The latest real estate bet for franchises? Fit rows
“Fit row” is the generic term for groups of workout concepts clustered together, a recent phenomenon liked by landlords to fill empty spaces in shopping malls and lifestyle centers. Above is an actual FITRow, featuring six different boutique fitness concepts in the Assembly Row mixed-use development in Somerville, Massachusetts.
Afive-in-one collection of boutique fitness studios at Assembly Row in Somerville, Massachusetts, is the most formal iteration of a real estate trend attracting workout fiends—and satisfying landlords—around the country.
Like restaurant rows—where competing restaurants cluster together to create a destination, and patrons can try Thai one night and Tex-Mex the next—so-called fit rows allow workout enthusiasts to do a spinning class one day, barre the next and boxing the third.
Or in FITRow’s specific case, a two-year-old feature of the Assembly Row mixed-use development that rose in an open field, they can do Orangetheory Fitness, Title Boxing, Club Pilates, Barre None or YogaSix, each of which has individual franchisee owners and some of which are owned by competing franchise brands.
But these are competitors that welcome one another, says Shaun Grove, president of Club Pilates, one of eight brands under the Xponential Fitness umbrella. “When I go out for real estate and finding a space, I’m always excited about finding a center that already has boutique fitness out there. You’re drawing complementary” customers, he said.
“We see a lot of landlords that are wanting that in their center,” he added, particularly with large, national retailers from Sears to Toys R Us closing stores and abandoning spaces.
“You’ve got these landlords with a 10,000-square-foot box and they don’t know what to do with it.”
Fit rows draw a higher-end, boutique type of customer, landlords say, willing to spend $40 and more per class and often fanatical about their workouts. “From that it draws in some bigger retailers and some boutique restaurants,” and other amenities “that are tailored to that boutique fitness consumer who’s willing to pay more for that lifestyle,” Grove said.
Wiping the slate clean
Liz Ryan is vice president of leasing for Federal Realty Investment Trust, the developer behind Assembly Row. She joined the firm as the first phase of the project was wrapping up, and her goal was to fill out the second phase.
“We always assumed we would have a health club of some sort,” and she figured a large-scale gym would fit into the footprint. “Right around that time, we had an opportunity to dig into who our customer was, who our residents were,” she said, and they hired an outside research firm to do the study. “If you look at Assembly Row as a neighborhood, it’s extremely dense, it’s diverse. So for us to understand our customer we had to spend time and money to dig into that.”
What they found: “Our core bread and butter customer is female, makes over $100,000, has a college degree. That customer doesn’t want to work out in a large-scale health club.” So they pivoted.
“We wiped the slate clean, and sat around the table and said: What if we went out and curated this.” At that point she didn’t know how club owners would like operating right next to their competitors, so she asked them.
“I met with boutique fitness club owners. They all loved the idea. They said they could feed off of each other,” she said.
All but one of the original concepts at FITRow was a franchise, which added complexity to the contract negotiations. “Franchising operates with certain parameters. They have certain requirements,” she said. “Being on a second floor is not typically where they want to be located, and then there were all kinds” of items to work through.
At the time, she couldn’t find any developers doing the same thing. “Once we started to aggressively market this vision, I received a lot of phone calls from developers,” she said. “I can tell you the deal structures were creative deals due to the nature of this unknown concept idea.”
Big boxes get in game
It’s not only boutique fitness concepts that landlords want to attract; big-box gyms are in demand as well, and that’s a switch. Todd Magazine, CEO of Blink Fitness, started there eight years ago. “There was a time when landlords did not like fitness. They viewed them as parking hogs and not great tenants. And obviously times have changed,” he said.
“Because our model is mostly the basics (we don’t have pools, we don’t have classes), there are a lot of instances where we have boutique fitness either in our centers or close by.
And we have found, and as we talk to other fitness providers, they like to be near us as well. They want to do an Orangetheory and then lift weights,’’ he said. “People look at our gym as being a complement to boutique. That’s been an interesting change.”
Magazine expects more to come. Blink inked a deal in July 2018 with Seritage Growth Properties to open 17 gyms across 10 states. Seritage bought vacant Sears and Kmart big-box stores, and is re-developing the sites as lifestyle properties. “A lot of the retailers have had challenges generally, so landlords are happy about anyone opening brick and mortar locations.”
Fit rows work best when they also include an offering to draw the general public, like this Squeeze Juice Co.
Should a ‘fit row’ be in your future?
Franchisees and developers alike should pay close attention to exactly which concepts will be located next to yours. “If you’re offering uses that are overlapping, you’re setting users up for failure,” said Liz Ryan, VP of leasing at Federal Realty. For example, if there are two competing yoga brands, that’s a problem. A rowing concept and a boxing gym, on the other hand, should be A-OK.
“Viewing these tenants as more of a partner than just a tenant, and being able to help promote them on a larger scale” so the area is a destination, are both important, Ryan said.
They’re adding unique, custom-made artwork over each boutique entrance, such as a bicycle over the CycleBar studio, to both attract attention and explain to customers what each store offers.
Fit rows do best when they also attract customers from the general public, not only workout enthusiasts. Squeeze Juice Co., for example, is in FITRow, and has expanded its menu to attract more residents and workers in the neighborhood. Attractive seating, indoors and out, is another must to draw in the community.
Delvin Burton, a franchisee of Club Pilates in New Jersey, said he met with seven local landlords before choosing his site, and he didn’t go with the adage to seek out a center anchored by Whole Foods. “Commercial real estate can be your make or break,” he said. “Many of our colleagues who in some cases struggle… they didn’t necessarily do all of their research in a particular location. They got excited about an anchor being there…but that doesn’t always translate to people wanting to come. Look for synergy with other businesses.” — BE