HIG announces $13 million sale of Temecula LA Fitness

TEMECULA — Hanley Investment Group Real Estate Advisors, a nationally-recognized real estate brokerage and advisory firm specializing in retail property sales, announced today the $13 million sale of a new single-tenant net-lease investment occupied by LA Fitness in Temecula.

Completed earlier this year, the new 37,000-square-foot single-tenant building is strategically situated on 3.69 acres at 29920 Temecula Parkway, and is located at the first major thoroughfare for traffic entering the Temecula Valley from Interstate 15.

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Hanley Investment Group Senior Associate Austin Blodgett and Executive Vice President Eric Wohl represented the seller, a private developer based in Irvine, California. The buyer, a family trust from Los Angeles, was represented by Richard Lee of R&L Properties-Cerritos Inc. of Corona, California.

According to Blodgett, the recently sold property benefits from “large monument signage, direct frontage on Temecula Parkway (68,000 cars per day), and its freeway-visible location near the Interstate 15 on/off ramp (176,000 cars per day).”

The property “shows extremely well with top-notch construction and a prime location,” said Wohl, and is an anchor to the Gateway to Temecula, a brand-new lifestyle center that contains approximately 61,000 square feet of commercial space. Businesses at the location include Starbucks with a 24-hour drive-thru, Chevron and Car Wash, Verizon Wireless, The Pizza Press, and 4,000 square feet of office space.

After the sale, Blodgett explained, “LA Fitness is the #1 health club in the nation and the most attractive health club investment in today’s market,” and said the popular and well-known gym recently executed a new 15-year primary lease term with a number of renewal options. 

“This is a rare sale of a single-tenant LA Fitness in Southern California,” said Blodgett. “This location has low rent for a new-construction LA Fitness, which is what ultimately got the buyer comfortable paying a cap rate  of 6.13 percent.” Of four single-tenant LA Fitness investments sold in California in the last 18 months, Hanley Investment Group sold two of the properties, according to Blodgett.

After the property was listed unsuccessfully by another firm for about six months, Hanley Investment Group took over, and quickly procured multiple offers and selected a highly-qualified buyer that closed in under 60 days.

“This property an excellent long-term investment for the buyer,” said Wohl, who explained, “We worked closely with the lender and third parties to help the buyer secure the desired financing in the allotted time-frame.”

“The Inland Empire market is the second fastest-growing region in California, and the five-mile population has grown over 81 percent since 2000, making it one of the fastest growing sub-markets in California,” according to Wohl. “Temecula in itself is booming with development projects like the $300 million expansion of Pechanga Resort and Casino, a new 1,750-unit master planned community called Altair, and over $24 million in road improvements to the I-15 Interchange to handle the increase in traffic to the region.”

“Health clubs continue to be an attractive investment for investors looking for an internet-resistant tenant that can outstand the effect of e-commerce,” said Blodgett. “LA Fitness continues to achieve lower cap rates than other national tenants like 24 Hour Fitness, purely because of LA Fitness’ national presence, with more than 700 clubs across the United States and Canada, and the fact that you are getting more locations backing the lease over any other health club chain nationwide.”

According to the Global Wellness Institute, as of 2017 the wellness industry is a $4.2 trillion business; growing 12.8 percent from 2015 to 2017 and is forecasted to grow 6.4 percent to 8 percent in the next five years.

To put that in an economic context, from 2015-2017, the wellness economy grew 6.4 percent annually, nearly twice as fast as global economic growth of 3.6 percent. Wellness expenditures representing $4.2 trillion, are now more than half as large as total global health expenditures of $7.3 trillion; and the wellness industry represents 5.3 percent of global economic output.

Racquet & Sportsclub Association reported that global health club industry revenue totaled $87.2 billion in 2017, as more than 201,000 clubs served 174 million members. In the U.S., health club membership grew from 45.6 members in 2008 to 60.9 million, a growth of 33.6 percent.  

“With investors’ appetite for high-quality, single-tenant retail properties, and consumers’ continued interest in fitness and health, we expect that well-located single-tenant, net-leased properties occupied by LA Fitness with long-term leases will continue to be in high demand,” said Blodgett, who noted that Hanley Investment Group currently has several other single-tenant health clubs listed for sale.

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Trevor Montgomery, 47, moved last year to the Intermountain area of Shasta County from Riverside County and runs Riverside County News Source and Shasta County News Source. Additionally, he writes for several other news organizations; including Riverside County based newspapers, Valley News, The Valley Chronicle, and Anza Valley Outlook; as well as Bonsall/Fallbrook Village News in San Diego County and Mountain Echo in Shasta County.

Trevor spent 10 years in the U.S. Army as an Orthopedic Specialist before joining the Riverside County Sheriff’s Department in 1998. He was medically retired after losing his leg, breaking his back, and suffering both spinal cord and brain injuries in an off-duty accident. (Click here to see segment of Discovery Channel documentary of Trevor’s accident.)

During his time with the sheriff’s department, Trevor worked at several different stations; including Robert Presley Detention Center, Southwest Station in Temecula, Hemet/Valle Vista Station, Ben Clark Public Safety Training Center, and Lake Elsinore Station; along with other locations.

Trevor’s assignments included Corrections, Patrol, DUI Enforcement, Boat and Personal Water-Craft based Lake Patrol, Off-Road Vehicle Enforcement, Problem Oriented Policing Team, and Personnel/Background Investigations. He finished his career while working as a Sex Crimes and Child Abuse Investigator and was a court-designated expert in child abuse and child sex-related crimes.

Trevor has been married for more than 28 years and was a foster parent to more than 60 children over 13 years. He is now an adoptive parent and his “fluid family” includes 13 children and 15 – but soon to be 16 – grandchildren.