Bay Area residents who have resolved to work out more in 2019 have plenty of options.
National chains and boutique studios alike are bulking up with new locations, fueled by health-conscious customers with growing appetites for tangible experiences, according to operators and retail experts.
Fitness operators signed 28 San Francisco leases from 2016 to 2018, according to real estate firms Cushman Wakefield and CoStar. A city retail study in February found that traditional retail growth has slowed but fitness providers and restaurants are still eager to expand. Across the Bay Area, 53 fitness leases were signed in the past three years. That’s nearly twice as many as a decade earlier, when 27 leases were signed between 2006 and 2008, according to CoStar.
“It’s really representative of a cultural shift. The Millennials, for all their disdain for regular retail, they all go eat and work out like crazy,” said Matt Holmes, principal of brokerage Retail West, which works with fitness tenants. “It’s all about community.”
Nationwide, fitness memberships grew to 60.9 million last year, up 6.3 percent from the prior year and up 33.6 percent since 2008, according to the International Health, Racquet Sportsclub Association, an industry group.
The upscale fitness club Equinox leased two new San Francisco locations this year and is opening in the new City Center Bishop Ranch shopping center in San Ramon. It already has three locations in San Francisco, along with one each in Berkeley, Palo Alto and San Mateo.
The Bay Area is one of the company’s “top growth opportunities” along with New York and Los Angeles, said Jeff Weinhaus, president and chief development officer of Equinox, which opens in big cities and nearby affluent suburbs.
Equinox is expanding into an under-construction housing tower at 1500 Mission St., developed by Related California, whose parent company also owns Equinox.
The company also leased former upper-floor office space at San Francisco’s 50 Beale St. — once the headquarters of two major corporations, Bechtel and Blue Shield, which are both moving out. A club will open in the middle of next year.
Having an Equinox in an office building makes other tenants happy and drives office rents up, said Weinhaus. That’s motivated landlords to convert upstairs work space into fitness space even in pricey office markets like San Francisco, he said. In contrast, some upper-floor stores in San Francisco’s Union Square and Mid-Market have struggled and building owners have sought to convert retail space into offices.
Being near, or even in the same building, as housing and office uses is deliberate. “It’s really about convenience and daily need,” said Weinhaus. “People are coming to us day in and day out.”
Gyms and fitness centers can thrive in upper floors and basements, where traditional retailers might struggle, said Helen Bulwik, a veteran retail consultant and senior partner at the Newport Board Group. A local operator, Fitness SF, recently leased second-floor space at the new Transbay Transit Center.
The difference is gyms draw members who are more dedicated, rather than casual shoppers who might overlook an upper-level retailer, said Bulwik. They can also offer different services like yoga, Pilates, strength training or cardio, which means they don’t cannibalize each others’ sales, she said.
“You can kind of stick a gym anywhere. It’s kind of like Starbucks.”
Some operators are finding it harder to expand in San Francisco. 24 Hour Fitness, the large national gym chain based in San Ramon, has been growing mostly in suburbs.
“We haven’t really been able to find a new location in the city in a long time,” said Frank Napolitano, president of 24 Hour Fitness. “Dense downtown cores tend to have the boutique-type operators. They don’t need as much space.”
24 Hour Fitness seeks a minimum of 15 years in lease terms and spaces of 38,000 square feet and more, which are more available in the suburbs.
Retail struggles have presented an opportunity: 24 Hour Fitness opened in the past year in El Cerrito, where it took over a long-vacant space formerly occupied by Safeway. It also opened in Milpitas in a former Mervyn’s department store.
Fitness operators are grappling with some of the same challenges as retailers. Construction costs are at all-time highs in the Bay Area and finding labor is difficult.
“It’s challenging to find the right real estate,” said Adam Shane, a partner at Barry’s Bootcamp, which offers group classes with high-intensity interval training, weights and running. The company prefers ground-floor spaces, with high ceilings of 14 feet and rectangular, clean spaces.
In the coming weeks, Barry’s Bootcamp will open new locations in the Castro neighborhood, in Palo Alto’s Stanford Shopping Center and in Burlingame.
The Castro location, in a former CVS, cost more than $1.5 million to build, Shane said.
The upside of being in the Bay Area is there are a lot people who are willing to spend a premium on fitness. Equinox costs nearly $200 per month in its San Francisco locations. Barry’s Bootcamp costs $35 per class in San Francisco, with discounts for multiple classes, close to its highest rates in the country, said Shane.
Alicia Kjeldgaard, a 15-year resident of the Marina district, has been attending the local Barry’s Bootcamp since February 2016. She said the communal aspect of the class draws her in.
“I never thought I was a group fitness person,” said Kjeldgaard, who has attended more than 500 classes. “I really feed off the energy from the group and from other people.
“It’s a like-minded community,” she said. “I made a really good friend just from running next to her on the treadmill three times a week.”
Kjeldgaard prefers paying for each class rather than a monthly gym membership because it gives her more flexibility — she can take time off to travel — and motivates her to show up.
Another growing group fitness brand is Rumble, which offers boxing-inspired, 45-minute classes focused around punching bags and weights. Its first Bay Area location opened last month in San Francisco’s Financial District, with four more locations planned in the next two years in the Marina, South of Market and Palo Alto.
Sixty students, most of them women, gathered in a dark studio on opening day, where thumping electronic music was reminiscent of a nightclub.
Seventy percent of customers are women, said Andy Stenzler, CEO of Rumble, which opened its first location in January 2017 in New York.
“This is their night out,” he said. “Boxing has always been a great full-body workout. We made it accessible, so it’s fun.”
There’s no sparring with other people, other than practicing punches with a trainer wearing mitts, he said. The workouts cost $34 per session, with discounts for multiple classes.
Will Keightley, who started going to classes the first week Rumble opened in San Francisco, also credits the workout community for drawing him in.
“You see them day in and day out. It holds you accountable. They become your friends,” he said. “When someone is panting and sweating and jabbing the heck out of a bag hanging next to you, you can’t help but want to match that same intensity.”
Rumble spent $3 million on its new San Francisco location, which has a single studio. It was formerly occupied by Beal Bank and is across the street from an Equinox, which is Rumble’s largest investor. Other backers include pop singer Justin Bieber and actor Sylvester Stallone, who played fictional boxer Rocky Balboa.
Stenzler expects to recoup the costs in less than a year.
“Downtown San Francisco’s challenging right now if you’re a traditional retailer,” said Stenzler, who was formerly CEO of restaurant chain Cosi. “You really have to create a need or something that customers really desire.”
Gyms aren’t vulnerable to online shopping in the way that clothing or electronics stores are. But some tech fitness companies are trying to bring the workout home, with both hardware and monthly subscriptions for digital lessons.
San Francisco startup Tonal has designed an in-home, $2,995 training system that uses electromagnetics to create precise weight resistance. New York tech company Mirror has a $1,500 reflective screen that incorporates digital lessons. Peloton, the New York maker of $2,000 stationary bikes, reached a $4 billion valuation last August and said it is on track to generate $700 million in annual revenue.
Shane of Barry’s Bootcamp doesn’t see those offerings as threats, and said they could encourage users to join a gym as well.
“Anything that gets anybody interested in fitness helps the fitness industry,” he said. “What you can’t get online is the feeling of belonging and the emotional connection you have with people.”
Roland Li is a Chronicle staff writer. Email: firstname.lastname@example.org Twitter: @rolandlisf