In 2007, Dave Henry opened his CrossFit affiliate in London, Ontario. He had no idea about the adventure that lay ahead. From humble beginnings to finding gym space multiple times to investing in gym real estate, he was able to forge a successful path.
When he first began the journey, CrossFit wasn’t well-known and Henry was unsure of where it all would lead. In fact, he was ahead of the curve when he started using Facebook to invite people to free classes.
And now, fifteen years later, he can look back saying he’s “accomplished everything I wanted to as a gym owner.” He closed his gym and sold the building for four times the amount he had purchased it for.
Finding Gym Space in the Early Days.
Henry stumbled across CrossFit when he was part of the Canadian military. He loved the methodology and started training in his parents’ garage. Soon enough, he also began training friends there, too.
As things picked up momentum, he needed to expand. At this point, investing in gym real estate wasn’t yet on his radar. He moved into a small, 800-square-foot facility, paying rent at just $650 per month. His business continued to grow, but that facility is where Henry had his “first inklings of the liabilities of being a tenant.”
He was informed that the owner was selling the building. Despite having negotiated a lease, the new owners didn’t interpret it the same way the original owner did. And suddenly, for the first time, Henry was responsible for monthly heating costs.
He recalls that it wasn’t that big of a deal, but enough to make him start weighing his options. He began thinking that life might be easier if he didn’t have to deal with a landlord.
Expanding into a Second Gym Location.
By 2013, Henry had outgrown his current facility. When he found a new, 3,100-square-foot facility in the downtown area of London, he was moving on up.
But once again, problems arose from being a tenant. The building owner started billing him for fees he hadn’t agreed to. These included things like landscaping, common area and HVAC maintenance, and snowplowing.
“And they hadn’t done work on any of those things except snowplowing,” Henry said. He recalled thinking that investing in gym real estate might be the way to go.
A year later, he received an invitation from his landlords to a lunch event. As part of the presentation that day, they announced they’d be building a high-rise tower.
“When I looked at the plans, I realized it was right where my gym was,” Henry said. “They were so ecstatic about this high rise, and didn’t realize I might be pissed. They told me I could just move into one of their other buildings. And I was like, ‘I don’t think you understand the zoning with a gym business. You can't just move into any building.’”
Ultimately, this was the last straw for Henry. He was tired of being a tenant, and not having control over his fate. It was time to look into real estate investment options for his gym.
“Fortunately for me, my business was going well, and I had put money aside to do this,” he said.
Investing in Gym Real Estate.
In 2018, Henry was back to finding gym space. But this time, with the intention of buying. The space he found needed some serious renovations, but Henry’s handyman skills paid off as he was able to do most of the work himself.
“The renovations doubled the value of the building right away,” he said. “And then the market went nuts, and that doubled it again.”
Just when it seemed things couldn’t be going better, Covid shut the world down. With Ontario facing some of the the world’s most strict lockdowns, Henry’s gym was forced to close for almost 18 months.
On the tail end of the lockdown, he had lost a considerable number of clients. He did some considerable introspection and thought back about the process it took to grow a successful gym. It was then that Henry realized the thought of rebuilding seemed daunting.
He came to several other realizations as well. First, he had accomplished more than he expected in his 15 years of gym ownership. And second, he knew he had a true, sellable asset, his gym real estate. So he decided to sell his building and move on from the fitness industry.
The move paid off. Henry was able to sell his building for four times what he paid for it in 2018. This gave him the financial freedom to take a well-deserved break before moving on to his next career.
When to Consider Buying Gym Real Estate.
For gym owners that lease and end up selling their gym, the reality is that most sell for not much more than the value of the depreciated equipment. On the other hand, gym owners who purchase gym real estate have an incredibly valuable asset.
In some markets, finding gym space is a tough endeavor, no matter if you’re buying or leasing. And in some cases, purchasing isn’t an option for less than a few million dollars. But if your market allows for the option, Henry recommends exploring it.
“It doesn’t necessarily make sense to buy in all cases,” he said. “But it makes sense if you want more certainty and control in your business. And it makes sense if you’re doing it as a long-term play. And it made sense for me because of where I bought. There is a limited supply of industrial property in my city and I knew the value would go up.”
While he didn’t expect the value to go up as quickly as it did, he was lucky to be pleasantly surprised. And although the unforeseen circumstance of a worldwide pandemic led to the sale, Henry is happy with how it all turned out. Owning gym real estate meant he was in a great position to profit from 15 years of gym ownership.
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.
