Zach Forrest knows a thing or two about finding gym space. Over the years, he owned five different gyms in the Las Vegas area. He knows the highs of selling two successful fitness businesses, and the low of having to close one because of city rezoning.
Now, Forrest is the Business Enrichment Coordinator for PushPress and, like the rest of the team, loves sharing his experience to help gym owners. We recently sat down with him to talk about the lessons he learned from his years of gym ownership. And specifically, the dos and don’ts of negotiating a gym lease.
Here’s what he had to say.
The Dos and Don’ts for Finding Gym Space and Negotiating Your Lease.
1. Do Aim for a Shorter Lease.
As you explore options for finding gym space, Forrest recommends prioritizing a shorter lease. Although there may be incentives available for a longer-term lease, he recommends finding one that’s three to five years, if possible.
“That’s the sweet spot, especially for the small gym owner,” Forrest said. “It’s the sweet spot because it gives you some security, but also leaves you the ability to move to a bigger space if your business grows faster than expected.”
2. Don’t Forget to Include an Option to Renew.
To cover most scenarios that may come your way, there are two things to be adamant about when negotiating a gym lease. First, you want the first right of refusal. And second, the option to renew. Forrest says that both can be incredibly valuable for the long term.
“If your business is doing well, then you want to be able to stay in that space if you want,” he said. “But at the same time, if your business is not doing well - or it’s doing really really well - you want the ability to move locations.”
Forrest once learned this the hard way when he signed a ten-year lease. He ended up incurring a plethora of legal fees to get out of it.
3. Do Include Tenant Improvements.
One often overlooked option for gym owners is to include facility improvements in your lease. These are things such as drywall or bathroom construction and sometimes even flooring. Over the years, this can save you a ton of money.
And as Forrest explained, without it, you might end up paying to upgrade a facility that someone else owns.
“I will sign a five year lease if they’re willing to build me extra bathrooms and put down the rolled rubber flooring for the gym,” he said. For example, when Forrest was finding gym space, three of his five leases included between $40,000 to $75,000 of tenant upgrades.
4. Don’t Overlook Liability Aspects.
Before you sign the lease, it’s incredibly important to be clear about the liability aspects, or which party is responsible for what. This includes things like the HVAC system or plumbing. Oftentimes, the building owner of the building will put that on the tenant.
Forrest said to make sure these things aren't your responsibility. In other words, you don’t want to be paying to maintain or fix the building’s structure.
Pro Tip: When it comes to liability, leave it to the professionals. Forrest recommends hiring a lawyer to help you sort through the details, and recommends Matthew Becker with GymLaywers.com. Becker is a gym owner himself and therefore understands the fitness business industry.
5. Do Lease a Standalone Building.
Through his experience, Forrest learned a standalone building where you’re not sharing a wall with neighbors is a much better option. There’s an inevitable noise level that comes with running a gym. And sometimes other business owners simply don’t understand that.
Therefore, Forrest says a standalone business means you’re less likely to deal with the headaches that arise from angering the neighbors.
“You’re less of a nuisance to neighboring businesses,” he said. “And you don’t have to consider neighbors as much in your day-to-day operations.”
6. Don't Underestimate Location.
Forrest believes the ideal spot for a finding gym space in a city is in an industrial or utility building. And even more specific than that, one that is on the border of a residential and commercial district, within a couple blocks of a major highway. He said that picking a gym location that’s close to a major highway makes it convenient for people to go to the gym on the way to or from work.
“It’s challenging to find, but that’s the ideal,” he said. “If you can nail all that, that’s the perfect location.”
7. Do Your Research.
Before you sign any lease, be proactive and check all the research boxes. Make sure the building is in good condition. Whether you’re in a suite or standalone building, meet the neighbors. If you’ll need renovations, find the right contractors.
And finally, be sure to do adequate market research. Discovering everything from median income to your closest competitors will help you to make smart business decisions for years to come.
Pro Tip: Once you’ve found your perfect gym location, it’s time to work on running a successful fitness business! Book a demo with our team today to find out how PushPress can help to save you time and level up your business.
8. Don’t Forget: Renting Isn’t the Only Option.
Forrest’s experience as a gym owner was all in the rental market. But if he could go back in time, he would have gotten into the real estate business and purchased a facility. He says this would have given him a guaranteed sellable asset, and seriously increased the value of his business.
“I didn’t have the foresight,” he said. “In retrospect, that would have absolutely been the best option for me. And I tell gym owners now, if you can buy the building it’s such a huge advantage long-term. If it’s financially feasible, you should always buy it, with rare exceptions.”
However, if buying isn’t possible when you’re finding gym space and you decide to lease, take the proper steps. Hire a lawyer and pay attention to the small details. Then, when the right facility pops up, you’ll be ready to sign on the dotted line.
