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Fitness Centers: Good News for Retail

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NORTH PLAINFIELD, NJ-Fitness purveyors are emerging as highly viable shopping center destination tenants, according to locally based Levin Management Corp.

Despite the challenging economy, the fitness industry reports healthy performance, according to the International Health, Racquet & Sportsclub Association. “With so much unpredictability and stress, people are focusing on what they can control and what makes them feel better-with health and wellness at the forefront,” says Ken Carrier, an industry veteran and owner of No Body Denied, a moderately-priced, star-up fitness center opening in December at Levin-leased Echo Plaza in Springfield.

“Visionary fitness center operators, both value-oriented and upscale concepts, and smaller entrepreneurial ventures as well as large chains, are opening new locations, giving a much-needed boost to retail properties hard-hit in this recession,” says Matthew K. Harding, president and COO of Levin. “We are seeing significant new leasing activity within this sector.”

Earlier this year, Snap Fitness, a health club franchise that offers 24-hour access and low-cost memberships, opened a 3,774-square-foot facility at Levin-leased and managed Capitol Plaza in Bangor, PA. Over the summer, Levin brought in Fitness 19, which established its third New Jersey location at Oak Park Commons in South Plainfield. That 6,500-square-foot establishment is now open.

“For many years, fitness centers were not viewed as desirable tenants by landlords or other retailers because of their potential strain on parking, but this attitude has shifted markedly,” Harding notes. “Backed by evidence that club members produce increased traffic to neighboring stores, the retail industry has warmed to this group. Of course, a property’s infrastructure-most importantly the amount and configuration of parking-determines the viability of leasing to a health club.”

In some cases, fitness centers, like No Body Denied, are even serving as non-traditional anchor tenants. “The unfortunate shakeout in the retail industry has opened up new doors for health club operators, including the availability of larger spaces,” Carrier says. “Landlords want to fill their vacancies, so the market is right. By leasing larger blocks at attractive rates, we are able to launch with lower dues and enjoy the ability to accommodate more clients, equipment and programs.”

Still, some fitness center operators are watching this trend with caution. Stuart Polevoy owns the three-location, upscale CAN DO chain, which includes a club at Princeton Forrestal Village in Princeton, where Levin serves as exclusive retail leasing agent. “While the fitness industry is more immune to economic downturns than many others, we still have seen a consumer pullback in the current cycle,” he says.

According to the State of New Jersey, nearly 150 new fitness centers have applied for licenses here during the past two years, and 358 existing fitness facilities have renewed. “The number of new clubs opening is causing a regional oversaturation, which may slow progress,” Polevoy notes.

At the same time, he is bullish about the long-term outlook for the fitness industry. Already, club members are taking increased advantage of their privileges; IHRSA has reported increased attendance. Combined with the untapped market for new members, the potential for continued growth is clear.

“As the economy bounces back, the fitness industry holds incredible growth potential,” Polevoy says. “Approximately 85% of the American population currently does not belong to clubs. So this is a good time for owners who have the resources to take advantage of the soft market to secure locations with future growth in mind.”

Other fitness center tenants within Levin’s 80-property, 12.5-million-square-foot portfolio include LA Fitness, which serves as one of the anchors for Brunswick Shopping Center in North Brunswick; Retro Fitness at Aldrich Plaza in Howell; and Fitzone at Somerset Shopping Center in Bridgewater. Currently, the firm is working with several interested local, regional and national fitness center operators looking to open new locations.

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