LA Fitness plans to build a gym on the former home of a Loews movie theater adjacent to Washington Square Mall in the latest sign of progress for a retail submarket that has struggled with vacancies.

Locally based Sandor Development Co., which owns the 5.5-acre site at the southwest corner of Washington Street and Mitthoeffer Road, has the parcel under contract with the California-based LA Fitness, which operates 10 central Indiana fitness centers.

La Fitness plans to start work soon on a 35,000-square-foot fitness center, said Sandor founder Sidney D. Eskenazi, who had been working to find a new use for the vacant property for several years.

The former Cherry Tree 10 movie theater closed in 2005, and Sandor demolished the building a few years later. It had opened in the late 1980s.

While Washington Square Mall has struggled—its small-shop space is more than half vacant and national retailers have fled, leading to a big tax refund for owner Simon Property Group Inc.—the surrounding area remains a strong regional shopping draw, in contrast with Lafayette Square, which faces more competition from newer retail offerings farther west in Avon and Brownsburg.

Freestanding retailers and strip centers anchored by national retailers have proliferated.

"It's a stable, diverse demographic that lives out there," said Mark Perlstein, a principal in locally based Sitehawk Retail Real Estate. "It's a fairly large market that needs to be served."

Sitehawk manages the fully leased Cherry Tree Crossing, where Qdoba, McAlister's and Mattress Firm are anchors and vacancies are snapped up quickly, Perlstein said.

A few years ago, Thompson Thrift finished a new retail strip anchored by The Vitamin Shoppe and Aspen Dental just outside the mall. CVS built a new store at the southeast corner of Washington and Mitthoeffer, and Chuck E. Cheese’s moved to the same corner from a spot just east of Interstate 465.

Late last year, Columbus, Ohio-based Big Lots took over a vacant Circuit City store in the Washington Place center at 10235 E. Washington St., and Goodwill bought property in front of the mall with plans to build a new freestanding store.