(Updated 12:30 p.m.) WASHINGTON COUNTY, Md. — Tilt Studio and a Onelife Fitness gym will replace the Valley Mall’s shuttered Macy’s, mall owner PREIT announced Wednesday in its quarterly earnings report.
PREIT announced the lease signing in its company overview for the third quarter. Hagerstown is also listed as a future location for the arcade on Tilt’s website.
PREIT CEO Joseph F. Coradino said in the Thursday earnings call that a lease has been executed with U.S. Fitness Holdings for a 70,000-square-foot gym with an indoor and outdoor pool. Coradino didn’t specify which of US Fitness’ brands but it appears to be Onelife Fitness. US Fitness Holdings operates OneLife Fitness, Sport & Health and Crunch Fitness.
The anchor replacements are part of an overall success for PREIT across its portfolio, being able to quickly fill in shuttered anchors. Coradino said that anchors are in transition at half of PREIT’s malls. The Hagerstown Macy’s closed in 2016.
“We’re leading the way in transforming the anchor landscape,” Coradino said on the earnings call. “This is a longterm business and malls in particular are undergoing a renaissance that we’re excited about.”
Tilt is expected to open in the third quarter of 2018 and US Fitness’s gym is expected to open in the fourth quarter of 2018, according to PREIT’s filing. Work has already begun on carving up the Macy’s floor plan into two spaces.
Dodge Projects, which collects information from permits and other sources for construction projects, is showing that it will be a Onelife Fitness. Without paying for the full access (it is quite pricey), it’s unclear where that information came from. Sometimes companies will submit the project for listing, other times it will come from a permit scan or sometimes from uncorroborated reports. In any case, the source is noted on the post. Mall employees are also being told that the gym will be a Onelife Fitness.
A mega-sized arcade and a full-fledged health club are part of an industry pivot away from department stores and clothing retailers to entertainment-centric tenants. Valley Mall already saw some of that occur with Primanti Bros., Red Robin, Tilted Kilt, Mission BBQ, Noodles and Company and Starbucks all taking up spaces in the mall and on Valley Mall Road.
“We’re establishing unique environments for our shopper,” Coradino said. “When we talk about diversifying our tenant base, we’re referring to reducing our reliance on traditional mall retailer, including department stores, apparel and accessories. We’re transforming our anchor mix with 10 of 11 anchor replacements solidified in less than a year.”
That remaining anchor PREIT identified as at Plymouth Meeting Mall between King of Prussia and Philadelphia. Does that mean that Sears already has someone lined up or, is it semantics because the Sears space is owned by Seritage Growth Properties and not PREIT?
Tilt Studio is your Dave and Busters consolation prize — and it might turn out to be better. Some locations boast over 100 arcade games, laser tag, black light mini-golf, mini bowling and bumper cars. Each location has a little bit of a different mix of what’s going to be included. Some Tilt Studio are much, much bigger than others.
Coradino said on the call that the Hagerstown Tilt will be 48,000 square feet with bowling, rides and laser tag.
While the graphics look like they are more teen and kid friendly, it will be interesting to see if this becomes an adult hang out, too. Having time to peruse Tilt’s site, every location looks to be a little different. Most have a basic snack bar and have an appearance that is welcoming for elementary school-aged kids.
Then, check out the massive two-story location in Tempe, Arizona. That is 40,000 square feet and includes a craft kitchen and bar instead of a snack bar and this little note:
Our Taproom at Tilt Studio Bar, also located on the second level, features a wide array of popular beers, bottled or on tap, wine by the glass or bottle, specialty alcoholic and non-alcoholic cocktails, and delicious frozen drinks. The Taproom will also be the perfect spot to watch your favorite sporting event on dozens of big screen TVs.
One source has said that mall employees were told it will have a bar, which should appease the 21-35-year-old crowd. Just judging by their websites, you can see how Tilt is more family-oriented than Dave & Buster’s and Round 1 Bowling and Amusement. Certainly, leasing agents and their companies did their homework and figured out why one of the above is better for a certain mall over the other. Let’s see if they got Hagerstown right by choosing Tilt, and what version of Tilt Hagerstown will see.
Here’s a news report on the 2016 opening at Eastwood Mall in Niles, Ohio:
Here’s a video on one of their larger locations in Arizona:
Will Tilt feel the same as the old Playland and Fun World on the north end of town? Will it be better? I need to know.
US Fitness/Onelife Fitness Gym
Onelife is a new player to the fitness world, with only two Frederick locations to its name in Maryland.
Both Frederick locations were formerly Sport&Health and feature a pool, turf workout areas, spa-inspired locker rooms, a virtual cycle studio, circuit stations, free weights, 100-plus cardio equipment and a studio for dance, yoga, Pilates and Barre. US Fitness acquired the Sport & Health brand in 2014.
US Fitness executives Kirk and John Galiani shared with the International Health Racquet & Sportsclub Association in 2015 what makes Onelife different from other clubs:
CBI: And you immediately launched Onelife Fitness. What was different about those clubs?
KG: We created Onelife as a destination club model—a sports club with all the amenities. A typical facility features racquetball, basketball, several pools, extensive Kid’s Clubs, women-only areas, private yoga and Pilates rooms, and group cycling studios, as well as large group exercise rooms. We wanted clubs that would appeal to everyone, and that, at around $30 a month, would offer unparalleled value.
JOHN GALIANI: And we wanted a brand that we could define, mold, and control. It’s much easier and more comfortable for us to be leading a brand. It’s not that Gold’s Gym lacked anything; we just wanted to go in our own direction.
Basically, this sounds and looks a little like Merritt Clubs around Baltimore but at half the price. Merritt starts out at $59 a month.
Valley Mall’s non-anchor occupancy stands at a strong 98.5 percent at the end of the third quarter, according to PREIT’s report. That’s up 1.4 percentage points from the third quarter of last year. Losing Sears took a hit on the overall numbers with 84.1 percent occupancy, down 14.2 percent just from losing one additional anchor.
I wouldn’t read too much into the comp sales figure. The mall is at $404 per square foot for comparable sales at the end of the third quarter, down from $420 for third quarter 2016. That figure takes into account tenants who are under 10,000 square feet and have occupied the space for at least 24 months. The mall has added several new tenants over the past year that aren’t reflected in these numbers and spaces like H&M wouldn’t be counted for its size.
A couple things to keep an eye on for the future: expiring leases.
PREIT’s earnings report shows that JC Penney’s lease ends in 2019 and Regal Cinemas lease ends in 2020. Typically talks would be underway around now to start renewing the JC Penney’s lease. For example, Bon-Ton’s lease is due to expire in 2018 but PREIT purchased the building in July 2017 and brought in Belk.
Regal is renovating theaters across the country by installing king-sized recliners, upgrading projectors, screens, sound systems and in some places, reducing screens and building a bar lounge. The Hagerstown movieplex could use a refresh if it stays on.
Before they even think of Regal’s renewal, all eyes are on a Sears replacement. The company didn’t share any plans for that space, which is owned by Seritage Growth Properties. Seritage has not made any announcements yet for the 109,000-square-foot space.