an anchor in every sense of the word.”
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