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Health, Beauty & Fashion

Landlords move to the beat of fitness clubs

Fitness is so big that some owners are repositioning their malls to ride the trend
The Business Times - July 9, 2005
By: Alexandra Ho
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Landlords move to the beat of fitness clubs

Growth in the fitness industry has been so healthy that all of the big three players here have expanded this year.

In the first five months of 2005, California Fitness, Planet Fitness and Fitness First have expanded deeper into the Central Business District. Between them, they have leased prime commercial space totalling 60,000 sq ft. And by next year, they will expand even further.

The latest on the scene is Fitness First, which has just opened its fourth location at the new office building One George Street. Taking up 10,000 sq ft of space, the new outlet, which has a pool, was fitted out to the tune of $2.5 million.

The club first opened at Paragon in Orchard Road in 2003. In 2004, revenue grew 34 per cent, says managing director for Singapore and Indonesia Anthony Tottman, who reckons more growth is on the cards.

'At present we estimate less than 2 per cent of the Asian population is exercising in fitness facilities, whereas Europe and USA enjoy a figure in excess of 10 per cent,' he says.

Fitness First, which now has 36 locations in the region, plans to open two more clubs next year.

Growth in the fitness segment prompted the company to convert its spa locations at Capital Tower and OUB Centre into gyms. 'The spa industry is growing too, but it is safer to locate them in hotels,' says Mr Tottman.

One factor that seems to have fuelled he expansion of fitness clubs is that they can now locate in prime office buildings - where the bulk of their members come from - at competitive rents.

Says Planet Fitness business director Craig Law-Smith: 'If you can get a good rental for an extended period, expansion makes good business sense.'

Planet Fitness which, has 13,000 members, also expanded recently. It opened a 17,000 sq ft location at Caltex House in the heart of Raffles Place. Mr Law-Smith says that so far the outlet has signed up about 2,000 new members.

Using last year's average office rent figures for Raffles Place when the lease was locked in - $4.50 per square foot - a rough estimate would put the outlet's annual rent at about $918,000.

Assuming it draws 3,000 new members at an average monthly subscription of about $80 - subscriptions range between $54 and $128 - subscription revenue would be about $2.9 million a year from this location alone. And even after subtracting operating costs, the end result would be a healthy profit. So it's no surprise that Planet Fitness will open its fifth location at VivoCity next year.

Location is important for fitness clubs, so Planet Fitness did not think twice about opening up at Caltex House. 'Convenience is a number one factor for members,' says Mr Law-Smith.

He is not worried that Fitness First and California Fitness are just around the corner. 'There are lots of people jumping in but the pie is getting bigger,' he said.

Success in any business requires market differentiation, and for Planet Fitness, keeping up with trends is vital.

Currently it offers 30 types of fitness programmes, from pilates to tai chi. According to Mr Law-Smith, these fads can last about four months before the next 'big thing' hits town.

In fact, fitness in all its varieties, is big. So big that some landlords are even repositioning their malls just to fit the trend. By next year, Novena Square Shopping Mall will become Velocity - a 'sports and active lifestyle' destination, anchored by a gym (rumoured to be California Fitness) and an 18,000 sq ft St Gregory Therapeutic Spa.

Supporting the fitness concept will be new Adidas and Nike flagship stores.

Novena Square marketing communications manager Claire Cher says focussing on health and fitness ensures unique positioning. And with the gym and spa, the mall is guaranteed 'repeated visits' by customers.

This thinking seems to be shared by the owners of Wheelock Place, who are also going healthy. Renovations have been taking place in the office tower there, and sources say the entire fifth floor, formerly office space, well become a health and fitness zone, with a club called Go! Fitness the anchor tenant. Details have not been released but it is understood the club will occupy 7,000 sq ft and will be mainly for women.

Of course, the growth of fitness clubs does not exactly translate to a fitter population. Mr Law-Smith says that on average, Planet Fitness members turn up about once a week only. This may not be enough to develop a six-pack, but at least it puts a smile on some people's face.

Wallace Chu, Savills' senior manager for research and consultancy - the company that negotiated the lease for Fitness First at One George Street - says: 'Based on the number of ads in the mass media, as well as the number of outlets being established, we definitely believe fitness outlets are one of the fastest-growing elements in the retail sector.'

We estimate less than 2 per cent of the Asian population is exercising in fitness facilities, whereas Europe and USA enjoy a figure in excess of 10 per cent.'

- Fitness First's Anthony Tottman


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