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The global quest for health stands to transform people’s lives — and retail properties too

April 30, 2019

The $4.2 trillion wellness industry grew by nearly 13 percent between 2015 and 2017, according to the Miami-based Global Wellness Institute, or nearly twice as fast as the worldwide economic growth rate of 3.6 percent. As the nonprofit reports on its website, fast-growing categories include fitness, beauty, personal care, anti-aging, healthy eating, complementary medicine and wellness tourism.

An exercise class at Westfield Century City's regular Wellness Wednesday program

The trend is part of a shift that could help change retail properties in lasting ways — and to make people healthier and happier to boot, says David Ruddick, group director of international leasing for Unibail-Rodamco-Westfield. Gyms like Equinox, LA Fitness and 24 Hour Fitness now lease space in about half of URW’s U.S. properties, he says, and the company continues to sign on more spas, medical clinics, yoga studios, juice bars and niche fitness concepts. “The subject of health-and-wellness has just become ever so important,” Ruddick said. “No longer is it about dedicating 30 or 45 minutes out of your day to a workout — now it’s a continuum throughout the day.”

The diversity and rapid growth of franchise operators in particular shows the strength of demand for health-and-wellness concepts in malls and shopping centers across North America, says Sara Martin, a vice president at Colliers International (Welsh Cos.). Martin cites Irvine, Calif.–based Xponential Fitness, which sells franchise rights to eight specialty fitness concepts: AKT, Club Pilates, CycleBar, Pure Barre, Row House, Stride, StretchLab and YogaSix. The company now boasts about 500,000 members in its nearly 600 studios, of which there are an additional 500 in development.

Health-and-wellness tenants are poised to take off internationally as well, says Ruddick, pointing to the entry last year of FirstLight Cycle to the 2.6 million-square-foot Westfield London. That mall also boasts a Gymbox, which offers cycling, yoga and high-intensity training. With a total of 10 units around London currently, Gymbox is reportedly set to roll out two more U.K. locations this year and has plans to keep expanding into 2021.

“We’re having a lot of conversations with our partners in our bigger European and U.K. portfolio about where [health-and-wellness] is moving,” Ruddick said. “I was just in Paris, where there’s a big running culture. Europeans are making healthier choices, and community fitness is where Europe is headed.”

Gyms like Equinox, LA Fitness and 24 Hour Fitness now lease space in about half of Unibail-Rodamco-Westfield’s U.S. properties

Another expanding fitness concept is Barry’s Bootcamp, which was founded in 1998 by celebrity trainer Barry Jay and now operates 44 units across North America, Europe and the United Arab Emirates. Concepts like Barry’s have leased retail space for decades. But the consumer focus on health-and-wellness is driving demand for concepts that offer a lot more than just exercise equipment or cardio workouts, experts say. Franchise operators such as ChillRX, CryoFit, iCryo and US Cryotherapy cater to the popularity of “cryotherapy” — brief exposure to extreme cold. At Westfield Century City, in Los Angeles, NextHealth offers cryotherapy as well as stem-cell therapy, hormone optimization, IV therapy, infrared therapy, vitamin shots, hair transplants and something called platelet-rich plasma services.

“I was in NextHealth yesterday in Century City,” Ruddick said. “There were people getting IVs, which are tailored to your needs, whether it is muscle or brain IVs, or IVs for sleep, stress, hydration or glutathione.” Intravenous drips allow for better absorption of vitamins, minerals and other substances, Ruddick says. “It is pretty close to a 100
percent absorption rate with these IVs,” he said. Around the country, Hydralive Therapy, Liquivida Lounge, The Hydration Room and others offer intravenous infusions as well. Meanwhile, Forward, a health clinic at Century City that has locations elsewhere in Los Angeles and also in San Francisco, New York City and Washington, D.C., bills itself as the doctor’s office of the future. The physician-staffed clinic sells real-time blood tests, genetic tests, 3-D body scans, and sleep and exercise monitoring. “It’s no longer about just a doctor’s clipboard anymore,” Ruddick said.

“Membership-based concepts can also strengthen a sense of community and belonging, as people regularly engage in shared activities among familiar faces, observers say”

Another nontraditional category involves sensory-deprivation “float” tanks, and this concept continues to grow as well, says Martin. These tanks are lightless, soundproof chambers that date back to the “consciousness” explorations of the psychedelic era; the users float in salt water kept at skin temperature, with benefits purported to include reduced stress, pain relief, improved sleep and whole-body muscle relaxation. The Urban Float franchise, for one, is now opening such studios around the country, Martin says. The company bills itself as the first float center to offer monthly memberships, rather than charging by the visit.

The membership model, in fact, is part of the reason for the success of so many health, fitness and medical tenants, according to Martin. She points to Amazing Lash Studio, Drybar (a blow-dry salon), European Wax Center and Prose (a nail salon concept launched by Dave Crisalli, former president and CEO of Massage Envy). “The benefit of a membership is that you are committing to giving yourself that service each month,” Martin said. “People are then more committed to taking care of their hair, their nails or their health.”

Membership-based concepts can also strengthen a sense of community and belonging, as people regularly engage in shared activities among familiar faces, observers say. This is no small consideration given growing concerns about the negative effects of social isolation. Last year health care company Cigna reported what it described as the “alarming” results of a loneliness study among a sampling of 20,000 Americans. According to the research, nearly half the respondents reported “sometimes or always feeling alone” (46 percent) or “left out” (47 percent), and about one out of four said they “rarely or never feel as though there are people who really understand them.” Ruddick, for one, says he appreciates the sense of belonging he feels each time he finishes a workout with others. “When you work out for 45 minutes with 20 or 30 people in a room, it feels like you’ve achieved something as a group,” he said. “It brings you back to being together. You’re not thinking about your phone; you’re thinking about where your next breath is going to come from, and that’s a really good thing.”

