Let's get Physical

Let's get physical

Total Property - Issue 2 2017

The fitness industry in New Zealand is pumped, and giving the real estate market a work-out. Total Property looks at how new exercise trends are affecting property needs.

Walk past Les Mills’ newest gym and you’ll see how much the exercise industry in New Zealand has bulked up over the past decade. The big box gym dominates the corner of Khyber Pass and Mountain roads in the busy central Auckland suburb of Newmarket. It is a temple of glass, steel and sweat, where thousands of motivated people come to jerk their Lycra-clad bodies to the choregraphed fitness classes that have made Les Mills’ name.

According to the Exercise Association of New Zealand (ExerciseNZ), 15.6 percent of New Zealanders, about 717,000 people, belong to a gym or attend fitness classes, a huge rise on the 450,000 Kiwis reported to have gym membership in 2008.

The $494 million sector employs 6,700 people, up from 4,500 in 2005, and ExerciseNZ believes there is still scope for it to get bigger still. Richard Beddie, the body’s chief executive, says: “The fitness sector is still in growth mode. It has grown on average 6.5 percent annually since 2010. Even during the recession, it was still growing by about two percent. And revenue is likely to keep growing.”

But it’s not just the sector’s size that has changed. Fitness chains, low-cost 24-7 operators and boutique gyms have become the dominant players and pushed out the large independents that used be the cornerstone of the exercise industry. The sector has also seen an explosion of new concepts, from cross-fit to ballet barre, plus a resurgence of some old ones, such as combat gyms.

Their property needs range from large, high-quality buildings in prime city centre locations to small- to medium-sized spaces in suburban retail hubs and industrial zones.

The big four fitness chains in New Zealand are Les Mills, City Fitness, Jetts and Snap, which together operate 150 clubs and occupy tens of thousands of square metres of commercial property.

Mr Beddie says the no-frill end of the market has experienced the biggest surge, with 24-7 gyms growing from fewer than a couple of dozen in the last five years to well over 100.

Mr Beddie says: “The 24-7 operators are often franchise businesses. They look for sites across the country based on a particular business model and demographic. They are what we would call small- to medium-sized gyms, occupying up to 1,000m2 of space but as little as 200m2-300m2.

“They are definitely pushing into the suburbs, moving into areas where traditional gyms weren’t.”

Mr Beddie says: “Going back ten years, gyms would nearly always be based in the heart of the city. The traditional gym was a relatively large space – 1,500m2 to 2,000m2 – and generally occupied tier two buildings, a nicely fitted out ex-factory building or warehouse as opposed to prime office space.

"But when the chains came to town, they said, ‘Well actually, we can go to a suburb with a population of 15,000 because that works for us.’ Of the 50 or so gyms that have been set up in Auckland in the last couple of years, about 40 of them would be outside the central city.”

Even though the no-frills chains are moving away from city centres, they still want to be near a hub of sorts and have street frontage. “They generally occupy ground floor spaces as opposed to being a destination hidden around the corner,” Mr Beddie says.

“They will pay for somewhere with street exposure, a good site you could find easily. A lot of the 24-7 operators will say that being on a busy street corner or near a shopping mall is part of their advertising, and therefore they’ll pay a premium for that sort of site rather than take one that’s just around the corner on a quieter road.”

Read more – Request the full article