Overcoming Hurdles, Gymnastics Center Shows Difficulty of Getting a Warehouse for Nonshipping Use
Soaring Logistics Demand Poses Challenges for Alternative Tenants
A 6-foot-deep landing pit under construction as part of Legacy Gymnastics Academy's conversion of an industrial building in San Diego.
In their quest for the perfect place to train potential future Olympians, the operators of Legacy Gymnastics Academy were put through their own paces — including a nearly three-year search in a border-adjacent San Diego industrial neighborhood where demand among more traditional types of tenants has been soaring lately.
While gymnastics and warehouses may seem worlds apart, their needs are not so different when it comes to real estate. To set up competition-standard gymnastics facilities, the operators needed 18-foot height clearances and plenty of space between support columns within the building — or preferably no columns at all to worry about, as they also planned to set up a large parkour obstacle-course training track.
One request was not so routine for an industrial building: permission to dig a 6-foot-deep trench spanning more than 300 square feet smack dab in the middle of the floor. Legacy’s father-daughter operators, Greg and Moorea Wood, needed that to install an inflatable landing pad — similar to those used by movie stuntmen — to cushion athletes coming off tumbles, high jumps and dismounts from gymnastics gear.
“Basically a blimp hangar would have been perfect, but there are no blimp hangars in San Diego County,” said Will Schneider, a broker with Keller Williams Commercial who helped the Woods land the San Ysidro industrial space now being prepped for the training facility’s planned April opening. “When you think of Olympic-type facilities, it’s high beams, high bars.”
The industrial vacancy rate in San Diego’s border region, led by Otay Mesa, is 4%, on par with the national average, though it has fallen more steeply than the nation as a whole over the past two years. So while nontraditional businesses such as gymnastics facilities popped up at industrial parks before the pandemic in locations ranging from New Mexico and Idaho to Virginia and Northern California, the tightening market for logistics space has made it harder for businesses like Legacy Gymnastics to compete for those spaces.
Against that backdrop, the company found the rare industrial landlord willing to allow the floor pit, and also let the approximately 27,000-square-foot property at 1602 Precision Park Lane undergo numerous other changes, including adjustments to parking and operating hours. Those were crucial to creating a family-friendly environment in a setting more frequently associated with big-rig truck deliveries.
The gymnastics training facility faced challenges in landing a space at a San Diego industrial park.
“Many landlords only want industrial uses, so they’ll say, ‘If you want kids and families and mothers and grandfathers, go to a retail facility, not my facility.’ So that was another barrier,” Schneider said of the location search.
“It depends on the permits and the zoning and what you’re trying to do,” said Moorea Wood, 30, who started gymnastics training at age 9 and competed in high-level USA Gymnastics tournaments in high school before transitioning to coaching in her college years. “We looked at some business parks in San Diego and they didn’t want us.”
Competition for Space
South County industrial landlords can afford to be picky these days as tenant demand ramps up, easing landlords’ leasing efforts in the border-adjacent area that includes San Diego’s San Ysidro and Otay Mesa neighborhoods. A new report from brokerage JLL said the South County area led a banner 2021 for San Diego industrial demand, with leasing and property sales hitting all-time highs as rents rose significantly from pre-pandemic levels.
The area has a historically tight 2.4% industrial vacancy rate after a year that saw nearly 250,000 square feet of net positive leasing, with asking rents in some newer developments now triple their pre-pandemic levels. Almost all of San Diego’s nearly 2 million square feet of speculative industrial construction is now in South County.
Much of this has been fueled by accelerated demand for last-mile deliveries of goods ordered from home during the pandemic and moves by companies to repair lingering breaks in global supply chain networks by shifting facilities from overseas to domestic distribution hubs. A large portion of that relocation activity is focused in the cross-border region that includes southern San Diego and Tijuana, Mexico.
“Of the largest occupiers, e-commerce dominated the real estate market, driven by increasingly demanding online shopping behavior,” JLL researchers said of San Diego’s 2021 trends. “Other sectors increased demand, notably in the logistics and life sciences industries, and food and durable goods increased their demand for cold storage facilities.”
With that rising demand and increasing rents, said South County commercial broker Linda Greenberg, it’s become increasingly rare to find new tenants in the neighborhood that are not focused on storing and distributing things such as electronics, toys and medical devices.
Taking on tenants like sports training facilities often requires landlords to invest in potentially expensive alterations generally not needed by most industrial warehouse tenants. “You’re talking about things like added parking, locker and shower amenities, better restrooms and maybe event seating,” said Greenberg, principal at brokerage Lee & Associates. “You probably would need better air conditioning for a crowd of spectators, and you have potential safety issues with trucks coming through an industrial park.”
Jumping Through Hoops
Against that backdrop, and after a lengthy search that spanned the entire San Diego region, the Woods late last year leased the San Ysidro building for Legacy Gymnastics, where renovations are now underway. Greg Wood, a semiretired school facilities administrator who previously worked in the aerospace industry, said he expects to spend “easily seven figures” to transform the 50-year-old building where the landlord formerly made and stored items such as auto parts before relocating his business.
Legacy will put a comprehensive gymnastics training center under the same roof as a full parkour track, which includes wall-climbing, running and vaulting challenges. The business is also expected to host gymnastics tournaments, birthday parties and other family-oriented events for its younger customers. Based on early registrations, the Woods expect to serve about 1,000 customers monthly.
The effort comes with the aid of a supportive landlord and a timely change in city zoning codes. Last summer, San Diego officials revised local rules to lessen parking requirements for businesses located near public transit stations; Legacy Gymnastics is located less than a mile from a San Ysidro station of the light-rail San Diego Trolley.
The zoning change alone helped to chop more than a year from the city approval process, which probably would have entailed garnering special-use permits and more than doubling the building’s existing 50 parking spaces.
Greg and Moorea Wood look over plans for their gymnastics training center taking shape in a southern San Diego industrial building.
“They initially were basically putting us in the category of a 24 Hour Fitness or a huge church, and the amount of parking was going to be ridiculous,” Moorea Wood said. “We were telling them, half these people who are coming aren’t even going to be driving; they’re just kids. But since we’re now in a prime transit area, that just went away.”
Greg Wood said the location in the industrial park is in a cul-de-sac well removed from truck traffic at nearby businesses. The site also has close access to local freeways, which should minimize travel times for Legacy’s target customers within a 20-mile radius. It is also near a certified U.S. Olympic and Paralympic training center operated by the city of Chula Vista, offering complementary facilities for budding athletes.
Greg Wood and William Schneider, the broker who helped identify the industrial space for the Woods, look at the drywall framing.
The five-year lease agreement calls for Legacy to fill in any floor holes before vacating the property, and Greg Wood said the business was able to secure a rent lower than those in several other locations that it scouted. The Woods are now looking to carry out a longtime family dream that was also shared by Greg’s wife, Diane, a former competitive figure skater who died in 2015.
But the location obstacle course could very easily have ended with a different result, based on the current South County industrial climate. “Another industrial user was up for this space, and they would not have had to do anything to the building,” said Greg Wood.