Sport Life Group

Fitness club in a shopping and entertainment centre: a new necessity

April 16, 2018
Grushevskogo, 5

A fitness club could increase a shopping and entertainment centre attendance and conversion level. The retailers from abroad learned it a long time ago, but the Ukrainian developers only start to familiarize with this trend. 

The spread of the Internet and online-shopping that happened in the last few years have changed the situation in a segment of trade drastically. Today Jeff Bezos, owing Amazon company and possessing over $100 billion, is the richest man in the world. Only in the United States 150 million people visit Amazon monthly. At the same time, even at the centre of world shopping — New York — the street retail shops and century-old large department stores constantly close down, the experienced brands leave. 

A map of empty stores in West Village, New York

Источник: The Real Deal

A change of trade to online is the global trend that will also get to Ukraine soon. To save consumers, and, above all, make them shop, it’s no longer enough for a shopping and entertainment centre to have a good pool of traditional tenants whose goods could be purchased online. A visitor should be attracted by other ways — entertainments, services and other activities he can’t get through the laptop or phone. 

The owners of shopping malls in the USA have already understood: sports clubs are a good instrument to attract the visitors to a shopping centre in the condition of growing online-retail. According to CoStar company, a number of gyms in the shopping centres in the United States has doubled over the last five years. 

For example, PREIT company, owing 22 million m² of retail area in the shopping centres along the US Atlantic Coast, actively involves the leading fitness companies such as Planet Fitness and Orangetheory Fitness to fill its malls. “People not just spend time in a gym, after that they do cross-shopping, buy clothes, have lunch, do something more than just fitness”, — explains the logic Joseph Coradino, CEO, PREIT company, in the commentary to CNBC. According to him, where previously the clothes accounted for 70% of shopping centre area, now it is only about 40%. 

For its part, in the commentary to The Wall Street Journal Sandeep Mathrani, CEO, GGP company, involved professionally in the real estate, explains the gyms help to create an enabling environment around a mall now, as small shops, stores and Christian centres in the separate districts of the cities did it before. According to him, GGP plans to integrate the fitness centres into half of its 115 shopping centres in the next decade. 

Generally, the United States is leading in terms of quantity and quality of enthusiasm for sport. As reported by MarketResearch about 22 000 companies and non-profit making institutions work in the industry of fitness centres in the USA, which control nearly 30 000 fitness centres and recreation centres and receive annual income of $22 billion. According to the sports association IHRSA, a number of the participants of these clubs has grown by 26% since 2009. 

In this regard the United States is a bright, but only one of the examples of global trends. A change of trade to online, refocusing strategies of shopping and entertainment centres, growing demand for sports clubs is a worldwide trend. The analysts of Technavio research company, having studied the global market of gyms and health clubs, have estimated that it will steadily increase in the coming years and grow by more than 11% by 2021. The researchers say the increasing number of baby boomers and millennials, who have just joined the fitness society, is one of the key factors of growth. 

Ukrainian trends 

In Ukraine some sports networks and owners of shopping and entertainment centres still don’t understand how the sports and commercial property markets change and which benefit both parties could have due to synergy. Especially considering the Ukrainian peculiarity of shopping and entertainment centres: when the USA malls are often located outside the populated places and everyone needs to get to them, in Ukraine in most of the cases the shopping and entertainment centres are constructed within the city limits, even in the downtown. It’s much easier in the Ukrainian realities than in American to look in a shopping and entertainment centre on the way home (or vice versa — in the morning before work). 

In addition, a shopping and entertainment centre provides a lot of benefits for a visitor as a complete facility. If a shopping centre possesses a fitness club, a visitor could not only shop or eat at the food-court before or after training, but go to the cinema, buy food in a supermarket, take clothes to a dry cleaner’s, visit a bank department and so on. In addition, a shopping and entertainment centre is a perfect place for family leisure time, including children. If children don’t visit a fitness club, parents could leave them in the kid’s rooms or entrainment centres for the time of training. 

