Builders Snap Up Aging YMCA Properties for Redevelopment

Old Structures, Remote Work, Home Fitness Create a Challenge

Since the first visitor walked into North America’s maiden YMCA in 1851, millions of people have flocked to the charitable organization to work out or take a swim. But the facilities are now also attracting interest from real estate developers acquiring many of the properties they see as ripe for redevelopment.

The next YMCA facility that could be part of the redevelopment trend is in Montreal, the home of North America’s first and the city’s largest YMCA, at 1435 Drummond St. The owners have announced plans to sell and move to a rented premises in the same area.

Located within the city’s Golden Square Mile area, the Montreal YMCA blames an increase in remote work as part of the reason for its demise.

“We must tackle considerable challenges, particularly the drop in the number of people coming into downtown for work or other reasons, new work habits, and changes in fitness and workout” routines, it said in a note on its website.

The YMCA sits in the heart of downtown among some of Eastern Canada’s most valuable real estate and it has remained closed since Quebec’s pandemic curfew was put in place. It’s on pace to be the second major YMCA in downtown Montreal to close after a gym at the Guy Favreau Complex shut its doors. Its landlord, the Canadian federal government, canceled a deal to provide free rent in 2006, leading to its closing in 2017.

Redevelopment plans of former YMCAs are also rampant in the nation’s capital. The Orleans YMCA at 265 Centrum Blvd. was purchased by Toronto-based developer Bayview Orleans for $6.5 million in January 2022. The developer plans to build three high-rise towers up to 40 floors on the site.

Another Ottawa YMCA now ripe for redevelopment is at 180 Argyle Ave., located in the heart of the city, a 20-minute walk to Parliament. The YMCA there has announced plans to sell but will remain on the premises for the foreseeable future. “We are open to plans to sell and vacate but that will be years and years later,“ a representative told CoStar News.

Acquiring one of the roughly 140 YMCA fitness facilities in Canada can be done directly with local management.

“The YMCA in Canada is a federated model so each Canadian YMCA Association is an independent charity,” a representative of YMCA Canada told CoStar News in an email. “Any operational decisions that need to be made at a YMCA location are addressed at the local association level.”

Other Ottawa-area YMCAs that have closed in the past decade include one at 2121 Carling Ave. that was open from 1967 to 2021, and another that was in the Merivale Mall at 1642 Merivale Road closed after complaints of noise and vibration in the shopping centre. An attempt to operate a YMCA in the home of the National Hockey League’s Ottawa Senators also failed, as the YMCA at 1000 Palladium Drive closed due to lack of membership.

The YMCA’s decline is more about buildings than brand, according to one fitness industry observer.

“Many of the YMCAs are located in buildings that were built over 100 years ago,” said John Atwood of the Atwood Consulting Group in an interview. “All over North America, there are YMCAs that frankly most people don’t want to go to because they are old, tired, moldy and whatever else. The dichotomy is that the YMCAs have done an extraordinary job of reinventing themselves.”

Pointing to the success of a newly built YMCA in Gloucester, Massachusetts, he said “new YMCAs all over the country are magnificent. I wouldn’t say the YMCA is a moribund organization. They’re doing a very good job of reinventing themselves with brick and mortar.”

Atwood does not believe that fitness outlets have suffered a dramatic overall decline, as he notes that gym membership is back to about 90% to 95% of pre-pandemic levels. He concedes, however, that about 5% to 10% of former gym members are not likely to return, with many opting to exercise at home on Peloton machines or other methods.

Canada’s YMCAs have suffered a significant recent decline in revenue, hinting that the trend to swap out the buildings for other purposes will continue. YMCA Canada’s revenue has declined by one-third, from CA$24 million in 2019 to CA$16 million in 2022, while expenses declined by over half, from CA$27 million to CA$12.6 million, according to its financial reports.

YMCAs in the U.S. suffered a similar decline between 2019 and 2022, as their total revenue fell from US$193 million to US$144 million during that period, according to their company reports.

Other Canadian cities that have seen their YMCAs targeted by developers include Toronto, home to the charity organization since 1853. The YMCA at 325 Burnhamthorpe Road W, was sold to RGF (Mississauga) Developments Inc. in 2020 as part of a plan to build five towers, ranging in height from 52 to 65 floors, with a total of 4,277 residential units. The Toronto YMCA situation is not entirely bleak, however, as a new YMCA opened at 907 Kingston Road in 2022.

In Calgary, the Eau Claire YMCA at 101 3 St. SW, which opened in 1988 and closed during the pandemic in 2021, was purchased by Telsec Property Corp., which now plans to redevelop the 430,000-square-foot-property.

In Vancouver, which is home to a downtown YMCA on Burrard Street and another on 49th Avenue, Concert Properties and Peterson Group have outlined plans to build on the 49th Avenue site as part of its Langara Gardens project, a major undertaking of 21 buildings, including towers of 16 to 36 floors. The project includes plans to include a newly built YMCA on the premises.

Source CoStar. Click here to read a full story