High-end gyms are no longer just places to work up a sweat.
The most luxurious gyms not only offer state-of-the-art equipment, exercise classes, and spacious locker rooms with eucalyptus-scented cool towels and luxury soaps, but also “third places” where people can interact and socialize outside of home or work. That means gyms are now recreation centers and event spaces; salons and spas, hotels, workspaces, and even childcare facilities.
At Chelsea Piers, a sports and entertainment complex along New York’s Hudson River, members can catch up on work before, during or after their workouts in the gym’s lounge and co-working space, which features 44-foot ceilings and waterfront views. The gym also hosts events for members, including author talks and creative classes and workshops. Nearby luxury gym Equinox is opening a hotel at Hudson Yards in 2019 and has plans to open more hotels in North America, Europe and the Middle East.
Life Time, a gym that describes itself as a “country club” version of a health club, allows members to leave their kids before their workout for a fee, and in certain locations offers private offices or dedicated Herman Miller desks in co-working spaces called Life Time Work. Life Time Work membership includes gym access and can cost anywhere from a few hundred to a few thousand dollars per month, depending on the type and location of workspace you want.
Once an amenity found only in hotels and office buildings, gyms have now taken center stage, offering hotel rooms and workspaces as drawcards. These amenities require large spaces, making now an ideal time for projects that require large retail spaces. A volatile commercial real estate sector with high vacancy rates creates an opportunity for large gyms, as property owners desperately need anchor tenants to drive foot traffic to boost the appeal of residential and office properties.
“There’s space available that didn’t exist before. If you were a tax firm or a bank, you would never have had second- or third-floor office space,” says Sam Bernstein, chief operating officer at Chelsea Piers. “But they’re not coming back. Space is just growing in our world.”
In a city notoriously short on space, the decline of department stores and offices has created vast swaths of space for luxury gyms, who have been able to occupy large swaths of retail space, ranging from about 30,000 square feet to 175,000 square feet, by signing long-term leases, often before the space is built.
Equinox has 41 locations in New York City, averaging about 43,000 square feet, compared with low-income gyms like Planet Fitness, which average about 15,000 square feet, and New York Sports Clubs, which average about 25,000 square feet, according to commercial real estate data firm Trepp, which compared the size of New York gyms to securitized loans.
Gym facilities have a history of taking over unused land and space. The real estate industry has expanded into traditionally undesirable spaces, turning windowless rooms in basements into locker rooms and space for group exercise classes. Chelsea Piers took advantage of a disused pier on Manhattan’s west side to build its flagship 150,000-square-foot complex in 1995, complete with a six-lane, 75-foot pool, rock walls, and three basketball courts.
Life Time started in Minnesota in 1992 and now has 1.4 million paying members and more than 200 locations nationwide, mostly in suburban areas. Penn 1’s 54,000-plus square feet of space in midtown Manhattan is more than enough for seven pickleball courts and a café-like seating area and bar, where members can watch each other play while sipping on draft beer and other beverages. Its other locations in New York average about 41,000 square feet. Life Time Work’s first New York location, opening in Brooklyn Tower next year, will also offer 110,000 square feet of space to work up a sweat.
Pricing for the upcoming New York space has not yet been determined, but Life Time Work in Ardmore, Pennsylvania, is offering lounge memberships for $588, desks for $776 and private offices for $1,958. Membership at New York’s Chelsea Piers starts at $220 per month, and the company wouldn’t disclose how many members it has. Equinox did not respond to requests for an interview for this story.
Life Time and Chelsea Piers are able to secure such large spaces primarily because they signed 20- to 25-year leases with options to extend at the end of the term (most commercial leases in New York are between five and 15 years, and office leases can be up to 10 years).
“You’re seeing very long lease terms and built-in extensions because developers are making large fixed payments up front,” says Cameron LaPointe, an assistant professor at the Yale School of Management. “They’re trying to tailor the property to the tenant.”
You can see this, for example, at the store’s Chelsea Piers location in downtown Brooklyn: The first thing visitors see and smell is the three-lane, 75-foot pool. Bernstein says the company’s in-house design and construction team worked closely with developer TF Cornerstone to reinforce the pool with steel beams that are visible from the ceiling of the group exercise room directly below.
Life Time CEO Bahram Akradi said the company’s strategy is to “seek to manage the existing spaces for 40, 50 years.” After its current leases end, the company has the option to extend for another 25 years. Chelsea Piers also has the option to extend its contracts for six of its stores across the city, Bernstein said.
Akradi said the design of Life Time Gym is “not like an Aritzia store that can be converted into an Aro store.”
“This is a more complex structure, so you have to have a long-term vision,” he said, referring to the type of space needed for all the amenities a luxury gym would offer, including a basketball court, a cold-water pool and group exercise rooms designed to accommodate everything from hot yoga to spin classes.
To realize that vision, Life Time cut back on its corporate staff during the pandemic, eliminated sales positions and member promotions and let its club amenities speak for themselves, Akradi said.
High-end gyms such as Life Time have rebounded after a tough time during the pandemic, when membership rates plummeted and 25% of all health clubs and studios were closed in 2021, according to the National Health and Fitness Federation, an industry group.
But whether real estate developers will continue to invest heavily in gyms is hard to predict, LaPointe said, especially since leases can run for decades into the future.One concern that could jeopardize the current gym revival is persistent inflation, said Chris Hudgins, a research analyst at S&P Global Market Intelligence.If inflation stays high, he said, rising membership fees could become a potential pain for customers.
But for Akradi, business is thriving and “when you look at the numbers for 2024 and 2025,” it will look like the pandemic “never happened,” referring to membership rates and revenue from in-gym purchases.
“In that time we have reinvented the business and it is significantly better than it was before,” he said.
