Originally ran September 18, 2019 on Digsy.ai. Authored by Sam Monempour, Senior Vice President of NAI Capital, West Los Angeles location.
The Challenges of Searching Gym Space for Rent
1. Zoning Requirements & Excessive Parking
Most areas require 10 parking spaces for every 1,000 square feet. This will apply to open areas of the club (not restrooms/locker rooms/offices) and generally end up ruling out most commercial properties in dense markets. If your requirement does not include equipment that is fixed to the ground and is more in line with a yoga studio or a martial arts facility, your use is typically considered “Educational” – this makes it a lot easier. Otherwise, your search will have to take you to larger office or retail buildings (greater than 50,000 square feet), which have parking structures where the city will give you a variance on your parking requirement.
2. Accessibility & Visibility
Once you get past the parking difficulties, you will need to be mindful of the “ease of access” – that way your members don’t have to fight to get to your facility and will have FREE parking. Signage and visibility from the street help tremendously for the general population to know you’re at the location.
3. Build-out for Gym Space
Next, most fitness facilities will require heavy build out, such as plumbing work in the locker rooms for showers, as well as heavy electrical for equipment. It is tremendous help to find existing facilities that already have the built out for gyms, or have landlords that are willing to contribute to the build out via a Tenant Improvement Allowance.
Property Types for Gym Space
Office buildings for fitness gym tenants work well because most office landlords are accustomed to giving out a Tenant Improvement Allowance, and at times are open to doing a full build out for tenants. This gives the Landlord an amenity to offer their other tenants in the building and helps reduce their overall vacancy. In such circumstances, it’s also possible to get some free rent after you occupy the premises.
Although office buildings work well for a gym use, something to keep in mind are the office hours. Most office buildings have general operating hours and services shut down while your fitness club is active. To overcome this, you’ll need separate air conditioning controls within your space, along with a separate meter so you get your utility bill direct from the utility company. Finally, office buildings generally run under a Modified Gross lease (MG) structure so you, as the Tenant, are not responsible for Triple Net(NNN) expenses.
Retail projects on the other hand, such as shopping centers, may be able to offer free surface parking, as well as ease of access and signage. However, most retail projects don’t offer much in terms of build out allowance – landlords prefer to give more free rent for you to do the work. They also run under Triple Net lease structures, which require tenants to pay a portion of the property taxes, insurance, and maintenance costs.
Industrial Warehouse Space
Lastly, some fitness operators like to be in industrial buildings, however these types of properties generally do not have adequate parking ratios, and have limited visibility to the street or main throughways. These buildings work much better for gymnastic schools or cheerleading academies that need high ceilings and larger open areas to run around.
Whichever your style of fitness you’re planning on operating, make sure you select the right location for your gym business. Take into consideration local income levels, population densities, age / gender counts of the general population, traffic counts and saturation from other competitors. Most brokers should be able to pull demographic reports for you showing all of the above.
Really study the area you’re entering and see if you can find a niche where maybe a certain demographic is not being served. For instance, current trends are to have lower-end monthly memberships, such as LA Fitness or 24Hr Fitness in the $30 to $40 range, and higher-end Equinox which is in the $200 range. There are not many in the middle where you’re provided with nicer service at a more reasonable rate of $80. Maybe your area of consideration doesn’t have class-based fitness, which is becoming more popular with millennials. Whichever way you decide, build in a good marketing budget, hire a good sales team, and make sure your staff takes care of your members well. A good community goes a long way in member retention. Good luck!
This post “Gym Space for Rent – Challenges & How to Find the Right Property” was written by Sam Monempour | http://www.naiglobal.com/agents/sam-monempour|
About Sam Monempour
Sam Monempour is Senior Vice President of NAI Capital, West Los Angeles location. Sam has been in the commercial real estate industry for over seventeen years – specializing in landlord representation, as well as helping tenants and buyers find their dream commercial space. Throughout his career he has built strong tenant partnerships with many reputable companies. To learn more visit http://www2.naicapital.com/agents/sam-monempour
Thanks for reading the second guest-blog in our commercial real estate series! This month, we’ve reached out to industry experts for advice and insight into commercial leases and securing the best property for your new or next gym location. We hope you find their information helpful as you grow in the health club space. When you’re ready to run your gym like a pro, call us at 1-855-FOR-GYMS. Gym Insight is an affordable, easy-to-use gym management software designed to make your business profitable. Our product offers effective payment processing, intuitive tablet-based sales solutions, simple member management and mobile-based 24/7 Door Access Digital Keytags — among a host of other technologies designed to free up your time and save your club money.