Four months after abruptly shutting down all of its locations, a members-only coworking and social club is on the comeback trail after being bought by a global hospitality group.
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Convene Hospitality Group acquired NeueHouse through a court-approved asset purchase agreement after the entertainment industry coworking club shuttered all locations in September and filed for Chapter 7 bankruptcy. CHG purchased the brand's intellectual property and the operations of the 115K SF NeueHouse Madison Square location at 110 E. 25th St. in Manhattan.
"We've long been fans of the NeueHouse brand and wanted to preserve and nurture the incredible community it has cultivated," CHG President and CEO Ryan Simonetti said in a statement.
CHG has an international portfolio of lifestyle meeting, event and coworking brands. It had been operating the NeueHouse Madison Square location for a few months prior to the purchase.
Private clubs create a curated community of those able to pay thousands of dollars for initiation fees and annual dues. In return, members often get access to private high-end restaurants as well as spaces that can host everything from coworking to fashion shows and family celebrations. However, private clubs haven’t always had smooth paths to profitability.
Social clubs have grown in popularity in major markets like New York City as people seek community in the post-pandemic world, according to The Real Deal. Even Playboy in August announced plans to return to the asset class and build an updated version of its iconic club chain in Miami.
In addition to the coasts, private clubs have also popped up in recent years in affluent cities throughout the country.
Dallas' luxury shopping destination, Highland Park Village, has had Park House, an on-site private members club, since 2018. That combination has proven that a private club can benefit from the clientele of luxury shopping centers while also increasing the frequency of visits from those shoppers.
The prestige of the nationally known Highland Park Village played a part in Park House’s success, but Gillon Property Group President and CEO Drew Steffen said the club also added a sense of exclusivity to his company’s nearly 100-year-old Dallas shopping center.
"It's a symbiotic relationship," Steffen told Bisnow in October. "What they did here was an opportunity to do something special and new, and they've largely delivered on that promise."
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WoodHouse, the group behind Park House, opened similar clubs near luxury retailers in Miami and Houston, while GPG is also considering opportunities to re-create the model in other areas of the country.
Also eyeing the model is Draymond Washington, who founded the Three Cities Social Club in Chicago in 2022. He now has two locations in Chicago and hopes to re-create his success in smaller cities.
Washington said municipalities such as Austin and Denver seem ripe for similar clubs. And adding a private club to an existing luxury retail center would solve one of his biggest problems.
"Parking is everything," Washington told Bisnow in October. "If we were in a high-end, luxury retail shopping center with unlimited parking, stores all around and restaurants all around, it would just dominate."
However, much like NeueHouse’s struggles, some longstanding clubs in affluent cities have built up more prestige than profits.
After four years as a publicly traded company, members-only club brand Soho House returned to private ownership in August as part of a $2.7B deal led by New York-based MCR Hotels and Apollo Global Management. While Soho House reported a nearly 9% year-over-year increase in total revenue during the second quarter, the company has lost money every year since its founding, Fortune reported.
CHG said it has no plans to reopen NeueHouse’s West Coast clubs. Before closing, the company operated a 23K SF Venice Beach location in Southern California, and its space inside the original CBS headquarters in Hollywood reportedly spanned 35K SF.
There were more than 5,600 private clubs operating in the U.S. in 2023, but fewer than 3,900 of them had revenues of more than $1M, according to an economic impact report on the industry by the National Club Association, the Club Management Association of America and Club Benchmarking.
Golf and country clubs make up more than 80% of the locations included in the study. Those aren’t as easy to build in dense urban landscapes such as New York City, but social clubs are still booming there.
The NeueHouse Madison Square location is one of nearly 40 private clubs operating or in development throughout New York City, The Real Deal reported. Private clubs often sign 10-to-20-year leases, but build-outs can prove expensive as club management customizes the space with amenities such as spas and ballrooms.
The NeueHouse Madison Square location spans eight floors and offers spaces such as an 80-seat screening room, a podcast studio and office suites.
The more than three dozen private clubs operating or on the way in New York City could oversaturate the market, Retail by Mona broker Brandon Singer told TRD.
If membership levels aren’t met, landlords could be left with big swaths of empty space and little flexibility due to the long-term leases.
“I don’t care how much money you make, there’s only so many people that can afford that [membership],” Singer said. “So I think you will see a thinning out.”
CORRECTION, JAN. 6, 5:04 P.M. ET: A previous version of this story referred to the acquiring party as Convene instead of its parent group, CHG. This story has been updated.
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