The broad demographic appeal of health-and-wellness is another growth driver for these businesses, says Marcia H. Flicker, a marketing professor at Fordham University, in New York City, and an expert on how consumers respond to pro-social-marketing campaigns. Having been a faculty member at Fordham since the 1980s, Flicker says students’ day-to-day habits have changed for the good over the years. “When I started teaching, I would go into a classroom and there would be cans of soda on every desk,” she said. “For the last 10 years, though, all I see are water bottles and maybe a few cups of coffee. You never see soda.”

But Gen X-ers and boomers are increasingly health-conscious as well, observers say. Bruce Williams, 73, a retired economist who lives in Atlanta’s Buckhead neighborhood, is an example. In 2017 he ramped up his commitment to health after a trip to the cardiologist, he says. Now some 60 pounds lighter, Williams credits physical exercise, calorie-counting and the so-called DASH (Dietary Approaches to Stop Hypertension) diet for catalyzing the major changes in his health. “I moved toward a more Mediterranean-type diet and got away from processed foods high in salt, sugar and saturated fat,” he said. “But the biggest change was getting at least 30 minutes of aerobic exercise every day.” In addition to walking and cycling outside, Williams logs plenty of hours at the LA Fitness in the Town Brookhaven mixed-use project. His activities there include lifting weights, running on the treadmill and taking spin, yoga and strength-training classes. “The cardiologist did put the fear into me,” Williams said, “but I also didn’t have much energy, and, certainly, appearance-wise, didn’t like the way I looked. Now I’m feeling great.”

By locating closer to customers, health-and-wellness tenants are also capitalizing on the demand for convenience, Flicker says. “There used to be only three gyms in a major metropolitan area,” she said. “Now people have access to all kinds of wellness or fitness facilities. Globalization has also exposed us to different kinds of health. Who knew, 30 years ago, about yoga, much less all of the varieties of it, or acupuncture? And now you can get your flu shots from the chain supermarket, and the drugstore actually has exam rooms.”

Indeed, the health-and-wellness push promises to be a game changer for such national drugstores chain as CVS and Walgreens, asserts Joe McKeska, a senior managing director at Melville, N.Y.–based A&G Realty Partners. “What they’ve seen is that there’s too much square footage in the store dedicated to general merchandise, which just hasn’t been selling at the same rate as in the past,” he said. “When you run the numbers, the three biggest chains have millions of square feet that they need to repurpose.” Uses based on health-and-wellness hold the most promise for increasing the productivity of this space, McKeska says.

McKeska cites CVS’ new HealthHUB concept, announced this past February and rolled out to three Houston-area stores initially. “They’re allocating more than 20 percent of the store for things like on-demand health kiosks, or products and services for sleep apnea or diabetes,” McKeska said. “It has community spaces and wellness rooms as part of the model, which is a novel use of square footage for a drugstore chain.” The HealthHUB concept includes MinuteClinic services, counseling with dietitians and access to weight-loss and other digital apps at in-store tech stations, according to a CVS press release. “There’s even been some speculation that you could have yoga classes at some of these locations at some point,” McKeska noted. Walgreens, for its part, has teamed with Humana to offer senior-focused primary-care clinics inside two Kansas City stores, he says. The 2,500-square-foot clinics are designed to complement the pharmacy. “You can pick up your prescriptions and go to the clinic all in the same visit,” McKeska said. “Walgreens has also done a deal with LabCorp where they’re bringing 600 LabCorp testing centers into their stores. All of this is about bringing health-and-wellness right into your neighborhood at the drugstore on the corner.”

The proliferation of such tenants could help landlords repurpose vacant spaces, says Jim Terrell, a senior managing director at A&G. Terrell cites his firm’s sale earlier this year of the Younkers building, formerly owned by bankrupt department store chain Bon-Ton Stores, at Miller Hill Mall, in Duluth, Minn. “A regional health care operator called Essentia Health stepped in and took the building,” Terrell said. “They want to convert part of the first floor into a fitness-and-therapy center.”

While such arrangements could surely help malls to refill vacancies, they often involve challenges too, among them dealing with reciprocal easement agreements that give co-tenants the right to reject proposed health care or fitness operators, says Terrell. “In the case of that Younkers building, we had to work closely with all of the parties, including the mall owner, Simon, and several of the tenants, to amend the underlying governing documents,” he said. “Any one of these parties could have said no, but all of them recognized the value in keeping the property vibrant, so it worked out well in the end.”

Gyms and other alternative tenants clearly generate traffic, Terrell notes, but they could also run afoul of municipalities bent on maintaining taxes levied on retail sales. “Some municipalities are passing legislation that limits the use of space to businesses that do bring in general sales taxes,” Terrell said. He wonders, too, whether some of today’s expanding health-and-wellness concepts could turn out to be fads. “Maybe it’s because of our shrinking attention span as a society, but the shelf life of things is so short now,” Terrell said. “We have become a country of trends. The key questions in this environment are: How nimble can you be in a brick-and-mortar environment, and how collaborative will each of the stakeholders be?”

Others are confident that the movement toward health-and-wellness is a lasting change. Ruddick says a focus on sustainable consumption — a conscious interest in benign ways to spend money — is rapidly becoming the norm. “If you go to Gloveworx, at Century City, this afternoon and work out in a group class, you’ve improved yourself physically,” he said. “Quite frankly, you’ve improved yourself mentally by releasing stress and tension, which allows you to interact more favorably with others. So you haven’t harmed the universe at all. There’s a good story here: We’re making our customers healthier by giving them better options.”

By Joel Groover

Contributor, Shopping Centers Today

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