Mall Owners Look to Gyms to Fill Empty Space

February 1, 2018

For decades, malls served as community hubs where people could shop, see a movie, or grab some food all in one convenient location. But the rise of e-commerce and social media caused malls to decline both as retail and recreational centers, leading many to look like ghost towns today. In fact, experts predict that one in every four malls could go out of business by 2022.

In an effort to stay open, mall owners across the country have started appealing to potential tenants who would have been unwelcome years ago. For example, landlords traditionally denied floor space to gyms, placing them “on a long list of prohibited uses that included massage parlors, billiards halls and pawnshops,” according to a commercial real estate analyst. The idea was that fitness clubs would attract younger crowds who were more interested in lifting weights than shopping. As retail began its steady decline, however, the health industry started thriving like never before. Today, more than 57 million Americans pay for membership at a gym, representing nearly 20 percent of the population.

As a result, many mall owners are actively courting fitness centers to take up space once occupied by major retailers. “Twenty-five years ago, the best real estate was given to the department stores,” said Sandeep Mathrani, CEO of a firm that invests in shopping centers. “And the department stores sort of prevented you from doing anything but having retail shopping. So today, their sort of slow retraction is giving us the opportunity to reinvent the wheel.” Over the next decade Mathrani’s company plans to add fitness centers to half of its 115 malls, many of which will vary greatly in size. Along with accommodating large-scale gyms, malls can also host the smaller boutique fitness centers that have become increasingly popular in recent years. Property developers hope that health centers like these will increase foot traffic and transform the American mall back into a modern day town square.

Questions:

  1. Why did mall owners traditionally deny entry to gyms and fitness centers?
  2. Do you think the addition of gyms will save some malls from closing? Why or why not?

Sources: Rachel Bachman, “Malls Never Wanted Gyms. Now They Court Them,” The Wall Street Journal, November 26, 2017; Josh Sanburn, “Why the Death of Malls Is About More Than Shopping,” Time, July 20, 2017.

Leave a Reply