High-end gyms are no longer just places to sweat it out.
The most exclusive ones offer not only state-of-the-art equipment, exercise classes and spacious locker rooms with cold eucalyptus-scented towels and fancy soaps but also “third places,” locations outside home and work where people can mingle and socialize. That means gyms are now also recreational centers and event spaces. They’re salons and spas. They’re hotels and workspaces. And they’re child care facilities.
At Chelsea Piers in New York, the sports and entertainment complex along the Hudson River, members can get work done before, in between or after workouts at the gym’s lounge and co-working space, which opens up to a 44-foot ceiling and waterfront view. The gym also hosts events, like author talks and creative classes and workshops, for members. Nearby, the high-end gym Equinox opened a hotel in 2019 in Hudson Yards, and has plans for more hotels in North America, Europe and the Middle East.
At Life Time, a gym that calls itself a “country club” version of a health club, members can drop off their child before a workout for a fee and, at certain locations, can get a private office or a dedicated Herman Miller desk at its co-working space, called Life Time Work. A Life Time Work membership includes gym access and will cost you a couple of hundred dollars to thousands per month, depending on what kind of workspace you want and the location.
Gyms, many of which used to be an amenity attached to a hotel or an office building, have now turned the tables and become the star attraction, offering hotel rooms and workspaces as part of their appeal. These kinds of amenities require a lot of space — and this is an ideal time for projects that need large retail space: A shaky commercial real estate sector with high vacancies has opened up opportunities for big gyms, as property owners desperately need anchor tenants that can drive foot traffic to help make their residential and office properties more appealing.
“There’s square footage opening up that never existed before — second- or third-floor office space you would never do before because it was a tax firm or a bank,” Sam Bernstein, chief operating officer of Chelsea Piers, said. “But they’re not coming back. The space in our world is increasing.”
In New York, a city known for its lack of space, the demise of department stores and offices has created vast spaces for luxury gyms. They have been able to take over large retail spaces, ranging from about 30,000 to 175,000 square feet, by entering into long-term lease agreements, often before the spaces are built.
Equinox has 41 locations in New York that average about 43,000 square feet, compared with lower-end gyms like Planet Fitness, about 15,000 square feet on average, and New York Sports Club, about 25,000, according to Trepp, a commercial real estate data firm, which compared the sizes of gyms in New York with securitized loans.
Gym facilities have a history of occupying unused properties and spaces. They can extend into spaces not traditionally desirable in the real estate world, using windowless rooms below street level as locker rooms or spaces for group exercise classes. Chelsea Piers took advantage of unused piers on the west side of Manhattan to build its 150,000-square-feet flagship complex in 1995, equipped with a six-lane, 75-foot pool; a rock wall; and three basketball courts.
Life Time started in Minnesota in 1992 and now has 1.4 million paying members and over 200 locations across the country, mostly in the suburbs. It took over 54,000 square feet at its Penn 1 location in Midtown Manhattan, more than enough space for its seven pickleball courts and cafe-like seating area and bar, where members can have beers and other beverages on tap and watch one another play. Its other New York locations average about 41,000 square feet. Its first Life Time Work in New York is coming next year to the Brooklyn Tower, which will also offer a 110,000-square-foot space to sweat it out.
The pricing for the upcoming New York space has not yet been determined, but the Life Time Work in Ardmore, Pa., charges $588 for a lounge membership, $776 for a desk and $1,958 for a private office. A Chelsea Piers membership starts at $220 per month in New York; the company declined to share its membership numbers. Equinox did not respond to requests to be interviewed for this article.
Life Time and Chelsea Piers can get these big spaces in large part because they sign leases lasting 20 to 25 years, with options to extend at the end of their agreement term. Most commercial leases in New York are five to 15 years, and office leases can be as long as 10 years.
“When you start to see these really long lease terms or ones with extension options built into it, it’s because the developer pays some big fixed costs upfront,” said Cameron LaPoint, an assistant professor of finance at Yale School of Management. “They’re trying to mold the property in a bespoke way to the tenant.”
This can be seen, for example, at the Chelsea Piers location in Downtown Brooklyn, where the first thing a visitor sees — and smells — is a three-lane, 75-foot swimming pool. Mr. Bernstein said the company’s in-house design and architecture team had worked closely with the developer TF Cornerstone to reinforce the pool with steel beams that are visible through the ceiling of a group exercise room directly below.
Life Time’s chief executive, Bahram Akradi, said the company’s strategy was to “try to control 40, 50 years” in its existing spaces. After its current leases are up, the company has the option to extend another 25 years. Chelsea Piers also has the option to extend its agreement at its six locations around the city, Mr. Bernstein said.
Mr. Akradi said designing a Life Time gym was “not like an Aritzia store that you can convert into an Alo store.”
“This is a more complicated structure, so you need to have a long-term vision,” he said, referring to the type of space needed for all the bells and whistles that luxury gyms offer, like basketball courts, cold plunge pools and group exercise rooms designed for everything from hot yoga to spin classes.
To make that vision work, Life Time reduced its corporate office staff during the pandemic and eliminated sales positions and member promotions, allowing the clubs’ amenities to speak for themselves, Mr. Akradi said.
Life Time and other high-end gyms have rebounded after hard times during the pandemic when membership rates plummeted and 25 percent of all health clubs and studios closed in 2021, according to the industry group National Health & Fitness Alliance.
Whether developers will continue spending big on gyms, however, is hard to predict, Mr. LaPoint said, especially with leases extending decades into the future. One area of concern that could put the current resurgence at risk is stubborn inflation, said Chris Hudgins, a research analyst at S&P Global Market Intelligence. He pointed to high membership fees as potential pain points for customers if inflation continues to run hot.
But for Mr. Akradi, business was going so well that “when you look at our 2024 and 2025 numbers,” referring to membership rates and sales from in-gym purchases, it would seem the pandemic “never happened.”
“We reinvented the business during that time, and it is substantially better than it used to be,” he said.
Source Agencies
