Recreational Spaces: The New Frontier in Commercial Real Estate

The Boom in Physical and Collective Uses is a Game Changer

The restructuring of the real estate market, accelerated by the rise in interest rates from 2022-2023, has made investors more selective and attentive to the sustainability of rental income. In this context, leisure activity spaces emerge as a coherent response to several structural trends: the search for physical experiences, the development of accessible sports activities, the rise of immersive formats, and the resurgence of the need for proximity and sociability.

This segment encompasses a variety of spaces: padel courts, indoor play parks, virtual reality rooms, wellness centers, and venues dedicated to hybrid activities that combine sports, services, and entertainment. Their common denominator is offering experiences that are not replaceable by digital alternatives. While physical retail confronts the e-commerce revolution and offices face questions from remote work, indoor leisure relies on an opposite dynamic: the more distant the activities, the more the demand for embodied experiences grows.

This trend is reflected in real estate fundamentals. Leisure operators often seek long-term lease commitments, as their business models require significant capital investments. Vacancy rates remain low due to a lack of structured land competition, and demand is focused on peri-urban or mixed areas where land availability aligns with spatial requirements. Municipalities, in turn, see this as a tool for revitalizing areas seeking to diversify their service offerings.

The result is a category of assets relatively decoupled from economic cycles because attendance relies on recurring uses: subscriptions, regular classes, weekly family activities. This attendance is less sensitive to macroeconomic fluctuations than traditional discretionary spending, enhancing their resilience.

Why Managers See It as a Source of Sustainable Returns

In response to this dynamic, Pierre Premier Gestion (PPG) decided to integrate this segment into the strategy of its opportunistic fund, PPG Growth, after seizing opportunities in 2024 with discounted office spaces. For the management team, leisure activity spaces now present a rare alignment between potential rental performance, revenue visibility, social utility, and market depth.

The most attractive projects meet the usual technical standards for activity spaces while hosting operators with proven business models. The manager particularly notes the rise of innovative entrepreneurial concepts—multi-player immersive VR rooms, new indoor padel formats, hybrid activity parks—driven by a new generation of operators professionalizing a long-fragmented sector. The diversification of business models enhances tenant quality and limits the risk of site obsolescence.

In this context, PPG Growth emphasizes a risk-return profile considered controlled. Leisure assets meet conditions appealing to investors: long leases, predictable income, social utility, entrepreneurial dynamism, and technical reversibility of buildings. The presence of top-tier tenants further strengthens the stability of rental income streams.

The fund recalls recording a performance of +8.93% in 2024 (Share A) and an annualized performance of +14.34% since its approval on July 28, 2017. While past performance is not indicative of future results, it sheds light on the fund's trajectory, which has adapted to new market opportunities by combining the pursuit of returns with an understanding of real estate transformations.

Looking ahead, this repositioning illustrates the belief that the most resilient alternative assets will be those that meet everyday, non-substitutable uses aligned with households' physical and social aspirations. Leisure activity spaces fit this perspective, offering a rare combination of visibility, growth potential, and local anchoring.