By Lauren Zumbach
WWR Article Summary (tl;dr) The amount of space leased by fitness centers and gyms in malls and upscale open-air shopping centers grew about 69 percent nationwide over the past five years, according to data firm CoStar Group, and the number of leases has nearly doubled.
While mall walkers strolled Yorktown Center’s quiet corridors before most shops opened Monday morning, a handful of visitors in search of a tougher workout strode straight from their cars to the fitness studios along the Lombard mall’s western side.
Shopping centers used to shun gyms and workout studios, believing clients would clog parking lots without patronizing shops post-workout.
But consumers’ changing shopping habits left some mall-based chains foundering, from department stores like Carson’s, which is in the process of shutting down all its stores, to smaller shops like Gymboree and Rue 21, which announced hundreds of closures last year. That’s pushed mall operators to turn the empty stores they’ve left into places for customers to do more than just shop.
Increasingly, that can mean sweating through a workout. Consumers are growing more health-conscious, so “it’s the perfect storm,” said Jason Press, vice president at real estate firm JLL.
The trend isn’t new, Chicago-based mall operator GGP says it has been working with fitness tenants for more than a decade, but it is growing.
The amount of space leased by fitness centers and gyms in malls and upscale open-air shopping centers grew about 69 percent nationwide over the past five years, according to data firm CoStar Group, and the number of leases has nearly doubled.
In Chicago, roughly a dozen gyms have leased space in malls and multitenant shopping centers in each of the last five years.
Fitness tenants have picked up more than 1 million square feet of shopping center space since 2013, according to CoStar.
There’s an Equinox fitness club at 900 North Michigan Shops and a rock climbing gym at Block 37 on State Street. At the Roosevelt Collection in the South Loop, shoppers can choose from interval training, boxing and yoga.
More gyms are headed to Chicago-area malls, including a three-story Life Time club with a rooftop pool on the site of a former Sears Auto Center at Oakbrook Center and a 40,000-square-foot UFC Gym replacing a former Sports Authority at Yorktown.
Sean McCourt, vice president at real estate firm CBRE, sees it as part of a broader interest in catering to the “self-care” trend, with salons and massage providers expanding too. But fitness tenants tend to get more attention because they can fill the big spaces shuttered department stores leave behind at a time when few retailers are looking to take on that much space, he said.
Yorktown operator Pacific Retail Capital Partners turned to the self-care idea when figuring out how to revamp an underused 12,000-square-foot area on the mall’s west side.
Nordstrom’s Last Chance clearance store, which opened in late 2016, made it easier to interest potential tenants in the surrounding space, since claimed by fitness studios The Barre Code, CycleBar and Orangetheory Fitness, along with an Amazing Lash Studio. European Wax Center is expected to open later this month. Yorktown said it is premature to provide information on future plans for the closing Carson’s in that wing of the mall because liquidators are still going through the restructuring process.
The entrance near Yorktown’s “self-care precinct” went from the least-used mall entrance to the second most popular over the past year, said Erin Falbo, Yorktown’s marketing and business development manager. Pacific Retail now is bringing the approach to other properties.
“What we find exciting is, it’s bringing a new shopper here,” Falbo said.
Jill Cammarata, a teacher who lives in Willowbrook, wasn’t a frequent Yorktown visitor until a co-worker introduced her to CycleBar and she found she liked the intensity of the indoor cycling workout.
She said she’s still not a regular shopper, though she has made unplanned trips through the mall when lighter-than-expected traffic left her with time to kill before a class. But she thinks CycleBar and the other studios could bring business to the nearby restaurants.
“I made friends in the class, and we’ll sometimes get something to eat afterwards,” said Cammarata, 29, who was on her way to a 9:30 a.m. workout Monday.
The ability to attract consumers with regular workout routines who might spend money while lingering before or after a gym session makes fitness tenants particularly attractive, JLL’s Press said.
Chris Pine, senior vice president of big-box leasing at GGP, said the company is actively seeking to add gyms and grocery stores to the mix of retail, entertainment and dining options at its malls, since both can get customers in the habit of stopping by multiple times per week.
“It’s just rounding out the experience and offering more for the customer to experience at the property,” Pine said.
Last year, GGP and Life Time announced plans to partner on developing athletic clubs at GGP properties. Five have been announced so far, including the 125,000-square-foot Oakbrook Center club, which is expected to open in fall 2019.
For Life Time, regional malls often offer convenient, easy-to-access locations with plenty of parking, said Bahram Akradi, the fitness chain’s founder and CEO. As long as Life Time can provide a “country club” atmosphere within a bigger shopping center, “if we can generate a positive impact for the mall, that’s fantastic,” he said.
In addition to the clubs in development with GGP, Life Time has opened or plans to open clubs at malls owned by Simon Property Group, Macerich, Kimco Realty and Taubman Centers, including several on the sites of former department stores. But Akradi considers the idea gyms will save U.S. malls “kind of comical.”
“With the amount of excess square footage, if it all became fitness centers, the fitness centers would go bankrupt,” he said.
But he sees an opportunity to partner with property owners to turn struggling, retail-only malls into “assets for the future,” where people can live, work, play and shop in one place.
“That’s the transition we’re going to see happen over the next decade or two,” Akradi said. “Some will make that transition better than others.”
In the meantime, mall owners that are considering adding a gym or workout studio can take heart from the fact that fitness so far has proved more internet-resistant than shopping, CBRE’s McCourt said.
“You’re not going online to exercise,” he said. “You still want to be around people to work out.”