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Patrick Conway is Regency Centers Vice President and Market Officer in Los Angeles, CA. He oversees a portfolio of 21 properties, totaling more than three million SF.
The booming fitness category has made a surprisingly significant impact on retail real estate. Trendy concepts like CorePower Yoga, Orangetheory Fitness, and SoulCycle are expanding nationwide, filling retail vacancies, driving more foot traffic throughout the day, attracting new customers, and complementing retail merchandising mixes for owners and operators of these shopping centers.
An Evolving Category
From a retail real estate perspective, fitness has evolved in the last decade. We’ve seen an evolution from large-format gyms give rise to what we would describe as a “deconstructed” gym.
Rather than a massive footprint, one-stop-for-everything gym, we now are seeing all the individual components of exercise broken down to 4-5 tenants. This can allow for a more varied merchandising mix for owner/operators, with some centers being able to carry multiple fitness retailers on the same property. A great example of this is Westlake Plaza near Los Angeles, which is currently home to five (and growing) successful concepts.
It also frees up the traditional burden of parking for big box fitness concepts. These larger format fitness centers can sometimes overburden the parking lot, creating a congested shopper experience for the rest of the property.
Attract New Customers to Your Center
The fitness category also draws farther than your average tenant. For example, customers will choose their dry cleaner based on convenience, but they will travel to their gym as if it were a destination. Anytime you get into something that’s a little more specialized, you will expand your radius. Now you are attracting customers that you might not normally get to your center.
Fewer Restrictions Today
Some anchor tenant leases may contain a fitness restriction that dates back to the 1970s. Originally, these restrictions were meant to keep very-male dominated body building gyms from taking over supermarket-anchored shopping centers.
Today, however, anchor tenants care much less, and benefit a great deal from these deconstructed gym concepts. Healthier lifestyles have impacted grocery to a large degree, so fitness is a natural partnership. After going to a Pure Barre or Orangetheory class, shoppers head to the pressed juice cafe, coffee shop or Whole Foods Market to refuel.
The current fitness customer is exactly who they would want to be in there, so those lease restrictions are becoming less of an issue today.
More People Throughout the Day
Perhaps one of the greatest benefits to deconstructed fitness is its all day magnetism, filling those non-peak retail hours.
CorePower Yoga, for example, draws people throughout the day. SoulCycle draws people in the early morning. Orangetheory Fitness is heavy in the morning when other tenants aren’t open yet, as well as the evening when other tenants might be closed. When you have these kinds of uses you can spread them out throughout your center. So instead of a 40k square foot “box,” which can really dominate the parking field, the smaller concepts can become much more complementary to the rest of the tenants and the operation of the property, given the right conditions.
In fact, you can read about one of our more successful merchandising mixes at Buckhead Court in Atlanta, which includes deconstructed fitness, and how each retailer is catering to the same demographic.
A Trend That’s Here to Stay
From our perspective, deconstructed fitness is a trend that is here for a long time. These companies are very well established and their performance is fantastic.
We’re noticing that entitlements for larger fitness are becoming more difficult, and the cities really look favorable on the smaller fitness concepts. There’s just a greater ease of doing a deal; you’re far more likely to get one of these deconstructed fitness concepts to get approved. And, of course, healthy lifestyles aren’t going out of fashion anytime soon.
