Muscling In
By Dawn Wotapka Hardesty, LIBN
For years, Long Island�s gyms were relegated to tired buildings off the beaten path, but that idea went out with leg warmers and aerobics.
Today�s pumped-up operators want their cavernous workout facilities, bustling with runners, weight lifters and swimmers, in attention-grabbing locations that come with a heavy price tag.
�There�s no longer a negative stigma attached in having a gym as a tenant,� said Gerard Buckley, director of real estate and development for Manhattan-based Town Sports International, which operates 150 upscale clubs under four banners, including New York Sports Clubs.
Buckley speaks from experience: New York Sports Clubs, a major tri-state operator with 10 other Island locations, just signed a deal for 35,000 square feet at 100 Duffy Ave. in Hicksville. When it opens early next year, the club will be a main tenant in a 425,000-square-foot complex adjacent to Nassau County�s busiest train station, according to Adam Shane, with Syosset-based Blumenfeld Development Group, one of the complex�s owners.
Other tenants include insurer AIG and KeySpan Corporate Services.
Over at 1111 Marcus Ave., a 1.4 million-square-foot office complex long known as i.park, LA Fitness International leases nearly 100,000 square feet. And, perhaps the most eye-catching location on Long Island is XSport Fitness Inc.�s $15 million facility in the tony Roosevelt Field Mall, one of the country�s largest malls.
�I think you�ll see more high-profile locations,� Shane said. �I think the developer�s appetite for health clubs has increased over the last five years, especially on Long Island.�
For years, gyms had a public relations crisis � they were viewed as cramped and unsavory havens for sweaty muscle heads. Landlords also feared wear and tear on the buildings and angry neighbors.
�There was always a negative connotation with gyms and health clubs that they ate up all the parking and shopping centers, their patrons would stay there for hours at a time,� said Gregg Carlin, senior vice president of CB Richard Ellis� retail division.
So, gyms were forced into areas including industrial parks and retail shells, places with low rent and plenty of parking. (Some landlords have always tucked smaller gyms into their office buildings for tenant use.)
But over the years, working out went mainstream. That forced operators to spruce up. They scrubbed the locker rooms and added complementary services such as preparing healthy snacks, selling brand-name gear and, for the truly connected, wireless Internet service.
That pushed industry revenues to $17.6 billion in 2006 � more than double the $8.3 billion in 1996, according to the International Health, Racquet and Sportsclub Association, a trade group. Membership penetration, meanwhile grew from 11 percent to 15.5 percent, according to the IHRSA/American Sports Data Health Club Trend Report.
As more people begin working out � there are now more than 41 million health club members nationwide � chains began storming the lucrative Island market. And they wanted bigger space on the path most traveled.
In 2004, LA Fitness shocked the region with a 58,000-square-foot health club in i.park, a sprawling complex that once served as the United Nations� first headquarters.
�LA Fitness was probably a milestone on Long Island because of its mass,� Shane said.
The facility is one of the Texas chain�s top performers and, about a year ago, LA Fitness added more than 35,000 square feet.
�I think they showed that if you build the right facility in the right location, it will be successful,� said Brian Lee, an executive managing director at Newmark Knight Frank.
That success caught the attention of XSport Fitness, an operator clustered mainly around Chicago. XSport picked Roosevelt Field, a retail powerhouse full of regional exclusives and luxury retailers, for its first Northeast location. Filling 60,000-square-feet, it has a day spa and day-care center.
But premium locations carry premium price tags, often double or triple the amount charged for industrial space.
The asking rent at 100 Duffy, space that formerly housed JPMorgan Chase�s credit operations, is $29.50 per square foot. New York Sports Clubs will pay �in the ball park,� said Shane, who most recently was New York Sports Club�s director of real estate and development.
LA Fitness currently pays $1.45 million, or $25 per square foot, for the 58,000 square feet it has, according to a 2005 offering memorandum. When it expanded last year, it added nearly $800,000 square feet to the annual bill.
But operators think marquis locations will attract more dues-paying members. Of course, gym operators say it�s hard to quantify the value of a good location. But they�re confident they�re making the right decision.
�We are seeing the value in better locations, nothing beats the old addage, location location, location,� Buckley said. �We do like visibility.