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.
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.
Richard Beddie, the chief executive of the Exercise Association of New Zealand, says the no-frills 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. By far the biggest players in this market are two overseas operators: the Australian chain Jetts, which has 56 gyms in New Zealand, and the US chain Snap, which has 48 gyms.
Beddie says the 24/7 operators are often franchised 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 1000sq m of space but as little as 200sq m to 300sq m."
Driving the fitness sector's growth has been the increase of different types of customer rather than more of the same customer.
"Boutique gyms, 24/7 gyms and all the gyms in the suburbs are all making gym membership more attractive, and as a result there is more variety in the types of people joining. There is just as many gym-users aged 40-50 as there are aged 20-30," Beddie says.
Although the chains make much of their low fees and round-the-clock opening times, a recent study of Australian and New Zealand fitness clubs found that location was the overwhelming consideration when new members were choosing a gym - even more important than value for money.
Beddie says: "Going back 10 years, gyms would nearly always be based in the heart of the city. The traditional gym was a relatively large space - 1500sq m to 2000sq m - 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," Beddie says.
"They will pay for somewhere with street exposure; a good site that can be easily found. 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 they'll pay a premium for that sort of site rather than take one that's just around the corner on a quieter road."
Boutique fitness clubs are also flexing their muscles. These clubs are a cross between personal training and group fitness.
"They normally have a particular niche product which could be anything from yoga to spin," Beddie says. "From a real estate perspective, they are generally looking for a small space - 100sq m-200sq m - and are probably happy to say, 'People will find us because they want to come to us.' They don't really need to have much street frontage or be on the busy corner. They'd take it if they could get it, but would they pay the premium for it?"
Viv Gallagher, who runs 150sq m Xtend Barre in Auckland's Grey Lynn, agrees. "My studio has a different profile to the big box gyms and the chains. I definitely don't need the street frontage - and the budget doesn't really allow for it. Finding the right space is more important."
Gallagher used to run Xtend Barre out of a space at the top of an office block but changed locations because the building wasn't a good fit for her gym. "My new studio is located on top of a childcare centre and a health and wellness centre. I think the concept of building communities that feed into one another is great. It's great for the landlord because it creates more traffic for all the businesses there."
Shane Cameron, whose boxing and cross fit gym occupies 1000sq m on Onewa Rd in Auckland's North shore, says car parking can make or break a gym. "If it's too hard to find a park, people will just go to the gym that does have spaces," he says.
Budd says for many landlords, fitness centres are a cavalry riding to the rescue. "Gym operators generally look for long-term leases and their set-up costs aren't onerous, roughly matching that of retailers in many cases. They are stable businesses and not especially demanding," he says.
Beddie says their most expensive fit-out components are the wet areas - the showers and toilets - and depending on the size of the operation, that component might not be significant.
"For a lot of the boutique operations, their wet area requirements are two toilets and two showers, which isn't a huge amount.
"For the larger gyms, the wet area requirements are considerably more substantial, but the number of larger gyms opening each year is relatively low while the boutique gyms and chain operators are looking for sites all the time."
