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Fitness Centers Boost Consumer Visits and Spending at Marketplaces

November 28, 2022

Data shows malls and shopping centers see increased cross-shopping, more visits during nontraditional hours and greater spend per visit at locations where consumers routinely come to stay in shape. A retailer located in a shopping center that also has a gym receives, on average, 2.5% more visits per month compared with the same retailer’s other locations in centers without fitness businesses, according to Creditntell.

As people return to fitness outside the home, Urban Edge Properties senior vice president and head of leasing Scott Auster sees strong interest in 2,500- to 3,000-square-foot spaces from boutique concepts like Orangetheory Fitness, CycleBar and Club Pilates. “These uses fit nicely in terms of customer hours and parking demand to complement adjacent tenants without competing,” he said. At the same time, larger specialty fitness brands are looking to reuse empty boxes of 15,000 to 25,000 square feet. Central Rock Gym is one example. It signed at Urban Edge’s Fresh Pond Mall in Cambridge, Massachusetts. “Introducing fitness at a property which didn’t previously have that use tends to energize the property and increase visits,” Auster said.

“At Woodmore Town Centre in Lanham, Maryland, we have built a whole new pad site for LA Fitness, which creates a reason for multiple trips each week and delivers convenience for club members also looking to check more off their to-do lists, from groceries to furnishings to electronics and apparel,” Auster said.

The Benefit Fitness Centers Offer Marketplaces

Placer.ai vice president of marketing Ethan Chernofsky said that in mid-2020, there were concerns that both offline fitness and indoor malls would be fundamentally disrupted by digital challengers and declining viability. The pandemic hit the gym industry hard, as about a quarter of the 57,600 health and fitness facilities that were operating in March 2020 permanently closed by the beginning of 2022, according to global health and fitness trade association IHRSA. “Yet, the COVID recovery period has shown that both in-person fitness and indoor malls still play critical roles within the brick-and-mortar environment,” Chernofsky said.

A Peloton earnings report revealed a big drop in purchases of in-home Peloton bikes. Peloton reported third-quarter-2022 revenue of $964.3 million, down from $1.3 billion in the third quarter of 2021. Furthermore, Peloton does not anticipate a rebound in the fourth quarter of 2022, instead forecasting revenue of between $675 million and $700 million. Meanwhile, during a Nov. 8 earnings call, Planet Fitness said it continues its steady recovery from the pandemic, ending the third quarter with more than 16.6 million members, an all-time high for the brand. Its members who are visiting the gym continue to visit more frequently, and cancellations are lower than in 2019. The company believes those are signs that members are generally more committed to fitness. Chernofsky said: “Especially interesting is the crossover between the two, where offline fitness chains are providing significant value to indoor malls as a tenant. The ability to capture audiences during nontraditional mall hours creates a valuable opportunity for malls looking to augment existing strengths.”

Colliers national director of retail services and practice groups Anjee Solanki said adding nontraditional retail like fitness to a retail project “definitely increases” cross-shopping, creating another reason to stop by multiple times a week and at different times of day. “We now see specialty fitness and wellness uses cohabitate with traditional fitness concepts,” Solanki said. “The per-person spend per shopping trip is $80, and by adding nontraditional retail to a project, you can see an estimated increase in the per-person spend to slightly over $100.”

Live, Work, Play, Work Out

“Part of our leasing and redevelopment work has been asking the question: ‘How do we extend a visit to our centers?’ noted Simon regional vice president of leasing Laura Schwartz. That’s a question “especially with an office population, where those commuting to Simon centers may be seeking gyms or restaurants close to work. The goal is to ensure that these projects last long term and stay relevant for years to come.” The introduction of fitness centers has been part of the evolution of all Simon properties. Schwartz said fitness chains significantly help increase foot traffic, bringing different types of consumers to Simon’s center and driving them to enjoy the convenience of myriad retailers in one location.

As Simon also continues to implement office space in its centers, these properties will need to continue to adapt to the needs of not only consumers but also daily visitors coming for work, dinner, the gym and event space under one roof, Schwartz said.

Nationwide, Simon has been reimagining the traditional mall experience to create centers that offer “live, work, play” in one space. In the company’s Boston portfolio, which Schwartz oversees, fitness chains have joined several Simon malls to expand and diversify the offerings to local consumers. In late 2020, Simon welcomed popular fitness chain Life Time to Northshore Mall. Pictured at top, it’s the fourth resort-like facility Life Time has located in a Simon center.

At Simon’s South Shore Plaza, a new Orangetheory will promote health and wellness, Schwartz said, bettering its community and allowing the property to continue to be a vibrant space for visitors. “It has been an amazing opportunity to bring nontraditional retailers into our center,” said Simon’s Jacqueline Fitzgerald, director of marketing and business development for South Shore Plaza. “Orangetheory brings in a devout membership base of locals and visitors, as it is a well-known and extremely loved chain. Given its position in the mall, we are confident that those coming to work out are exploring our many other retail and restaurant offerings.”

Fitness Centers’ Journey into Shopping Centers and Mixed-Use Properties

During the early 2000s, fitness centers began to move into abandoned anchor spots in large regional malls facing decline, said Baker Katz principal and X Team Retail Advisors executive director Jason Baker. Those vacancies left by major department stores each provided 40,000 to 50,000 square feet of adaptable space and ample parking. “At the time, it was a great fit for high-volume, low-cost providers, such as LA Fitness, 24 Hour Fitness and Planet Fitness,” he said. “These operators breathed new life into tired malls and provided the foot traffic needed to keep the center going.”

Now, these same fitness centers are successfully operating in shopping centers anchored by Whole Foods, Home Depot, Walmart and other larger retailers, Baker said. And “smaller-scale fitness clubs are opening within mixed-use communities built with elevated amenities and conveniences in mind. In the last couple of years, higher-end fitness clubs, such as Life Time, have been opening locations in regional town centers and luxury malls, expanding to omnichannel living and co-working environments. It remains to be measured whether these clubs will substantially impact foot traffic or drive additional business to other tenants within the mall.”

The Sector’s Hurdles

“Location is a determinant of the speed at which health clubs will rebound,” Baker said. “States that mandated stricter lockdowns and longer club closures likely have experienced a reduction in the number of locations and members.” He cited a Michigan health club operator that managed 49 locations pre-pandemic. That operator now has 55 locations, though total membership has dropped from 400,000 to 360,000, he said. “It may be that people have not yet fully returned to their workout routines,” Baker noted.

That same operator told Baker that more than 400 independent fitness/health-and-wellness businesses had closed permanently in the state. “Extrapolate these figures, and I am not sure exactly where we stand,” Baker said. “We are in transition. Although the overall sentiment that I am hearing from my industry colleagues across the nation is positive and trending forward, I suggest that time will tell how the industry rebounds as people reinvigorate their social lives and return to the workplace.”

By Paul Bergeron

Contributor, Commerce + Communities Today

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