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How Smaller Fitness Chains Are Making Bay Area Retail More Buff

In the late 2000s, Norcal Fitness Inc. CEO Brett Livingstone was looking for a new direction in his career. He was a partner in a restaurant equipment business and built commercial restaurants, but it was a tough gig. The growth industries at the time were guns, Walmart and fitness. He had been around fitness all his life so it seemed like a good fit.

Norcal Fitness Inc. CEO Brett Livingstone and daughter, Avery Livingstone

He decided to go small since this was his first venture into fitness. He ended up partnering with Anytime Fitness, which typically has sites up to 6K SF. The franchise offered him a blueprint about the operations, while also providing him with autonomy. Ever since then it has been a happy partnership.

“I love what I do,” he said. “Not only is there the income from the health clubs, but there is the income of changing people’s lives … It’s really incredibly fulfilling.”

Small-format gyms require less capital outlay, less exposure and less risk, he said. Each Anytime Fitness can be modified to fit the needs of the area, offering different classes to fit the demographic, which is not always the case for big-box gyms.

Livingstone now spends 20% of his time looking for the next location and next opportunity. He is expanding his own operations and gearing up to open another Anytime Fitness at a shopping center near Pacifica State Beach. He also owns locations in Santa Rosa, Rohnert Park and Berkeley.

Anytime Fitness is not the only small-format fitness center expanding throughout the Bay Area. Orangetheory Fitness, SoulCycle and CycleBar opened new locations in the region within the past 12 months. While these companies are thriving from the smaller-is-better fitness craze, landlords also benefit from these typically longtime tenants. These centers bring people to shopping centers who may not otherwise stop to shop.

The Rise Of Small-Format Fitness


The small-format fitness center operators hope to connect with a portion of the population that may not like the big-box gym experience. About 20% of adults in the U.S. have a fitness club membership, according to Anytime Fitness National Sales Director Tom Gilles. The remaining 80% presents the fitness industry with a lot of opportunities. And more people are joining gyms each year. Health club memberships reached over 57 million in 2016, a 34% increase from 10 years ago.

Oftentimes the large big-box gyms intimidate even the people who are fiscally able to afford a monthly gym membership while smaller fitness centers offer a less threatening environment and often have closer ties to the community, according to Gilles.

“We embed ourselves in the neighborhood and foster a club culture,” Gilles said.

Convenience is a huge part of Anytime Fitness’ model, as is coaching. Members have access to the gyms 24/7 via key fob entry. The Bay Area is particularly attractive to Anytime Fitness because residents tend to be more receptive to coaching and have the means to afford a membership. Franchisees usually set their own pricing, but membership typically averages $35 to $40/month, according to Gilles.

“The Bay Area is one of the apples of our eyes,” Gilles said.

With only about two dozen locations open in the Bay Area, there is plenty of geographic turf available for expansion, according to Gilles. Six to eight more territories are on the docket, which would increase its locations to 32.

Anytime Fitness gyms take about 4,500 SF to 6K SF, according to Gilles. The locations typically reside in a neighborhood strip mall. The company sells territory rights to avoid oversaturation. Anytime Fitness has about 3,600 gyms globally with 2,600 in the U.S. and Canada. Other Anytime Fitness locations will open in Mill Valley, San Rafael, Walnut Creek and Pleasanton.

The Single-Type Fitness Craze Takes Hold

A SoulCycle in San Francisco

Whereas big-box fitness centers might provide generic classes, boutiques do a specific type of class and do it really well, according to Equinox Chief Development Officer Jeff Weinhaus. Equinox consists of three brands: Equinox, a high-end full-service gym, SoulCycle and Blink Fitness.

“The popularity is not specific to Northern California. We’ve been tremendously successful around the country in all major markets,” Weinhaus said. “This is a tremendous exercise, but also a great social environment and a great team-building, networking, supportive, playful and fun environment.”

