Life Time Forges Ahead With Gym Openings, Branded Fitness Villages
Just a year ago, the fitness industry seemed to be on an unstoppable upward trajectory. Now, the coronavirus has left operators of fitness clubs picking up the pieces of what might have been a banner year.
But the pandemic hasn’t seemed to spoil the growth plan for Life Time, one of the largest chains of fitness clubs in the nation. On this week’s Walker & Dunlop Walker Webcast, Life Time founder and CEO Bahram Akradi appeared undaunted by the challenges posed by the coronavirus and the patchwork of state shutdowns that are still keeping many of his chain’s 150 locations empty. He discussed his positive outlook for the future, Life Time’s health and safety policies and the chain’s three branded fitness "villages," which are still slated to open over the next two years.
“I think we are in a great position,” Akradi told Walker & Dunlop CEO Willy Walker on the webcast. “We have an opportunity to go to places that we’ve never gone to and create new ways of doing things. Life Time will prevail immensely as things come back.”
So far, 2020 has not been an easy year for any fitness operator, and Life Time is no exception. Akradi said that the company is on track to bring in around 50% of the revenue it projected in January, and EBITDA for 2020 would essentially be zero. In June, the company laid off 300 of the employees at its Chanhassen, Minnesota, headquarters, around 18% of its corporate staff, not including the thousands of furloughs across its 150 locations.
But with states loosening restrictions on fitness centers, recent news has been more positive. Akradi said that nationwide, Life Time’s locations are seeing about 60% of their expected visits, though the distribution is very uneven, as states have reopened to different extents. And in October, Life Time sold around the same number of new memberships that it did in October 2019, without having spent more money on outreach or advertising efforts.
As New Year’s resolutions — and fitness centers’ busy seasons — approach, Akradi said, he is weighing whether to cap the number of memberships that can be sold each day in an effort to keep occupancy at reasonable levels. The company is still reportedly planning on opening two fitness centers in New York within the next two months, including one location of four that Life Time took over from New York Health & Racquet Club. Two more New York locations are under construction.
With the country averaging over 100,000 new cases of COVID-19 per day, though, it remains to be seen whether states that had previously relaxed restrictions will shut down fitness centers once more.
Life Time has instituted temperature checks, strict social distancing policies, cleaning regimens and mask-wearing mandates at its locations, as well as upgrading ventilation and air filtration systems. Since reopening, Life Time’s fitness centers have seen nearly 21 million visits from guests, and there have only been 850 reported cases of COVID-19 among users, none of which, Akradi said, were traced back to transmission at the fitness center itself.
Where there have been cases, Life Time and other fitness centers may be much more able to effectively contact trace than grocery stores or restaurants, because the centers can check exactly when a customer entered and left, and notify everyone who was using the fitness center at the same time. Akradi chafed at the fact that scientific studies and media headlines alike group gyms together with restaurants and hotels as major sites of coronavirus superspreader risk.
“People have this hypothesis that people throw off more droplets when they exercise, but fitness clubs are low in terms of places transmitting disease,” Akradi said. “The facts just don’t support closing down gyms the way they do with bars or restaurants.”
Akradi hopes that talking directly to state governors could sway them toward keeping fitness centers open even as cases continue to spike across the country.
Plans have also not slowed for three multifamily fitness village developments, branded with the Life Time flag, to open in Coral Gables, Florida, and Green Valley, Nevada, in 2021 and in Midtown Dallas in 2022. The buildings are slated to combine luxury apartments, offices and restaurants with sprawling fitness and wellness facilities, including pools, spas, studios and in the case of the Coral Gables property, a beachside club for fitness and relaxation.
Akradi is still enthusiastic about spreading the villages concept. He said Life Time is in talks with developers around the world to see if branding their developments with the Life Time flag will make sense for their next projects. Demand for space in the developments is still high, though some of their appeal is reliant on travel.
“When we announced to our users that we had 146 units coming to the Las Vegas area, we had 1,500 people on a waitlist within a day,” Akradi said. “Nine hundred of those were from people outside of Nevada. There’s a huge market for baby boomers, who, instead of having the hassle of owning a second or third home, rent five two-bedroom apartments in key cities in the world. It makes international travel easy, and when you don’t want it anymore, you terminate your lease.”
For its users that can’t or don’t want to go into one of Life Time’s locations, the company has put out on-demand video classes and is in the process of rolling out live virtual classes for “just about every exercise you can think of,” Akradi said. And while the pandemic has forced his company to pivot temporarily, Akradi believes strongly that fitness will not only continue to be a powerful force in the world of real estate, but can change individual lives — and indeed, the whole world — for the better.
“It’s the people that choose on their own that they want to do the right thing for themselves and their health that inspire me,” Akradi said.
This feature was produced in collaboration between the Bisnow Branded Content Studio and Walker & Dunlop. Bisnow news staff was not involved in the production of this content.
CORRECTION, NOV. 12, 1:20 P.M. ET: A previous version of the story misstated the number of Life Time locations set to open in New York before the end of 2020. It is two, not five. The story has been updated.