CHOOSE THE RIGHT LOCATION
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If you are starting with zero members and hoping to grow as time goes on, you should be a bit more conservative with the monthly rent.
Choose the Right Real Estate Agent
Get a “Commercial Real Estate Agent” who knows your desired area well. At this point, you should be referencing your COST ANALYSIS WORKSHEET to see how many clients you will need to make a profit. It's very important to consider how many clients you need in order to break even, and ensure you choose a space that can accomodate that growth and level of operations.
Commercial Real Estate is broken down by cost per square foot and then given triple nets. Triple Nets are like Home Owners Association Dues for commercial real estate. Triple Nets, or NNN as you will see them written in most contracts, are used to pay for things like common area upkeep, grounds maintenance, trash removal, landscaping, exterior painting, etc. NNNs are an addition to the square footage cost. Ask your Real Estate Agent what the triple nets are in each space you visit. In many instances NNNs will not be shown on the listings.
When shopping for a location, remember to ask the real estate agent the important questions for YOUR BUSINESS. He will likely not know the answers to these questions, but he will ask the Property Owner or their agent on your behalf.
Office Space vs. Warehouse Space
If you find a large, open, industrial space with a role up garage door you are one lucky owner! A more likely scenario when choosing your location will be buildings divided into “warehouse” and “office” space. At first glance, having offices next to your warehouse might not seem like a desirable option. After all, you want as much gym space as possible and could probably make do without any office space! Right? Well, let me steer you away from that thought process for a couple of reasons...
The first and most obvious reason is money. Think of office space as a closet full of gold. The office space can be used to increase membership value to your future members or it could help supplement rent during your first months. The office space can be used for childcare, a retail shop or a locker room. All of which will make you extra money on top of your membership rates; simply charge a small fee to watch the kiddos, or sell your favorite protein supplement in the retail shop. Either way, you are making extra profit.
Also, consider body maintenance businesses that would love to have access to your members. You can rent out the office space to a chiropractor, a massage therapist or a physical therapist. Consider asking a bit more for their rent considering you are supplying them with customers from your gym, or ask for a percentage of sales.
Lastly, don’t be afraid of a little construction. If none of the ideas on how to use the office space, rather than wish it were more warehouse, appealed to you then simply get rid of it. Ask your real estate agent to work the cost of construction into the initial offer and see what they say! If the location has been empty for a while, they might be willing to pay for your construction to make it the perfect fit for you. The worst thing they can say is, “no modifications allowed”.
Choose the Right Real Estate Agent
Get a “Commercial Real Estate Agent” who knows your desired area well. At this point, you should be referencing your COST ANALYSIS WORKSHEET to see how many clients you will need to make a profit. It's very important to consider how many clients you need in order to break even, and ensure you choose a space that can accomodate that growth and level of operations.
Commercial Real Estate is broken down by cost per square foot and then given triple nets. Triple Nets are like Home Owners Association Dues for commercial real estate. Triple Nets, or NNN as you will see them written in most contracts, are used to pay for things like common area upkeep, grounds maintenance, trash removal, landscaping, exterior painting, etc. NNNs are an addition to the square footage cost. Ask your Real Estate Agent what the triple nets are in each space you visit. In many instances NNNs will not be shown on the listings.
When shopping for a location, remember to ask the real estate agent the important questions for YOUR BUSINESS. He will likely not know the answers to these questions, but he will ask the Property Owner or their agent on your behalf.
- Is running/working out outside allowed in this complex?
- Will loud music affect neighboring businesses?
- Are changes allowed to be made to the interior of the building?
- What are the walls made of inside? (Pull up rigs have to be screwed into something and it sure can’t be dry wall.)
- Is signage required on the outside of the building, if so, how much does that cost and who is responsible for that bill? (sometimes the property management will cover some or all of that, if you ask.)
- Is the rental agreement based on a Gross Lease, or NNN? If NNN, what is the NNN cost per square foot?
- What are the permissable hours of operation?
- Who is responsible for paying utilities?
- How many months rent prepayment is required. How much security deposit is required?
- What are the traffic patterns and speeds of the parking lot? Is it safe for your members to run outside?
Office Space vs. Warehouse Space
If you find a large, open, industrial space with a role up garage door you are one lucky owner! A more likely scenario when choosing your location will be buildings divided into “warehouse” and “office” space. At first glance, having offices next to your warehouse might not seem like a desirable option. After all, you want as much gym space as possible and could probably make do without any office space! Right? Well, let me steer you away from that thought process for a couple of reasons...
The first and most obvious reason is money. Think of office space as a closet full of gold. The office space can be used to increase membership value to your future members or it could help supplement rent during your first months. The office space can be used for childcare, a retail shop or a locker room. All of which will make you extra money on top of your membership rates; simply charge a small fee to watch the kiddos, or sell your favorite protein supplement in the retail shop. Either way, you are making extra profit.
Also, consider body maintenance businesses that would love to have access to your members. You can rent out the office space to a chiropractor, a massage therapist or a physical therapist. Consider asking a bit more for their rent considering you are supplying them with customers from your gym, or ask for a percentage of sales.
Lastly, don’t be afraid of a little construction. If none of the ideas on how to use the office space, rather than wish it were more warehouse, appealed to you then simply get rid of it. Ask your real estate agent to work the cost of construction into the initial offer and see what they say! If the location has been empty for a while, they might be willing to pay for your construction to make it the perfect fit for you. The worst thing they can say is, “no modifications allowed”.