If you’re a fitness entrepreneur at any stage of the gym business, you’re likely to have a need for a space in a building. If you want to open your doors somewhere, you will have to face the commercial real estate (CRE) industry.
For you, negotiating a tenancy might be a daunting task or just a matter of phoning a friend. I’m not looking at the search or leasing process here, but I think it’s worth taking a quick look at some of the changes going on in CRE and how gym business owners like you can work it to their advantage.
More Change Coming to Your Local Shopping Mall
Sears, Roebuck, and Company was once known for its catalog shopping services. Back in the day, it would have appeared to be the perfect contender for the role that Amazon.com has filled so completely now. It did the same thing essentially but from printed catalogs rather than e-commerce web pages.
Now, Sears has filed for Chapter 11 bankruptcy and will probably close down completely in 2019. It will leave huge gaps in shopping malls across America, which is the latest in an ongoing trend. The change is bringing lifestyle businesses, including gyms, to malls everywhere.
Riding The Wave to Stay Alive
I think that one of the things that brought down the traditional retailers was the old style of centralized information system. Corporate bureaucracies worked well enough back in the day. However, legacy organizations tend to be too sluggish to compete with agile e-commerce innovators.
The new brands on the scene and older ones that have adapted have embraced e-commerce. Their customers can browse and order online, then go to brick and mortar locations to pick up and get customer service. Companies that have adapted to the new reality are thriving. Lean supply chain companies like Amazon and Walmart are eating everybody else’s lunch.
Redefining The Shopping Mall
The pace of change and innovation is moving so fast these days, it seems like you have to be a futurist to keep up with recent developments. Part of this is the trend in how American businesses occupy and utilize commercial properties has changed too.
The mindset of American consumers has changed. People are less likely to be shoppers and more inclined to be doers, pursuing experiences and connections. So perhaps we shouldn’t be surprised to see more fitness companies in shopping malls.
As companies move into e-commerce and the cloud, the new generation of consumers prefers friends and experiences over consumerism and shopping malls have taken some serious hits as a result. The traditional anchor tenants have been hit the worst by these broad changes.
Sears was the department store that has been around forever it seems. Now it’s closing many of its stores. The company isn’t alone; other department store brands have gone down the same path, or they’re well on their way.
Replacing Retail with Lifestyle
It may seem like shopping malls would be more accessible to the big box fitness brands. You can find big box fitness clubs like Planet Fitness and Lifetime Fitness in shopping malls, as well as locally owned gyms and studios.
When the anchor tenants move out, other tenants go too if they sense a drop in foot traffic and the falling revenues that go with it. Landlords who need income are much more open to offers if it keeps the rents coming in.
Beyond shopping centers, there’s always the possibility of a space left unoccupied when a big box gym franchise moves to the mall. Vacancies that result from the shuffle could be available to lease with favorable terms or a discount rental rate.
Concluding Statement
CRE is not too different from flipping houses for profit: If you’re looking for a deal, you have to be patient. If your goal is to open a fitness club, you need the mindset of a fitness entrepreneur, always seeking opportunities, while being flexible in how you move ahead.
Retail companies are now competing with online sellers directly. The weaker and inflexible brands are dropping like flies. The new normal in retail means CRE has had to adapt as well. That shift works to the advantage of anyone who’s looking for commercial bargains, including fitness entrepreneurs.
Bibliography
Corkery, Michael. Sears, the Original Everything Store, Files for Bankruptcy. October 14, 2018. https://www.nytimes.com/2018/10/14/business/sears-bankruptcy-filing-chapter-11.html (accessed October 22, 2018).
Dupuis, Peter. How to Start Your Own Gym – 10 Things to Consider Before Signing a Gym Lease. https://www.theptdc.com/2015/12/how-to-start-own-gym/ (accessed October 22, 2018).
Fagan, Lawrence. 3 Alternate Revenue Streams To Boost Your Fitness Business. May 15, 2018. https://blog.gyminsight.com/5002-3-alternate-revenue-streams-to-boost-your-fitness-business/ (accessed October 22, 2018).
Peterson, Hayley. Dead Macy’s, Sears, and JCPenney stores are giving way to a new trend in shopping – here’s what’s replacing them. October 1, 2018. https://www.businessinsider.com/whats-replacing-macys-sears-and-jcpenney-stores-2018-10 (accessed October 22, 2018).