Lawsuits Against Equinox, Blink Fitness Still Piling Up, With $18M On The Line
It’s been more than a year since the last restrictions on New York City’s indoor fitness operations lifted. Gyms are bustling once again, filled with Lycra-clad New Yorkers ready to sweat or pose in front of the mirrors, dumbbell in hand.
Yet one of the city's biggest fitness operators is still allegedly skipping out on rent, and its legal battles are stacking up.
Luxury fitness chain Equinox and its lower-cost subsidiary, Blink Fitness, have been hit with more than two dozen lawsuits from landlords in Manhattan, Brooklyn and the Bronx claiming they haven't received rent since the early days of the pandemic.
The total rent the gyms allegedly owe adds up to more than $18M, a Bisnow analysis found. Sixteen of the suits are still active.
“The question is: Is it volitional and opportunistic, or is it real?” said Rosenberg & Estis attorney Deborah Riegel, whose firm is representing several landlords suing the fitness chains.
“The problem for some of them is that, even now that they are able to operate, they’re still not paying," Riegel said. "I think they have more than an optics issue — they have a credibility issue.”
Equinox Fitness owns its namesake brand, as well as SoulCycle and Blink, but each of the gyms being sued is operated through separate LLCs. There are 12 active cases against Blink-run spaces in NYC, according to Bisnow’s analysis, totaling over $8.9M. There are four suits against Equinox, in which landlords are asking for a total of more than $9.3M.
Equinox is partially owned by The Related Cos., which possesses approximately $60B worth of real estate assets, according to its website. Related Chairman and founder Stephen Ross is worth $8.39B, according to Bloomberg’s billionaires index.
Blink, Equinox and Related all declined to respond to Bisnow’s request for comment.
The privately held Equinox doesn't disclose its financials, but signs point to some struggle.
It slashed its cheapest membership to $10 per month in January, promising just a month of low rates, but continues to advertise its $10 rate outside gyms six months later. However, Blink published a press release in March boasting its strongest sales month in the company’s 11-year history.
Those surging sales haven't translated to suits being dropped.
Blink has failed to pay $1.3M in rent at its headquarters at 386 Park Ave. S, according to a lawsuit filed in February by the building's owner, Heng Sang Realty. Its sublandlord at the property, an affiliate of Dreamworks Animation, also sued Blink, alleging $1.1M in unpaid rent and $515K in damages. Blink denied it owed any money, and a judge has since ordered it deposed in the suit.
Blink was sued last month over rent at its 3779 Nostrand Ave. location in Brooklyn, where the landlord, a foreign LLC, according to New York Department of State records, says it is owed more than $500K in back rent after having granted Blink a rent deferral until May 1, 2021.
In September last year, Blink was sued by its landlord at 3000 Jerome Ave. in the Bronx, Fordec Realty Corp, whose CEO is Russian Tea Room owner Hasan Biberaj. A lawyer for Biberaj told Bisnow after this story's publication that Fordec reached a settlement with Blink, although the settlement doesn't appear in court records.
At Blink's location at 31 Penn Plaza, landlord Vanbarton Group alleges the gym chain hasn’t paid rent since April 2020 and failed to pay its water and electricity charges starting a few months before the pandemic, owing more than $4.4M by the time it sued in January this year. Blink filed a response denying the claims in February.
While Equinox isn't facing as many lawsuits as its budget sibling, its larger footprints and presence in luxury buildings leave it with larger liabilities.
Landlord Savanna sued Equinox for unpaid rent among three locations — SoulCycle and Blink at 5 Bryant Park and the unopened Equinox on West 27th Street — for a combined $5.3M. The owners of 1633 Broadway sued Equinox last year alleging nearly $1.6M in unpaid rent, and the owner of 568 Broadway claimed in a suit last year that Equinox owed $3.5M for nonpayment of rent between April 2020 and July 2021. At 421 Hudson St., Equinox was sued in October 2020 for $1.3M in back rent, and the case is still pending.
It was ordered to pay $450K for nonpayment of rent at 670 Broadway last year, which could signal more legal defeats in the future.
In multiple instances, Blink and Equinox have yet to respond to allegations. Where they have provided responses, they have denied that they defaulted on their leases and continue to claim that their business and the facilities they rent were damaged by the coronavirus.
In response to allegations, lawyers for Blink argued that the gym’s “non-performance is excused due to COVID-19.” It argues that the gym “earned virtually $0 in revenue” between March and September 2020 due to executive orders from then-Gov. Andrew Cuomo forcing gyms and fitness centers to close.
Although gyms were allowed to operate at 33% capacity from September 2020 through May 2021, lawyers from Blink argue that the property’s original lease didn’t foresee operating at limited capacity due to a pandemic.
While other retail businesses saddled with capacity restrictions had other lines of revenue — restaurants could fulfill takeout orders and entertainment venues staged virtual events — gyms faced a different challenge. Even once they were allowed to operate at a reduced capacity, customers didn’t come flocking back in droves.
“We have lots of restaurants with operators that were struggling, but at least they were able to function through takeout,” Compass Vice Chairman Robin Abrams said. “I think large health clubs that were totally shuttered, they were challenged.”
This year, foot traffic has recovered, according to data from Placer.ai shared with Bisnow. At fitness centers in New York City, foot traffic was up 18% in February compared with the same time period in 2019. Last month, foot traffic was 26.3% higher than May 2019 levels.
But that rise in traffic hasn't been enough for these businesses to recover their losses. SoulCycle, the spin class Equinox subsidiary, had to seek a new line of credit in February to cover its debts, Bloomberg reported at the time.
As New Yorkers relegated themselves to their apartments, gyms — like many restaurants — negotiated rent deferrals with their landlords to mitigate the reduced footfall. But even with deferred rent, some Blink and Equinox locations didn't start paying their landlords again at the agreed-upon date in rent deferral agreements — or at all.
“There's a point at which, if you're being intellectually honest, you have to say, ‘We've got revenue coming in, we're gonna start paying again,’” Rosenberg & Estis' Riegel said. “From a negotiation standpoint, they're not helping themselves.”
If gyms are still struggling to pay rent now, more than a year after being allowed to operate at full capacity, it begs questions about the sustainability of their business models, Abrams said.
“Some of these guys were going through shake-ups anyway and needed to be restructured and reinvented,” she said. “The pandemic only exacerbated their issues.”
With scores of locations across the city and investors like Related, it is unclear whether blaming the pandemic for Blink and Equinox’s rent obligations will be a convincing argument in court. Landlords who are owed money by Blink and Equinox hope the low likelihood of judicial mercy will persuade their tenants to start paying again.
The longest-running active lawsuit against Blink for nonpayment of rent during the pandemic stretches back to May 2020, when landlord A&H Acquisition Corp. began legal proceedings against Blink at its Harlem location on 125th Street for $119K.
“Litigation is ongoing,” a source with knowledge of the suit told Bisnow on the condition of anonymity to discuss private negotiations. “We are getting close to reaching a settlement.”
Experts said few, if any, landlord-tenant rent disputes stemming from the pandemic have been resolved in favor of the tenant. Riegel, the litigator representing landlords, said she expects all of the 16 active cases against Blink and Equinox gyms in NYC to resolve through court orders forcing the tenants to pay or by reaching settlements.
“The courts have made it very clear that there really isn't a legal basis for any relief,” Riegel said. “No tenant has won on these arguments.”
UPDATE, JUNE 16, 12 P.M. ET: This story has been updated to include comment from Hasan Biberaj's attorney.