Kropfl: “Since big-box retailers have been going dark, these fitness brands are seeing opportunities to backfill vacant space.”
IRVINE, CA—Growth in the fitness segment of retail is indicative of a greater consumer trend that centers on living a healthy life in general as these fitness brands see opportunities to backfill vacant space, Avison Young principal Keith Kropfl tells GlobeSt.com. The firm recently negotiated four new Southern California leases totaling 157,000 square feet with 15-year terms on behalf of 24 Hour Fitness in the Orange County cities of Santa Ana, Huntington Beach and Fullerton, as well as one Riverside County lease in Riverside. We spoke exclusively with Kropfl about the gym/fitness sector, its impact on retail space and where this trend is heading.
GlobeSt.com: Why has the gym/fitness sector of retail become so strong recently?
Kropfl: Over the past several years especially, the gym/fitness industry has really been elevated to a new level of popularity and overall growth. This growth is indicative of a greater consumer trend that centers around living a healthy life in general. People are passionate about eating healthier, feeling more energetic, and looking better, and working out is a big part of this lifestyle.
Retail space in the fitness sector is seeing a growing market share in a diversity of types, sizes and space requirements with brands such as CrossFit, SoulCycle, and Orangetheory Fitness taking small- to mid-size spaces, while the big-box-type fitness centers like 24 Hour Fitness, LA Fitness and Planet Fitness seek large spaces for expansion. Since big-box retailers have been going dark, these fitness brands are seeing opportunities to backfill vacant space.
GlobeSt.com: What impact is this segment having on retail space in general?
Kropfl: I think landlords are increasingly warming up to the gym concept as they better understand the importance of creating a strategic and complementary tenant mix within their projects. Historically, owners didn't want a gym in their shopping center because they felt it took up too much parking and gym-goers weren't cross-shopping. That has all changed. A big part of this change is a shift in attitude of gym-goers. While they used to be self-conscious about shopping in their workout clothes, many don't see it as a deterrent anymore. They are cross-shopping while donning their designer brand workout gear. They also feel a sense of community with other fitness peers and become regulars as they conveniently stop in to buy nutrition supplements, frozen yogurt, organic groceries, energy drinks, etc., at the nearby shops.
GlobeSt.com: Where do you see this trend heading in terms of retail space?
Kropfl: This expanding fitness segment is having a favorable effect on retail occupancies, especially with the larger 30,000- to 40,000-square-foot spaces that have been vacated by grocery stores and other distressed retail concepts. In a world where many tenants are downsizing, fitness brands that are seeking that large space requirement can backfill the space, and landlords can breathe a sigh of relief. Ultimately, if a large fitness tenant fills the space, landlords potentially are given the opportunity to reposition their shopping center to better cater to this healthy lifestyle demographic.
GlobeSt.com: What else should our readers know about the gym/fitness segment?
Kropfl: Across the board, the fitness sector is a very competitive environment; however, there is room and consumer demand for a diversity of workout options and price points. I believe that in markets that continue grow in density and population, retail space will see an increased market share of fitness occupiers. They will oftentimes fill space formerly occupied by retailers hurt by Internet sales. At some point, the market will get saturated; however, I don't see that happening over the next couple of years, especially when it comes to infill Southern California markets.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
