Gyms Working Out for the NNN Lease Market

NNN Lease Market News

Gyms Working Out for Landlords

The influx of health clubs comes at a time when retail landlords are scrounging for new tenants to offset a pullback among many traditional retailers. Retail vacancies in the top 80 U.S. markets remain near multiyear highs, reaching 11% for neighborhood shopping centers and 9.3% for regional malls in the second quarter, according to Reis Inc.
What is more, the costs for landlords of setting up a health club's facilities aren't onerous, roughly matching that of retailers in many cases, landlords say.
"Generally, health clubs are pretty good rent payers, in the sense that you will be able to recapture your [set-up] costs as part of the rent," says Michael Pappagallo, chief operating officer of Kimco Realty Corp., which owns stakes in 900 shopping centers in North America. "They're paying market rents for the space."

Gold's, with 500 U.S. gyms either owned by the company or franchised, intends to open 17 gyms this year and 30 next year.
Other rapidly growing health-club chains include L.A. Fitness International LLC, which intends to expand its stable of 370 clubs by opening 50 in each of the next five years. Global Fitness Holdings LLC's Urban Active is looking to add seven to 10 new clubs to its 37 by the end of 2012.

http://online.wsj.com/article