Meet The Company Behind Chicago's Corporate Fitness Craze
The race for the best amenities is picking up pace in Chicago, with tenants looking for outdoor decks, WiFi cafés and rooftop workspaces in their search for the next great office space. On-site fitness centers are rapidly blossoming into the most sought-after amenity in the city. As leasing expectations increase, property owners have dedicated significant resources to build-outs and space renovations to be able to offer fitness centers and other amenities.
LifeStart Wellness has led the explosion of managed fitness centers in Chicago office buildings over the last five years, building an average of 25 to 30 centers every year. This has helped attract an increasingly Millennial workforce in addition to a spurt of major international organizations. Hines, Sterling Bay, Zeller Realty and Riverside Investments have all recently hired LifeStart to develop and manage their new fitness centers. LifeStart manages a portfolio of 65 centers across the country for companies such as Tishman Speyer, Blackstone, CBRE and JLL, making its corporate fitness center portfolio the largest in the nation.
“One of the most highly demanded amenities for nearly every office property in Chicago is the fitness center, whether it’s a redevelopment or repositioning,” LifeStart Wellness CEO Mike Flanagan said. “We’ve done about 80% of fitness center build-outs in the city multi-tenant properties.”
Five years ago, LifeStart primarily built centers in properties 500K SF or larger; it rarely made sense to build a center unless it was going to be used by a large population. These days, smaller properties are embracing fitness centers. Those in 300K SF buildings are gradually becoming the norm (though build-outs at 1M SF properties such as RiverPoint and 150 Riverside still dominate) as office density has increased.
The work area allocated to the average employee has shrunk from 225 to 151 SF since 2007 — a decrease of 33%. As office employees put in longer hours in smaller workspaces, businesses are recognizing the need for and high value of a physically active, social space employees can escape to in the middle of a hard day. Myriad organizations are pushing the idea of work/life integration rather than work/life balance, driving regular usage and membership despite relatively higher initial costs.
Budgets dedicated toward such facilities have increased 40% over 10 years, primarily driven by a demand for larger layouts, group exercise studios and technologies such as wearable device integration and high-end fitness machines.
The growth in on-site corporate fitness centers points to a larger trend among U.S. businesses, with companies moving toward self-insurance consumer-driven healthcare. This shift places the onus on employees to live active, healthier lifestyles. Integrated health and wellness facilities undeniably play a large part in this progression toward greater individual responsibility, with many employers beginning to tie incentives and HSA dollars to fitness center membership. In this sense, fitness centers provide a convenient on-site location delivering wellness services directly to the employee.
The key differentiator between traditional gyms and corporate wellness centers is the concept of the management center that actively engages the tenant population and drives center utilization. Rather than hosting a lonely pair of treadmills and mismatched weights in a secluded room, these fitness centers are fully managed facilities complete with group exercise classes, personal training options, towel and laundry services, nutritional and wellness programming and more.
LifeStart manages over 40 centers in the Chicago CBD alone, but has seen growth in Dallas, Silicon Valley, Boston and Phoenix. Flanagan believes New York City is poised to become the next Chicago, as young workers increasingly move to Jersey and Brooklyn, leaving Manhattan lease rates sagging and property owners scrambling to differentiate themselves from competitors.
“I definitely think we’re going to start seeing some amenity wars,” Flanagan said. “It will thrive with this model, which it wouldn’t have had five years ago.”
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