Gym chain 24 Hour Fitness is blaming the COVID-19 pandemic for its filing for Chapter 11 bankruptcy protection and plan to permanently close 133 gyms, including two on Long Island.
In addition to planning to close the two local gyms — in Massapequa and Bay Shore — the chain has nixed plans to open three new locations on Long Island — in East Meadow, East Setauket and Hicksville, according to the company’s filings in the U.S. Bankruptcy Court for the District of Delaware.
“If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11. With that said, we intend to use the process to strengthen the future of 24 Hour Fitness for our team and club members, as well as our stakeholders,” 24 Hour Fitness’ chief executive officer, Tony Ueber, said in a statement Monday.
24 Hour Fitness plans to reopen its two remaining Long Island locations when state-ordered shutdowns end. Those are in East Northport, where the gym opened in part of a former Sears store in February, and at Green Acres Commons in Valley Stream.
Gyms, which are included in Phase 4 of New York State's reopening plan, are not expected to get the go-ahead to open their doors until some time in July at the earliest. Long Island is in Phase 2 now.
Most of 24 Hour Fitness’ 445 gyms in 14 states and Washington, D.C., have been closed since March 16, and membership payments for closed facilities were suspended on or about April 15, as a result of the pandemic, according to court filings by the company, which is based in San Ramon, California.
In a court filing, 24 Hour Fitness Worldwide Inc. listed 164 gyms for which it was seeking court approval to reject the leases, which means it wants to breach the contracts and stop paying rent as of the bankruptcy filing date. Of those, 133 are “costly or underperforming” gyms that the company wants to shutter permanently.
The list of 164 gyms also includes 29 locations that were permanently closed before the COVID shutdowns.
In addition, the list includes two leases for planned clubs that were never opened, the company said in the filing, plus the three planned Long Island gyms that have been scrapped.
The gym chain expects to secure about $250 million in financing. With the court’s approval, the financing and the company’s cash from operations should allow 24 Hour Fitness to continue operations during the bankruptcy process, the company said in the statement.
Retail slumped, gyms buffed up
For the past several years, the United States has been undergoing a fitness boom, as mall and shopping center landlords courted gyms and other non-store tenants to fill vacant spaces left by retailers that struggled with online competition. Gyms are attractive replacement tenants because they occupy large spaces that landlords would otherwise have to subdivide and they bring foot traffic to other businesses in malls and shopping centers.
Fitness industry players were drawn to Long Island's high population and high median income.
“We will build clubs on Long Island until we can’t find a place to put them,” Frank Napolitano, then-president of 24 Hour Fitness, told Newsday in May 2019.
The number of health clubs in the United States increased 14.3% to 41,370 between January 2015 and January 2020, according to a Boston-based trade group known as IHRSA (International Health, Racquet and Sportsclub Association).
The number of fitness and recreational sports centers on Long Island increased 7.7% to an estimated 503 from 2015 to 2019, according to the most recent data from the U.S. Bureau of Labor Statistics.
The boom stalled as gyms nationwide began what initially were temporary closings in March as part of state-mandated business shutdowns to help reduce the spread of the virus. Months without member revenue mean that many gyms will not reopen, and plans for some new gyms will be canceled or put on hold.
In May, Gold’s Gym cited the pandemic as the reason for it filing for Chapter 11 bankruptcy protection and deciding to close 30 company-owned gyms, leaving nearly 700 mostly franchisee-run locations worldwide.
Unlike 24 Hour Fitness and Gold's Gym, most fitness businesses are small, with five or fewer locations, and they have been hurt financially more than most other small businesses, IHRSA spokeswoman Meredith Poppler said.
“Not only were they among the first businesses mandated to close, but during the shutdown, while other small businesses were able to pivot and sell online or fulfill takeout orders, health clubs had no real opportunities to earn revenue,” she said.
3 abandoned LI plans
The 24 Hour Fitness nixed for East Meadow, at 2000 Hempstead Turnpike, was to open in the fourth quarter of 2021 in 40,000 square feet of space that was part of a former Home Depot, said Ken Breslin, a broker for Garden City-based Sabre Real Estate Group, who represented Salisbury Partners LLC, the owner of the East Meadow property.
The planned 37,750-square-foot 24 Hour Fitness that had been slated for Hicksville was to be part of a redevelopment of a former Sears site on North Broadway called Heritage Village, a proposed retail and residential project that is undergoing approval review in the town of Oyster Bay.
Construction was halted in March for the 37,250-square-foot 24 Hour Fitness that was supposed to open this month in East Setauket, in part of a former Waldbaum’s supermarket space at 4054 Nesconset Hwy. in Suffolk Plaza, said Kristen Moore, spokeswoman for Brixmor Property Group, the Manhattan-based owner of the section of the shopping center that includes the former grocery store.
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