The $32 billion U.S. fitness industry is experiencing a resurgence and evolution, with promising future prospects. According to the Houston Chronicle, Placer.ai named the fitness industry as one of 2022’s top industries in its annual overview of industries. Globally, health club industry revenue totaled $96.7 billion in 2019, according to a 2020 report by the International Health, Racquet & Sportsclub Association (IHRSA). Following the COVID-related downturn, global revenue in 2023 is estimated to be $81.5 billion, according to Wellness Creative Co. Research by McKinsey & Company indicates that the market for health and wellness products and services is growing by five to 10 percent per year, depending on the region.

The pandemic had a detrimental impact on health clubs, gyms and studios (hereinafter collectively also referred to as “gyms”). According to IHRSA, comparing the number of health clubs, gyms, and studios in operation as of March 2020 to those same facilities remaining in operation as of December 31, 2021, twenty-five percent of all health and fitness facilities closed and thirty percent of studios closed. AP (citing a statistic from the National Health & Fitness Alliance) reports that twenty-five percent of U.S. health clubs and studios have closed permanently since the pandemic began.

In the port-pandemic era, the fitness industry is returning to retail real estate and is evolving to meet changing consumer behavior. As described by PerfectGym, the pandemic acted as a catalyst for the industry’s digital transformation, with virtual fitness classes, live-streamed workouts, and on-demand fitness content gaining popularity, and fitness providers adapting to offer online services. Although this transformation will have some permanent effect, it is mitigated by the consumer desire and demand to interact in person and return to normalcy. This dynamic has led to the development of hybrid programs which offer both in-person and remote experiences. Another change is the surge in the popularity of strength/weight training. ClassPass reports that strength training was the most popular workout for 2021 and 2022 and that there was a 94 percent increase in reservations for strength training classes from 2021 to 2022.

The health and fitness consumer’s physical return to gyms is evident in the data. Monthly visits to gyms from March through August 2022 increased by more than 18 percent from the same period in 2019, according to The New York Times (citing data from Placer.ai). The Times also reports (citing information from Datex Property Solutions) that new memberships have increased, with sales per square foot at gyms up 34 percent in August 2022 from a year earlier and almost on a level with 2019. According to Mordor Intelligence, the Health and Fitness Club Market size is expected to grow from $87.07 billion in 2023 to $154.21 billion by 2028, at a CAGR of 12.11 percent during the forecast period (2023-2028). Meanwhile, WUSA9 reports that stocks for home-based fitness products like Peleton fell in 2022 as people headed back to in-person fitness classes.

As the retail real estate industry adjusts to altered consumer patterns and behaviors, many landlords are eager to incorporate fitness into their retail portfolios, in part because of the co-tenancy advantages. According to The New York Times (reporting data from Creditntell) a retailer in a shopping center with a gym receives, on average, 2.5 percent more visits per month than the same retailer’s locations in centers without fitness businesses. Gyms have the potential of bringing consistent/daily traffic to shopping centers. They are usually able to operate out of spaces that other retail tenants may deem unsuitable or less than ideal (e.g., basement level or second floor, limited visibility, inadequate storefront, etc.…). Gyms tend to attract retailers with a focus on health (e.g., smoothie and açaí shops, nutrition stores and healthy fast-casual restaurants) and they pair well with other retailers that invite consistent/daily traffic, such as grocery stores, dry cleaners and physical therapy.

Last Updated on August 28, 2023 by Ramin Seddiq