If you feel like there is a new gym on every corner in Denver, you’re not crazy. Real estate records back you up.
Gyms and fitness centers are opening at an impressive clip in large-format retail spaces across the metro area. And, market analysts say, it’s part of a national, health-driven trend that commercial property owners are embracing as former shopping center staples such as Kmart and Macy’s close stores or tangle with bankruptcy.
Between July 2016 and October, 16 fitness centers signed leases or purchased spaces of at least 18,500 square feet in the Denver metro area, according to CBRE, an international real estate brokerage.
Those gyms, from brands such as Chuze Fitness, Vasa Fitness and Planet Fitness, are filling holes left by grocery stores, bowling allies and former big-box mainstays including Office Depot, CBRE’s data shows. Those 16 gyms account for 627,166 square feet of commercial space in Colorado cities such as Denver, Aurora, Centennial and Broomfield.
“That’s probably been one of our most active categories, no doubt about it,” Jon Weisiger, a senior vice president with CBRE Retail Services based in Denver, said of fitness centers. “I think the trajectory is for more still.”
Fitness centers appeal to consumers on multiple levels, Weisiger says. Obviously, they offer a place to exercise — a big deal in America’s slimmest state — but they also profile as social and entertainment destinations, particularly as more of them offer group yoga and cycling classes and the like. Because customers typically visit the gym multiple times a week, they create a lot of traffic, which can lead to “cross shopping” where patrons stop by grocery stores or restaurants in the same center.
“I think it’s become much more of a community accepted alternative to retail,” Weisiger said. “It’s a use that, in the right location, can bring a lot of traffic into a shopping center, for sure.”
The gym boom is big — boutique concepts such as Orangetheory Fitness and Barre 3 are popping up fast and frequently, like their umpteen-thousand-square-foot cousins — and not confined to metro Denver.
Stephanie Cegielski, spokeswoman for the International Council of Shopping Centers, said the fitness centers trend is sweeping the country as property owners seek to appeal to health-conscious millennial consumers.
What makes the big-box trend unique is that many brands that had previously occupied these spaces are shrinking. JCPenny, Sears, Kmart, Macy’s, Guess and Gordmans are just some of the retail chains that have announced bankruptcies or multistore closures in recent years. Office Depot, which previously occupied two of the spaces CBRE listed as new gyms, is in the midst of closing 300 stores across the country to cut costs, according to financial filings.
CBRE data shows there were 84 big-box spaces available at the end of the third quarter of 2016 and 80 such spaces available at the end of the third quarter of this year. The total square footage of those spaces has risen to 4.1 million square feet from 3.9 million, a result, Weisiger said, of less desirable Class B and C spaces hitting the market as Class A spaces are snapped up.
“(Big boxes) are perfect, already-built structures for a fitness center,” Cegielski said. “There is a cost savings in that.”
Ben Midgley, CEO of Crunch Fitness, said his company is benefiting from the retail revolution. The chain of more than 220 franchised clubs was on pace to open 65 locations in 2017, he said, with aims to add another 75 to 100 next year.
High big-box vacancy has meant that more landlords are willing to offer prime deals, including cheaper prices per square foot, generous improvement packages and extended periods of free rent, Midgley said. The latter is important to companies such as Crunch that make most of their money on monthly dues and have to ramp up membership to turn a profit. Crunch has four Front Range locations.
“It allows us to be a little more selective than we were in the past,” Midgely said of the real estate market. “We’re moving up to Class A space. We’re going to ride that as long as we can.”
Broomfield Plaza, a shopping center at 5015 W. 120th Ave., welcomed a 37,500-square-foot Chuze Fitness gym earlier this year, filling a hole left when the Hobby Lobby store there moved farther east.
Allen Ginsborg, the mountain states principal for plaza owner NewMark Merrill, said much like the Gold’s Gym location that opened in NewMark Merrill’s Longmont shopping center in 2015, Chuze has been very successful. He said shopping centers these days must appeal to the way people live. That means filling vacancies with more restaurants or grocery stores with prepared foods, and more health and wellness businesses.
He suspects that Colorado’s plentiful sunshine and outdoor amenities are actually muting the trend locally.
“Other states, I think, are seeing an ever-more aggressive trend for health clubs,” he said.