The Bay Area is Equinox and SoulCycle’s third-largest market after Los Angeles and New York. The Bay Area is densely populated with residents who live a more healthy, active lifestyle and have great affluence, according to Weinhaus. SoulCycle and Equinox have locations in San Francisco, as well as the East Bay, South Bay and Marin County. The Equinox brand specializes in premium quality programming and services and offers proprietary classes as a differentiator from the generic big-box gyms.

Orangetheory Fitness usually offers hourlong classes, which have been successful in attracting Bay Area clientele, according to Orangetheory Fitness Vice President of Real Estate and Development Dan Adelstein.

“People don’t have a lot of time,” Adelstein said. “They can get in and get out within an hour using technology to get better results.”

Why Site Selection Is Key

Orangetheory Fitness Vice President of Real Estate and Development Dan Adelstein

All three of these models have fast become ideal for retail centers. Unlike e-commerce, exercise and fitness typically require people to go somewhere, Anytime Fitness’ Gilles said.

With smaller overhead costs, these fitness centers have better success rates. The failure rate of Anytime Fitness is about 2%, according to Gilles. Orangetheory’s Adelstein said he has never closed a location. These companies also are very meticulous about site selection, and they will not put a location just anywhere.

Finding the right location is becoming a science in the industry. Adelstein said Orangetheory uses a demographic company to find the most likely members who love fitness. The program figures out income levels, number of kids, work habits, and all kinds of data and habits to better predict a successful location.

Orangetheory typically needs about 2,600 to 3,700 SF. The gyms are usually in the suburbs within retail; San Francisco locations often are in office locations. Orangetheory locations in the Bay Area serve 800 to 900 members each with a location in San Jose serving 1,500.

An ideal location must have the right ceiling heights, good visibility, appropriate parking and the right mix of co-tenants, like an upscale grocery store, CVS and other similar stores where health-conscious people would spend money, according to Adelstein.

“It’s a very scalable model,” Adelstein said. “The right members gravitate to co-tenants and don’t use a lot of parking.”

The space has to have enough plugs to handle 10 to 12 treadmills and a good HVAC system. Oftentimes new franchisees are current members who have taken a class and end up wanting to open their own locations. Orangetheory receives 200 to 300 emails each week inquiring about opening a new franchise.

Inside an Orangetheory Fitness

Orangetheory has 29 locations in the Bay Area open with another 40 potential locations in the works. The company has locations in 15 countries with 1,500 in the U.S. and 350 in Canada.

When deciding a new location for SoulCycle, the company looks for high-density areas, demographics and psychographics to figure out where the type of potential rider lives or works, according to Weinhaus. SoulCycle typically spans about 3,500 SF and can occupy a retail center, at the base of a residential or office project or a freestanding location. Weinhaus said SoulCycle does well in both residential pockets and near an office population, but it currently has more locations in residential areas.

“[The Bay Area] has been a great market for us and we can cluster locations effectively without commoditizing or cannibalizing our business,” Weinhaus said.

People do not tend to travel very far for their daily fitness needs, he said. The population density in the Bay Area allows SoulCycle the potential to add more locations to be more accessible.

SoulCycle is not membership-based and riders pay per class. Daily ridership varies, but each class can accommodate about 60 riders and there tend to be six to eight classes each day. SoulCycle has about 80 locations and Equinox has about 90. Equinox also has a location in London and is growing rapidly in that city. More Equinox and SoulCycles are in the works for the Bay Area, according to Weinhaus.


Location is the single most important aspect of deciding where Anytime Fitness franchisee owner Livingstone goes next. He looks for seven specific traits before he goes forward and typically prefers an affluent population within the top 40th percentile in the city.

Females ranging from 35 to 55 years old are a key demographic because they are more likely to tell their friends and family and workmates about a new gym or new store. He also prefers a higher homeownership population since renters tend to move around a lot. Complementary businesses, such as a grocery store, also need to be near the location.

His new location in Pacifica provides a perfect combination of these elements, he said. There is a high-volume grocery store and a lack of competition. This will be his first location along the peninsula, and he will continue to look for and expand into new locations.

“You can recover from a bad hire, but you are married to a location,” Livingstone said. “It’s critical that you find the right fit when you locate the health club.”