Goodlife Fitness first to stake out Target Canada locations

January 22, 2015


Photo credit: The Financial Post


by Hollie Shaw

Originally published in The Financial Post:

TORONTO – GoodLife Fitness is the first business to stake its claim on the locations vacated by Target Canada as it aims to shore up its position as the country’s largest fitness chain.

“GoodLife Fitness is continuously growing and expanding,” David Patchell-Evans, founder and chief executive, said Tuesday.

“These are great locations, typically with high visibility, great parking, easy access and most locations are familiar to the public. We are very flexible and innovative when it comes to taking on existing space. The large open blocks of space that the Target locations provide are much easier spaces to work with when building a club.”

Founded in 1979, GoodLife has 328 locations across Canada, with 287 under its fitness banner and 41 under that of its discount brand, Fit4Less. The London, Ont.-based chain would like to have 400 locations by year’s end.

“Currently only 15% of the population is using fitness clubs to achieve their health and fitness goals,” Mr. Patchell-Evans said in an email. “There is tremendous opportunity for growth and development in the industry.”

Its interest, sources say, is fuelled in part as a hedge against competitors such as Irvine, Calif.-based industry giant LA Fitness, which has a handful of locations in Ontario and one in Edmonton.

A real estate source said that LA Fitness has long coveted a further expansion into Canada and has been looking for more locations.

“The issue would be some of these locations are more than 100,000 square feet, and do you need some of these locations,” the source said, indicating if some of the Target locations are chopped up into smaller pieces, LA Fitness could be interested.

About half of Target Canada’s 133 current locations are in “B-malls,” said retail expert Antony Karabus, chief executive of HRC Advisory, making them a good fit for a brand such as GoodLife.

“I think LA Fitness is a real threat, and GoodLife has done a nice job building its brand,” he said. “For the B-type locations, I could see the landlords being willing to take a fitness club because they are trying to repurpose some of those strips. I cannot imagine an A-grade location wanting a fitness club. Co-tenancy in an A-mall is all about curation. If I am a landlord of an A-list mall that just got burned, I want a rock-solid co-tenant that will complement my other tenants and drive customer traffic.”

Avi Behar, chief executive of The Behar Group Realty Inc., said real estate brokers are doing a lot of pitching to retailers now.

“The challenge is the bigger U.S. covenant retailers are few and far between, and now they are going to be even more mindful of coming into Canada,” said Mr. Behar.

Kohl’s is being approached again, according to sources, but previously walked away from considering an entry into Canada after real estate brokerage CBRE Canada had done a considerable amount of research into bringing the retailer here.

Mr. Behar said it’s probably far too early to figure out exactly what will happen to Target’s 15-million square feet of retail space. “Right now letters are still going out to landlords to be officially notified.”
Ross Moore, national research director for CBRE in Canada, said the sector was caught off guard by Target’s announcement and continues to play catch up.

“This was almost a surprise to everybody. I haven’t met anybody who says they knew this was going to happen. The most people thought was this would be a reorganization and they would close some stores,” he said.

Mr. Moore said the unwinding of Target will take some time because there are so many moving parts, involving different landlords and the legal process.

“This is going to take awhile. It cannot be done quickly,” he said.

GoodLife aims to hit 1,000 locations over time. Similar to an offer from Sears Canada last week, the fitness company said Tuesday that it is looking to hire new staff, and encouraged any interested Target employees to apply for the positions.