Feb 20, 2024 - Business

New "workplace-plus" spaces combine the office and the gym

Illustration of a treadmill with a hundred dollar bill for a running belt

Illustration: Sarah Grillo/Axios

The persistence of remote work has sparked the rise of well-appointed spaces fusing work with fitness and leisure.

Why it matters: A raft of data strongly implies workers are still productive outside traditional office confines. But some employees are balking at working continuously at home or in loud coffee shops.

How it works: The self-described "athletic country club" caters to white-collar workers, combining workspaces with high-end, family-friendly fitness facilities.

  • Its facilities are "more athletic country club space than a gym space," CEO Bahram Akradi tells Axios.
  • Life Time's facilities vary from location to location, but amenities include top-of-the-line gym equipment, fitness classes, juice bars and even spas. Those perks don't come cheap: memberships start at $279 monthly ($249 if you're under 26 or over 65).
  • All Life Time locations have room to work, but the company also offers dedicated "Life Time Work" coworking spaces.

Zoom in: Life Time is riding several related trends.

  • Hybrid work arrangements remain "highly popular among employers and employees alike," Coworking Cafe noted in a recent analysis.
  • Analytics firm Placer.ai says traffic at traditional offices was down a staggering 36.5% in December 2023 compared to the same month in 2019, even as Corporate America remains as productive as ever.
  • The fitness sector is hot again after falling at the beginning of the pandemic, thanks to "rising health awareness" and popular lifestyle trends like yoga and specialized training, per Mordor Intelligence.
  • All those virtual meetings have to happen someplace quiet. Life Time is betting its facilities can be a port in the storm of noise that's overtaken many coffee shops, especially since the workspaces are separate from the workout spaces.

What they're saying: People are sending a message that "I don't want work to be separate from other places in my life. I want it to be stitched together with other things," Jamie Hodari, CEO of global coworking company Industrious, tells Axios.

  • The new status quo is "workplace-plus," Hodari adds.
  • Life Time's model works well because certain (noisy) venues may not be conducive for virtual meetings, a post-pandemic staple of remote work, Hodari says.
  • It's a "confluence of workplaces where people live that's integrated into how people want to live. That's a successful model and something Life Time's got a line on."

Between the lines: Operation Return-to-Office has fared so badly that some cities are now moving to re-engineer empty commercial properties into housing.

  • WeWork's slow-motion implosion aside, the post-pandemic coworking landscape is blossoming, with a mix of short- and medium-term office options.
  • Some are more exclusive and pricey than others. Premium lifestyle companies like SoHo House and Equinox are also leaning into the trend, offering flexible workspaces for those who don't want to work in their kitchen, spare bedroom or living room every day.

Reality check: The beleaguered office sector is still in lots of trouble, with a debt-heavy capital structure — and bills are coming due this year in a major way.

  • The seasonal "new year, new you" trend that usually buoys gyms at the start of a calendar year appears to be softening.
  • Needless to say, hybrid work poshness doesn't come cheap. In its quest to become the destination of choice for upper-income remote workers, Life Time has been spending hefty sums to expand its footprint, at a cost to its stock price.
  • Life Time's stock currently trades around $13, languishing near a 52-week low. In the third quarter of 2023, the company's operating expenses jumped by over 8% from Q3 2022, outpacing a 7.6% gain in memberships.

The bottom line: Employees generally want workspaces that fit better with active personal lives after an era of long commutes that meant a firewall between the office and the gym and leisure time.

  • "A lot of people don't want to work that way anymore," says Hodari.
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