Do the Ukrainian shopping and entertainment centres possess enough space for sports clubs? Of course. Firstly, a quality of tenants has been changing in Ukraine like in other countries over the last years: sellers of clothing leave and the companies providing services and entertaining people replace them. This trend is not so bright, as, for example, in the United States, but it is obvious. Sports clubs also could be among the service companies. 

Secondly, no matter how seriously to consider such analytics, Ukraine still doesn’t have enough professional shopping space comparing with other European countries. 

Источник: UTG

Источник: CBRE

According to the report of Colliers International company, there is 34 m² of shopping area per 1,000 inhabitants in Ukraine, while on the average for 13 countries in the Central and Eastern Europe (CEE) this index is 200-300 m². Thus, Ukraine is in bottom 13th place among the CEE countries considering the commercial space density, when in Kyiv the commercial space density per 1,000 inhabitants is nearly 400 m² that corresponds to 10th place among the capitals of the CEE countries. 

Источник: Colliers International

Источник: Colliers International

It’s about synergy 

As Colliers points out, a service branch occupies about 10-12% of commercial space in the shopping and entertainment centres in all countries, entertainments have only 3%, but this segment is gaining momentum. According to Colliers, Sport Life network is the most active and popular operator of fitness clubs in the Ukrainian shopping and entertainment centres. Five sports clubs of the network work as part of the shopping and entertainment centres in Kyiv only, a few more should be opened in new shopping centres and already work in such format in other cities of the country. 

According to the developers who rent the space in their shopping and entertainment centres for sports clubs, a sports club in a shopping and entertainment centre is beneficial to all. “A large fitness centre could generate from one to two thousand people per day. 5-6 thousand people are the clients of this fitness centre in the medium-sized Ukrainian city. So, all these people are the regular customers of the shopping and entertainment centre”, — says Maksym Havriushyn, commercial director of the group of companies “Budhaus”. 

The reality proves the developer’s words: a shopping and entertainment centre “Fabrika”, which “Budhaus” had opened six year ago, became one of the most successful shopping centres and the most popular mall of the southern region. The inhabitants of several neighbouring regions come to shop and entertain here. Moreover, Sport Life, located in “Fabrika”, is the only full-fledged fitness club in the city, which also has three swimming pools. 

“Today in Ukraine the clients of fitness clubs are the most active and solvent population category. They are people who are called trendsetters: the objects they visit, their clothes, lifestyle are the “magnet” and guidance for the rest. Consequently, their favourite shopping and entertainment centre would become a “lovely place” of any city. The United States understood it 20 years ago. Today, finally, it’s is also obvious for the Ukrainian developers. It is not possible to imagine a shopping and entertainment centre, business centre or residential complex without a fitness room not only in the west for a long time. Try to remember at least one hotel in Turkey without fitness centre! But we can often see in our European capital the skyscraper even without a small fitness room. And surprised owners together with them, who don’t know what to do and whom to rent their space”. — Dmytro Yekimov, founder of the group of companies Sport Life. 

So both European and Ukrainian shopping and entertainment centres more often realize that they need a sports club for further successful operation. A shopping and entertainment centre Smart Plaza Polytech (in fact a mixed-use complex, which also will have residential space) with an area of 25 thousand sq.m, including Sport Life sports club, is planned to be opened in April in Kyiv. According to Yevheniya Loktionova, director of UTG company, it will occupy from the second to the fourth floor, including a swimming pool on the second floor. So, there is hope that the Ukrainian developers of shopping and entertainment centres would continue to follow the worldwide trends and cooperate with sports clubs as tenants. 

However, the experts also assure that developers and builders should be very scrupulous about a choice of sports operator, as management and administration of fitness club with a swimming pool is perhaps one of the most complicated business directions. In this case, they recommend to conclude contracts with the proved, first and foremost by the time, fitness networks, which have not less than 10-year experience in club management.