24 Hour Fitness has been established in the San Diego area for almost 30 years. A few of its clubs there have gotten a little long in the tooth, however, which is why the San Ramon, CA-based company is relocating three clubs over the next two years to the tune of $20 million.
Jim McPhail, executive vice president of real estate and chief development officer at 24 Hour Fitness, says the company has been working on the relocation project for more than two years.
“For years, we’ve always built new clubs,” McPhail says. “But we haven’t gone out and proactively relocated existing facilities and taken care of the older clubs and the older membership base.”
The three clubs will be upgraded from either an Active club or a Sport club to Super-Sport clubs. In all three cases, the new 24 Hour clubs will occupy either a former grocery store or a former department store.
24 Hour’s decision to move into those vacant properties, made available through bankruptcies and closings in the retail industry, is part of a fitness club trend that The Wall Street Journal and other newspapers have noted. While available real estate for clubs may be a hot topic of late, McPhail says the story is old news to 24 Hour, which has pursued such vacancies in California for at least four years. In 2007, 24 Hour purchased a portfolio of locations from Albertsons grocery store, he says.
“It’s a unique opportunity for us to reposition our brand because of the fact that we have so many clubs that are in the 15,000- to 25,000-square-foot range,” McPhail says. “We know for a fact that we want to be in the 40,000- to 44,000-square-foot club type with more things to offer to help our members meet their fitness goals.
“With the opening in the real estate market over the last three years,” McPhail adds, “it’s really allowed us to reposition quicker our portfolio.”
Members at the three San Diego-area clubs that are relocating will have access to the new clubs at their current membership value, McPhail says. Rates for new members, however, will increase for the Super-Sport clubs, which will have more amenities.
This is not the first time 24 Hour has made upgrades in the San Diego area. Two years ago, one of the first 24 Hour clubs ever built relocated in El Cajon, CA.
The timing was right for 24 Hour to proceed with more relocations this year, McPhail says.
“As we learned a lot about where our brand was going, we learned that there’s a hunger and an appetite for our type of fitness and our type of engaging format,” he says. “We had so many older, legacy clubs in the San Diego market, it was just the right time to begin to reposition those to our current brand and the current needs of our membership base.”