STORY HIGHLIGHTS

An Arcata construction company has acquired the site of a proposed residential development for $10.5 million with plans to build affordable housing on the property.

Danco Group, which builds rental properties for low-income residents, bought the property from Capitol Equity, according to records filed with the Santa Clara County Clerk Recorder’s Office Nov. 12.

A permit to build 128 affordable housing units on the 1.5-acre site is under review, according to the city permit records. Currently, the property houses a 5,627-square-foot single family home. The development permit shows plans to demolish the home and replace it with a five-story apartment complex.

The property, at 1207 North Capitol Ave., sits on the edge of a residential neighborhood and near a light rail station.

Though the timeline is subject to change, a representative from Danco Group said the company plans to begin its construction phase in 2026, which will last about two years. The lease-up phase, set to begin as construction nears completion, is anticipated to begin summer of 2028, according to Danco Group.

San Jose must add more than 62,000 residential units between 2023 to 2031 to meet its state housing goals. Of that total, roughly 23,800 must be designated as low or very low-income housing. San Jose last year completed a mere 1,441 units of new housing, less than a quarter of them affordable, according to the California Department of Housing and Community Development.

Danco’s plans for the apartment complex includes, lounges, community rooms, fitness facilities and open spaces in the “c-shaped” building, the company posted online.

The last time 1207 North Capitol Ave. exchanged hands was 2020, according to real estate database PropertyShark. Capitol equity bought the property for roughly $2.4 million

Three gyms coming to Silicon Valley are poised to add luxury options to the fitness scenes of Campbell, Redwood City and Mountain View.

The three facilities will bring cryotherapy, infrared saunas and waterslides to select sites.

“We just view Silicon Valley as a great community and a great community for what we do,” said Villa Sport President Billy Malkovich. “It’s a very active community, it’s a health-conscious community, it’s a social community.”

San Rafael-based Villa Sport has gyms nationwide, including facilities in San Jose and Pleasanton.

Villa Sport offers two types of products: fitness clubs and athletic clubs. The former are typically smaller, have fewer amenities and have a lower membership price. Campbell’s incoming facility will be a fitness club, while Redwood City and Mountain View are slated to get athletic clubs.

“Our fitness clubs have more emphasis on that fitness consumer,” said Malkovich. “So, emphasis on group exercise classes, strength training, cardio, cycle, yoga, pilates.”

Fitness Club coming to Campbell

Of Villa Sport’s incoming local developments, the Campbell site will arrive first.

According to Malkovich, that will be sometime in 2025.

Villa Sport is setting up shop at a former Bed Bath and Beyond store in the Almarida Place Shopping Center on 515 East Hamilton Ave.

Malkovich told the Business Journal that construction has not begun and that the company is waiting for building permits from the city to begin.

The former 40,000-square-foot big box retail store will be renovated to include a yoga studio, group exercise studio, strength training area and recovery center equipped with cold plunges, infrared saunas and hyperbolic chambers.

Villa Sport is leasing the property, and the new facility will cost around $9 million to build, furnish and fill with equipment, according to Malkovich.

He anticipates the gym accommodating around 5,500 members. Malkovich said the price would reflect their other fitness club locations, with memberships starting at $79 a month.

Malkovich also expects the Campbell fitness center to need around 200, primarily part-time, employees.

Athletic Clubs: Mountain View and Redwood City

Villa Sport will open an Athletic Club in Redwood City in 2026 and a Mountain View location in 2027.

The Redwood City location will be a 90,000-square-foot facility where fitness activities, from personal training to group exercises, will be held. Members can access basketball and pickleball games, cafes and outdoor amenities like family-friendly pools. They’ll also have the option of 60- to 90-minute massages and skin care services like facials.

The site in Mountain View will be 100,000 square feet and feature the same or similar services.

Villa Sport Athletic Clubs are ground-up developments, unlike its fitness clubs, and typically cost tens of millions to construct. With the sky-high costs associated with expanding into the Bay Area, the company is looking at a $40-million price tag per development, equal to more than $80 million in total construction costs.

But it’s saving money on land acquisition costs through its parent company, Syufy Enterprises, a San Rafael-based entertainment and leisure company that owns the two parcels of land Villa Sport intends to build on.

“You couldn’t charge enough membership dues to ever recoup the cost of buying land in those areas today. So, it’s a major advantage for us to have that land owned by our parent company,” Malkovich said in a video call.

The athletic clubs will also have around 400 employees, many of them for specialized services, and offer more full-time employment than the fitness centers to handle over 10,000 customers. A quarter of the hires will be seasonal for jobs connected to aquatics operations and outdoor cafes.

“Our summer operation is a big deal for us,” he said.

Expansion Strategy

Villa Sport also has locations in Texas, Oregon, Idaho, and Colorado. It has eight locations in California. That number will climb to 12 once Campbell, Redwood City and Mountain View open.

Malkovich told the Business Journal that the company is approaching $100 million annually and anticipates that the three new Bay Area locations will generate $50 million or more in revenue in two to three years.

Villa Sport, founded in 2006, has grown organically and inorganically. Its inorganic growth is through acquisitions. In 2022, the company acquired four fitness clubs from Axiom Fitness, one of the largest fitness center chains in the Boise metro area, and it’s looking to acquire more.

Ideally, the company is looking to buy fitness centers that are in good health and have operations, management teams and customer bases that can easily integrate into Villa Sport’s portfolio of companies.

But it’s also open to hearing from businesses that have not recovered from the pandemic and are looking to exit.

“Turnarounds are not part of our growth strategy,” Malkovich said. “But it doesn’t mean we won’t look at a company that needs a turnaround.”