Pickleball and padel, two racquet sports rapidly gaining in popularity in Canada, are seeking indoor spaces in former industrial and big-box retail buildings to develop year-round facilities for avid players.

“Anytime the right building characteristics are available, you're getting multiple offers from different groups,” CBRE senior vice-president and T.10 Padel co-owner Michael Bellissimo told RENX.

Bellissimo cited an example of a warehouse in Toronto's Etobicoke district that received three offers for recreational uses in December. The owner preferred to lease to more traditional warehouse tenants but, when that opportunity fell through, they again considered recreational uses a month later -- and received three new offers from three different groups.

“It's not really a square footage issue, it’s more an issue of landlords wanting to take these types of uses on,” Bellissimo said of the caution being exercised by some property owners. “Some of them got really badly beaten through COVID with other types of recreational uses, whether it be baseball indoor training facilities or gyms.

“A lot of landlords either subsidized tenants or tenants simply couldn’t carry through on the leases. So there's a bit of trepidation now that these groups are going to be in the same situation and may not be well established to organize themselves for the long term.”

Having the right operator is essential

The challenge for landlords, according to Bellissimo, is that most costs to convert an existing building to a pickleball or padel facility are front-loaded. They are afraid of being stuck with these courts if the sports prove to be short-term fads and operators can't continue with their businesses.

That makes it more difficult and expensive to convert the building back to traditional industrial uses.

“On paper, these businesses work really well,” Bellissimo said. “But when you start to get into the day-to-day operations of them, you need an operator that really understands how to make money in their given business.”
 
Winnipeg-based TPC Development Corporation, which stands for The Picklr Canada, announced plans last year to open 65 Canadian pickleball clubs. The first location is to open in Toronto this year.

“I think they've got the right format,” Bellissimo said of TPC, and others like it. “They started at the top level on arranging financing corporately. They're taking the responsibilities on a location selection basis. It's not ad hoc at the operator level.

"These larger companies that are coming in are well-organized and treating it like a business as opposed to a one-off destination club. I think it will work better and give landlords more confidence that they're dealing with business operators that probably have the flexibility to swap out franchisers or individual operators based on performance.”

T.10 Padel, at 601 Cityview Blvd. in Vaughan, was the first indoor padel club in the Greater Toronto Area (GTA) when it opened in 2023. 

The company has modelled that the GTA could accommodate five to 10 new padel facilities based on consumer demand. Four others have opened and Bellissimo said T.10 is looking to expand.

Facility requirements

Most pickleball and padel facilities are in buildings converted from other uses as opposed to being purpose-built. The potential for conversions are considered on a case-by-case basis and both industrial buildings and big-box retail locations can be suitable.

“It's very much a one-off decision process, and that's why we're here to help the occupier market and the landlord side to make sure that it's a good fit long-term,” Bellissimo said.

The minimum space needed for a decent pickleball or padel facility is 15,000 square feet, which would accommodate four padel courts or eight to 10 pickleball courts. The regulation ceiling height for padel is 24 feet, though Bellissimo said that’s not necessarily a deal-breaker for operators catering to recreational players. 

Buildings also require column spacing to accommodate courts as well as adequate occupancy loads and parking for players. Some operators may also want to include showers, food and beverage service or other amenities depending on their business model.

Dozens of large Hudson’s Bay Company stores will soon be empty after the retailer completes its liquidation process, and those that aren’t in downtown areas have lots of existing parking. Bellissimo said stores with lower ceilings may not be right for padel, but many would be well-suited for pickleball and could drive traffic to malls.

Expenses and revenues

Bellisimo said it costs about $40,000 to install a padel court, and less for pickleball. This means an initial investment in the neighbourhood of $250,000 or more before opening a facility.

“Some of the tenants that people are putting into buildings aren't committing that type of investment, so that should give a landlord confidence,” Bellissimo observed. “Also, a lot of the funding for these comes from institutional banks that have already analyzed the business model and are confident lending on it.

"Banks usually scrutinize more than landlords do on the potential of a business.

“So there's potential here for things to go well. You still have to do your due diligence but, on rates, I think they can pay the same or sometimes more than traditional industrial tenants.”

Bellissimo can also envision condominium, purpose-built apartment and mixed-use residential developments incorporating pickleball and padel courts into their amenity packages like some have already done with fitness facilities, basketball and squash courts.

“We're starting to see membership models for these types of clubs, which usually happens when there's enough demand to justify charging a fee to ensure you can have specified court times and such,” Bellissimo said.