Will Indoor Pickleball Centers Thrive in Big Box Space? Trampoline Parks May Provide the Answer.

The sport of #pickleball is growing in popularity.

And so is interest in turning vacant #BigBox space into indoor pickleball centers.

Many real estate brokers with Big Box space listings have reported high call volumes and inquiries from parties interested in opening indoor pickleball centers in these former retail spaces.

And the recent (or impending) closure of approximately 1,000 former Bed Bath & Beyond stores may be adding fuel to the fire.

But can indoor pickleball centers thrive in former Big Box retail stores like those that were operated by #bedbathandbeyond?

The history of trampoline parks may provide the answer.

Pickleball is America’s fastest growing sport. 

The USA Pickleball Association reported that over 36 million people played pickleball last year and that its own membership increased by 30%.

There are now approximately 10,000 places to play pickleball throughout the country and approximately 130 new locations were added each month during 2022.

Given that weather is not conducive to outdoor pickleball play during winters in the North (or perhaps even summers in the South) - and with increasing complaints from residents in many communities about the loud pop sounds that occur during neighborhood pickleball games - some pickleball play is moving indoors.

As a result, many indoor pickleball courts and dedicated indoor pickleball facilities have now opened or are in development.

Including in #BigBox spaces that were previously occupied by Bed Bath & Beyond .

For instance, in April 2022 The Picklr opened a 9 court pickleball facility in a 22,000 square foot former Bed Bath and Beyond in Logan, Utah that was part of an early wave of #bedbathandbeyond store closures.

In June 2022 the Paddle Up Pickleball Club is planning to open a 9 court center in a former Bed Bath and Beyond in The Meadows of Lake St. Louis shopping center that just closed this past January.

Other indoor pickleball centers have opened in (or are in development at) malls and Power Centers throughout the country.

And new indoor pickleball clubs and organizations are sprouting up as well.

Ace Pickleball Club is opening its first club next month in a long vacant former CompUSA building in Roswell, Georgia. Ace has already signed up multiple franchisees and expects to open 5 new clubs by the end of 2023 and 40 new clubs by the end of 2024.

And Life Time Inc. has leaned into pickleball as well.

Life Time Fitness expects to have nearly 700 pickleball courts - many that are indoor - at its 160+ fitness clubs by the end of the year.

It even converted its former fitness club in North Bloomington, Minnesota into Life Time Pickleball, a dedicated pickleball-only indoor club that offers not only five competitive level pickleball courts but also luxury locker rooms, whirlpools, saunas, fresh towel service and a large bar and lounge area.

There are challenges to finding locations for - and operating - indoor pickleball centers.

For one, many Big Box spaces - including most former Bed Bath and Beyond suites - are located in shopping centers which have restrictive covenants that often prevent non-retail uses at the center.

Additionally, the ceiling heights at some Big Box buildings is too low to support pickleball play. And the column spacing in some suites can inhibit appropriate court sizes and layouts.

Many Landlords are also turned off by the lack of tenant history and the perceived "fad" nature of the sport - or the fact that many potential pickleball center operators often come with more of an "idea" than an actual business plan.

But these hurdles are not necessarily insurmountable.

In fact, the indoor pickleball center-in-a-Big Box "craze" is somewhat reminiscent of the fervent interest that trampoline parks had in this same real estate beginning roughly 15 years ago.

At the time many Landlords were leery of filling their vacant Big Box spaces with trampoline parks. Like with indoor pickleball, trampoline parks were considered by many to be a fad - and some Landlords were less than impressed with the lack of business plans, experience and financial wherewithal exhibited by some of the initial operators that sought to open new parks.

But despite being labeled as a fad, the constant concerns about safety and liability, and the business interruption from required closures in the early days of the pandemic, many trampoline parks have remained viable Big Box tenants for nearly two decades.

Nearly 20 years after Sky Zone opened one of the earliest indoor trampoline parks in Las Vegas in 2004, there are estimated to be over 800 indoor trampoline parks and family entertainment centers in the U.S. - the majority of which are located in former Big Box buildings and shopping centers.

And trampoline parks have been opportunistic when Big Box retail tenants have declared bankruptcy and vacated their real estate.

For instance, more than a dozen former #ToysRUs stores are now trampoline parks. Parts of at least 20 former #Kmart buildings have also been converted into trampoline parks and family entertainment centers. And approximately 5% of the 440+ re-tenanted former #SportsAuthority Big Box suites were converted into trampoline parks.

The business of running trampoline parks has also been "professionalized" over the past decade.

While most trampoline park operators are independent franchisees, the number of franchisors has largely consolidated into a small handful of companies that likely operate over three quarters of U.S. trampoline parks.

Additionally, the private equity firm Palladium Equity Partners, LLC , which has a 25+ year track record and over $3 BB in prior capital investment, made its first investment in the industry in 2017 through the CircusTrix Holdings, LLC brand which later acquired Sky Zone and now operates over 300 trampoline parks across several brands.

Another large franchisor, Urban Air Adventure Parks , operates approximately 200 parks and Altitude Trampoline Parks is closing in on 100 sites. Smaller - but fast growing - franchisors Get Air Management and Launch Entertainment also operate dozens of parks and continue to backfill Big Box space.

Indoor pickleball centers appear to have some advantages over trampoline parks. While the economic model for indoor pickleball centers may still be a work in progress, pickleball appeals to a wider customer demographic than trampoline parks which largely cater to families with small children. And pickleball does not carry with it the same safety and liability concerns that have plagued the trampoline park industry over its history.

It remains to be seen whether indoor pickleball centers will enjoy the same growth and multi-decade staying power of trampoline parks.

And whether the interest of pickleball center operators in vacant Big Box space will continue at its current fever pitch.

In the meantime, expect the calls to keep coming to Big Box real estate owners and brokers about turning their space into indoor pickleball centers!