Feature Article on California Family Fitness:

January 4, 2008

Sacramento Business Journal - by Kelly Johnson Staff writer
Friday, January 4, 2008

California Family Fitness has landed a former grocery store in Citrus Heights and plans to convert it into the chain's 15th gym.

The fitness center operator is scheduled to open the 52,000-square-foot gym by October in the former Tom Thumb store in Sunray Plaza at Sunrise Boulevard and Antelope Road.

It would be the second new gym since a Boston private equity firm pumped money into the chain a year and a half ago in a quest to take it national. The first opening with help from the new backers is set for April 1 in Natomas, a 65,000-square-foot center built from the ground up.

With Bunker Hill Capital LP as a money partner, California Family Fitness plans to open two to three gyms a year and could hit the higher mark in 2008. The chain has a signed lease and could open this year in the Laguna area of Elk Grove at the former JVC Disc America Co. plant, which is planned for a variety of sports and entertainment tenants.

For expansion down the road, the chain is pursuing 10 sites, including spots in El Dorado Hills, Auburn, Yuba City, Woodland and Vacaville, as well as infill sites in Sacramento, said Larry Gury, California Family Fitness co-founder and an owner.

The chain's arrival at Sunray Plaza, a three-decade-old center with many vacancies, would coincide with a much-needed $8 million renovation. Ap Thomas Construction Inc. in Orangevale will do the work.

"The center's very worn. It hasn't had much attention for a number of years," Gury said.

Citrus Heights officials are glad for new energy at an important location. "It's a gateway to the city from Roseville from the northern border," economic development manager Rhonda Sherman said. Gym-goers might boost business at nearby shopping centers as well, she said.

A different ownership group

A new real estate development and management company bought Sunray Plaza on Dec. 31 for $10.85 million. The group's principals include California Family Fitness co-founder Russ Kuhn. With a tightening of lending requirements and other factors, the deal took about a year.

Placer Partners LLC, the new company, will invest $8 million into the 93,000-square-foot shopping center, including new paint and landscaping. The company wants to lease space near the planned gym to tenants that will complement it, such as chiropractors, physical therapists and beauty salons, Gury said.

The anchor spot, which housed the grocery store, has been vacant for a year. Sunray Plaza also is home to Round Table Pizza and Leatherby's ice cream parlor.

At 52,000 square feet, the Citrus Heights gym will be about average size for California Family Fitness, which has been building only large gyms in recent years. It will offer basketball, racquetball, a private women's workout area, rooms for spin and group exercise classes, tanning, a pro shop and a leased-out juice bar. A swimming pool would be added later.

Site considerations

The site made sense for California Family Fitness because it bridges the gap between the chain's Orangevale and Roseville and Rocklin clubs, Gury said. Many members who work out in Orangevale live in Citrus Heights, he said.

The chain sees opportunity in the area, which has a 24 Hour Fitness and a few smaller gyms. Citrus Heights has lost several gyms in recent years through business failures, lost leases or other factors.

Marcello Montagnino, operating partner of Gold's Gym locations in Roseville and Granite Bay, reckons Roseville, Rocklin and Citrus Heights have too many gyms. But California Family Fitness might do fine in Citrus Heights with the mid-level pricing it has chosen, he said.

Gym-goers are attracted to an operator with multiple locations and a variety of amenities, Gury said: "We feel very confident about (the site)."

Having a company other than Fit Development as landlord is a departure for the chain. Fit, a partnership of gym founders Gury and Kuhn, owns the space leased by most of the gyms.

Fit, however, recently sold the building at Park Drive and Sunset Boulevard in Rocklin that has housed a California Family Fitness gym for six years. Gury and Kuhn will invest the $21.5 million from the October sale in other commercial properties, Gury said.

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