When it comes to driving financial success – whether for profit or social good – the industry has traditionally had a strong focus on sales, marketing and retention. However, although these are vital parts of the mix, operators running some of the most successful fitness businesses have been quietly developing seriously impressive property teams. It’s becoming clear this is giving them a significant commercial advantage.
The way real estate is handled in relation to the development of clubs and the management and refurbishment of assets is starting to define value in the market in ways not previously seen.
Yet very little is generally known about the impact of real estate on the sector – there are no widely available industry surveys which track rental costs or values or look at profitability or asset value by location or by location type.
We don’t have shared numbers about the best location types, or where the rent to income ratios are most favourable, nor is this being tracked over time to show changes.
Neither do we assess in any depth how refurbishment cycles impact on the bottom line or how co-location affects turnover and profitability. These are all things we need to know.
In this issue, we open a discussion about property in our Ask an Expert feature on page 30. We look at some of the ways leading operators are managing their portfolios and ask how the industry can continue to thrive, as competition for sites intensifies and rental values increase in prime locations.
A new report from Allegra Strategies, called Project Fitness UK 2018, gives insights into the direction the industry is going, showing a strong drift towards retail-related locations.
Allegra says the majority of new private sector facilities built since 2012 have been in shopping centres, mixed use schemes, on retail parks and on the high street and our experts agree the contraction of retail is proving beneficial to gym operators.
New clubs will open at the rate of well over 300 a year in the UK for the next five years and it seems clear that when growth in the UK starts to slow – if the terms of Brexit make it viable operators will look to Europe to keep up the momentum, and so we will need to start extending this knowledge into Europe too.
On page 42, we publish Deloitte and EuropeActive’s latest numbers on the market, but again, the focus of this research is on membership and the number of locations. We’d like all industry analysts to start collecting data about rental values and property yields as well, so the best investment decisions can be made.
