Life Time OC Focus: Rapid Growth in Fitness

Life Time Inc. is helping to pump Orange County’s retail market. And its executives are also trying to improve the health of the area’s offices and multi-family sectors.

On the heels of opening its second venue in San Clemente earlier this year, the Chanhassen, Minnesota-based large fitness center operator has two more locations in the pipeline: one in Irvine’s Great Park Neighborhoods. and another planned for the Brea Mall.

Both should be approximately 125,000 square feet, nearly three times the size of a typical LA Fitness location or 24 hour fitness.

The private firm has opened or disclosed plans for approximately 300,000 square feet of space in OC in recent months, the most of any area retail tenant, based on area brokerage data.

These projects are likely to exceed $ 200 million to be built on a combined basis, if not more.

The company’s impact on the local retail real estate scene is not lost on CEO Bahram Akradi, who founded Life Time in 1992.

“We are less a gym company, more a real estate developer aiming to build lifestyle components across the country,” Akradi said.

Development partner

Akradi told the Business Journal that Life Time wants to be considered in the ranks of real estate and development companies and is looking for large mixed-use development deals elsewhere in OC.

Adding fitness centers to developments involving coworking, multi-family and hotel projects is a plan for the future, he said. Life Time has a dedicated team exploring real estate opportunities for new projects here, she said.

The company plans to open north of 20 locations in the coming years in Southern California.

The newly opened San Clemente spot is the fifth spot in California for Life Time, which has 151 locations in total.

Renovation of the shopping center

Life Time’s most recently disclosed plans include a partnership with Simon Property Group Inc. (NYSE: SPG), the largest REIT mall in the country, for its business center in Brea.

In 2018, Simon claimed that a 168,000-square-foot portion of the mall, the No. 3 of OC for sales last year and formerly home to a Sears, would be converted to a mixed-use concept. Specific details of the project were not disclosed.

Sears closed its Brea office in April 2018 as part of the retailer’s well-documented financial struggles; it has also closed an office at Westminster Mall and South Coast Plaza.

Later, in 2018, Simon bought the 50% stake he did not yet own in Brea Sears for $ 68 million.

Simon announced a redevelopment proposal as part of a broader portfolio renewal; he claimed to have “transformational redevelopment plans in five key locations,” including shopping malls in Massachusetts, Texas, New Jersey and Pennsylvania along with Brea.

The REIT’s proposal became more tangible last fall when Simon presented the city with plans to demolish the Sears store and its automotive service center and replace it with commercial, restaurant and residential components along with a high-end fitness facility.

According to city records, the project “would result in a net increase of 149,625 square feet of commercial use and 312 residential units on an approximately 17.5-acre portion of the 74-acre Brea Mall site.”

Requires an amendment to the master plan and a zone change to accommodate the residential component.

Shortly after the proposal was submitted, Life Time signed an agreement to lease a 125,000-square-foot space in the 1.3 million-square-foot mall. This represents the second-largest retail deal in 2019 and the largest during the fourth quarter, according to a brokerage report by CBRE Group Inc.

Collaborating with mall operators is a new goal for Life Time, which says adding mixed-use components can “help rekindle the retail industry,” according to Akradi.

FivePoint Partner

Elsewhere in OC, Life Time is nearing the start of construction of a new self-contained 125,000-square-foot facility at FivePoint Holdings LLC’s Great Park Neighborhoods in Irvine.

City records indicate that the new location will have five swimming pools, basketball courts, fitness classes and a “spa, salon and café accessible to both members and non-members.”

It will be the largest fitness facility in the city and marks the first major commercial development in the Great Park neighborhoods.

“We’ve been trying to get into Irvine for 20 years,” Akradi said, noting that working with FivePoint CEO Emile Haddad was essential to getting a foot in the door.

Local history

Life Time entered the OC market in 2014 with the opening of a 128,000 square foot site in Laguna Niguel and opened its second venue about a month ago.

The company closed on a 10.4-acre site in the San Clemente Hills in 2015, then home to the closed Rancho San Clemente Tennis & Fitness Club. Life Time demolished the original clubhouse building, building a new one in its place. 45,000 square foot single story facility.

He transformed the space previously used as tennis courts into a new swimming pool, restaurant, spa and classrooms for yoga, pilates, cycling and group fitness. He also refurbished part of the tennis court space.

Life Time said it invested between $ 50 million and $ 200 million in creating a new club.

The San Clemente office, at 111 Vista Montana Avenue, “will easily cost north of $ 50 million,” when all is said and done, according to Akradi.

Currently employing around 450 people in Orange County, the new facilities could increase that figure to 1,000.

Coworking, Residential

Life Time’s parent company was once publicly traded, but five years ago it was stripped of investor affiliates Leonard Green & Partners and TPG Capital in a deal worth more than $ 4 billion.

In 2017, Life Time abandoned the name “Fitness” to emphasize a diversification of the product offering, including the new Life Time Work concept of coworking and the Life Time Living multi-family concept.

The company has opened co-working locations in Pennsylvania, Minnesota and Texas and will debut its first apartments in Florida and Nevada later this year.

Orange County could host such projects in the future, with Life Time’s team of 500 employees looking for not just self-contained gyms, but “any way for us to provide a feel-good component to a project,” Akradi said.

“We are agnostic about the kind of developments we pursue. Our expansion is centered around the goal of influencing healthy living, healthy aging and a healthy lifestyle, “said Akradi.

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