During the summer months, VITAL Climbing’s rooftop rock wall often has as many as 100 members hanging around at one time climbing, watching the sunset, and drinking a beer from the gym’s cafe.
“People are at the gym more than just to climb,” co-founder Nam Phan told Fortune. “They’re there to meet other people, socialize and climb with other people. That has really cemented our design approach.”
Luxury gyms, like all health clubs, were left out in the cold when COVID lockdowns forced many people to give up their memberships. Along with home-office setups, fitness enthusiasts set up garage-gyms and ordered Peloton bikes en masse. But over the past few years, the customer base for high-end clubs has surged again—and many aren’t just coming back for the barbells.
‘We change travel patterns’
Life Time opened its first NYC club in 2016. Eight years later, it has 12 locations throughout the city, either fully open or in development. Their newest location, Penn 1, occupies over 50,000 square feet in the heart of Manhattan, decked out with seven pickle ball courts, multiple workout floors, a bar and cycling studios.
While a membership at a Planet Fitness or Blink might run you anywhere from $15 to $40 a month, Life Time’s cheapest midtown membership starts at $269. And if you want access to the pickleball ball courts, it’ll cost another $60. But then again, Life Time isn’t just selling you a gym.
On the ground floor of Penn 1, a lounge area looks out over the courts where members can sit and answer emails after a workout—or pour themselves a draft beer from the bar-style tap in the corner. Up another flight of stairs is a recovery area where people can use Life Time’s massage chairs or pneumatic compression sleeves, which look like giant blood pressure cuffs that wrap around your arms or legs.
Life Time, Inc.
Parham Javaheri, chief development officer at the company, told Fortune that Life Time builds a complete health and wellness experience that keeps members coming back to the facilities far more than a typical fitness club.
“We change travel patterns,” he said. “If you’re going to Life Time 12 or 13 times a month, well then you’re more likely to stop and shop around there, do your groceries around there, pick up whatever you need to pick up on your way to and from that Life Time.”
Prime real estate
It isn’t just customers that have a new appreciation for everything luxury gyms have to offer.
The general shift of more people working from home has spelled trouble for commercial real estate. Earlier this year, the office vacancy rate nationwide passed the 20% threshold for the first time in history, according to a Moody’s analysis. In New York City, the value of office space is expected to decline 28% by 2029, equating to a nearly $50 billion loss for the city.
But for high-end gyms like Life Time, the city’s vacancy problem has opened the doors to prime real estate, and Javaheri said developers are taking note.
“That’s phenomenal real estate, with a phenomenal developer in the heart of Manhattan,” he said of the new Penn 1 location, where runners on the second-floor treadmills can literally see NBA teams stepping off their buses to enter Madison Square Garden. “They could have leased that out to many other users, but what they wanted was an amenity that people use and coveted.”
Top-tier gyms aren’t just a boost for commercial real estate. In Henderson, Nevada, Life Time Living offers a signature membership to a 162,000-square-foot club just feet from its luxury apartments. Javaheri said that Life Time has brought the residential project more rent per square foot and a higher tenant retention rate.
Life Time Work, which has 15 locations across the U.S., is opening a new 110,000-square-foot club in Brooklyn Towers that will complement a curated co-working space with conference rooms, open work spaces, and private phone booths.
“When we did that Brooklyn Tower deal, there was an available space of office space,” Javaheri said. “We showed the developer at the time the concept of Life Time Work, and it was just a no-brainer for them.”
A few years ago, the overall landscape was bleak. Like hotels and restaurants, gyms had it rough during the pandemic. Between March 20, 2020 and December 31, 2021, 25% of all health and fitness facilities in the U.S. shuttered, according to a report from the Health and Fitness Association.
But since the U.S. emerged from lockdowns, the clubs that were able to hold out have seen people hitting the weights and treadmills again with a vengeance. In the first quarter of 2024, there were 184 million gym check-ins, according to a report by ABC Fitness. That’s a 60% increase from the same period in 2023 and nearly double from pre-pandemic levels.
Young people have been a crucial factor in the rebound of the fitness industry. Almost a third of new gym sign-ups were Gen Zers, who are more invested in their physical health than any other generation, according to the ABC report.
Rick Caro is the president of Management Vision, a consulting firm specializing in the health club industry, and former director of the Health and Fitness Association. He told Fortune that health clubs have always been strong anchor tenants for commercial real estate. Gyms generate regular traffic from users who want to get a return on their investment. They boost surrounding retail, and employers like proximity to health clubs because they can often get group discounts that serve as an incentive to their workers.
“What is exciting now, is how clever and creative people are to take this fundamental that’s been proven for a long time, but now they’re doing it a little differently or uniquely,” Caro said. “They’re doing it with a different variety of concepts at different price points or different size facilities.”
VITAL’s co-working spaces emerged organically
Lon Rubackin, senior vice president at CBRE, told Fortune he was contacted by VITAL Climbing about five years ago when the upscale-bouldering gym was looking to expand into Brooklyn. When the club opened in 2021, Rubackin said most of the members were “dudes” between 18 and 30 years old.
VITAL’s monthly dues don’t run as high as a Life Time or an Equinox, but a Williamsburg membership still costs $145 a month. For that, members get 24/7 access to VITAL’s facilities. To go along with the climbing, there’s weight training and cardio equipment, slacklines, a sauna, and a second, rooftop rockwall touched off by a fire pit and views of the Manhattan skyline.
There’s also a lounge-ish area that stretches from the entrance to the first floor rockwall, which Rubackin said isn’t exactly a co-working space, but still encourages members to hang out for longer than an average workout.
“People will work out and then they’ll go climbing and then they’ll take a shower and they’ll go back to their laptop,” Rubackin said. “Then maybe three or four hours later they’ll take a break and maybe they’ll hit a treadmill. It’s a very unique situation.”
Phan told Fortune that VITAL was never intended to include a co-working space, but rather that it was something that happened organically. Unlike older climbing gyms, which are often in out-of-way industrial parks, VITAL is in the heart of Williamsburg. It’s close to people’s homes and already had readily-available open space. Eventually people started bringing laptops and even setting up computer monitors.
“Post-COVID attitudes have aligned with what we were already building,” Phan said. “People were working from home more, they were desperate for community, and Vital just happened to be there at the right time.”
‘A golden era’ of expansion
Despite the awesomeness of some of the new fitness clubs popping up around the city, there are still challenges to building out the kind of spaces that a Life Time or a VITAL require for their facilities. Javaheri said that most of Life Time’s clubs in NYC are around 50,000 square feet. VITAL’s location in Williamsburg is about the same. That kind of space is few and far between, compared to the 15,000- or 25,000-square-foot spaces a smaller gym might fill out.
VITAL is opening a new location in NYC on the Lower East Side that will top out around the same size as their club in Williamsburg. CBRE’s Rubackin said the new space at Essex Crossing was only the second acceptable location he’d found for VITAL in five years representing them.
“A lot of buildings that could use a tenant like that as a draw to get people back just don’t have the space,” Rubackin said. “Just picture your average office building. It wasn’t wasn’t designed to house a 50,000-foot anything.”
Still, Javaheri said that Life Time is in “a golden era” of expansion. The kind of space they need is becoming more available, and developers are coming around to the kind of anchor luxury gyms can provide.
“If it’s good real estate, I think a good developer looks at this current downturn and sees the opportunity,” he said. “They see the opportunity to take back some space and reimagine their building. And that’s where we come in.”
