Delay-Plagued Health Club to Open December

A local developer says a posh new health club near John Wayne Airport will open by December, but minus an indoor swimming pool, a year behind schedule and months after a competitor across the freeway opened its doors.

Construction on the three-story Sporting Club in the Lakeshore Towers project slowed recently when the owner decided not to build the swimming pool, said an executive for Birtcher, the developer of Lakeshore Towers.

It took weeks for the health club owner, a unit of San Diego’s Naiman Co., to get the changes cleared internally, said Bill Kearns, a Birtcher principal. Naiman is building the project with two Japanese financial partners.

It was the latest in a series of delays to plague the project and that have put it more than a year behind schedule. When construction slowed, rumors that the club would be canceled outright swirled around the local real estate industry.

The club lost a race to open within a couple of months of the Sports Club Irvine, another upscale health club across the San Diego Freeway that opened in February.

Both clubs are designed to be far larger and more lavish than the average neighborhood health club, charging hefty dues to provide upscale amenities such as valet parking. At 100,000 square feet, both clubs cover the same floor space as about 40 houses. These clubs can be risky investments because they’re expensive to build and can’t easily be converted into another type of building if the health club goes belly up. Each of the Irvine clubs cost more than $20 million.

Kearns said the indoor swimming pool wasn’t deleted from the building to cut construction costs, although costs at one time were running over budget. Instead, Kearns said, the club decided after observing its competitor across the freeway that it would need more executive locker rooms and other amenities. With the construction delays, those amenities will wind up costing as much as the pool would have, Kearns said. The club will still have an outdoor pool.

The club across the freeway, Sports Club Irvine, has an indoor-outdoor pool. That club, perhaps still trying to scare off the new facility, says the market can’t possibly support two such huge, expensive health clubs only blocks apart. The two had earlier talked about merging but couldn’t reach an agreement.

Although Sports Club Irvine says its business is all right, the recession has already cost it some members who have resigned from the club after being laid off, says Michael Talla, president of Los Angeles-based Sports Club Co., operator and one of the club’s owners.

“The market can barely support our club, especially in light of the recession,” Talla said. “We’re doing OK, but we’re not making a fortune there either.”

But Naiman had signed a lease with Birtcher committing it to building the other health club. Birtcher is also counting on the health club attracting tenants to Lakeshore Towers, two 18-story complexes the Laguna Niguel developer is building just off the San Diego Freeway. The first tower is to open this spring into a soft office market plagued by millions of square feet of empty office space.

Naiman is also struggling with other problems. Recently HomeFed Bank, a San Diego savings and loan, formally classified a $70-million loan to Naiman on an office park as non-performing--a bad loan. HomeFed says it has begun foreclosure proceedings on that property.

Naiman is trying to develop a nationwide chain of these big, posh health clubs through his Sporting Clubs of America, but the club in Chicago was reported in the local press to have recently opened off schedule and over budget.

Jack Naiman, Naiman Co. chief, said through a spokesman that he has financing lined up to see the Irvine club through construction to its opening, which he said would be “by the end of December.”