The Health and Fitness sector shapes up

We have witnessed a strong performance from the Health & Fitness sector over the last 12 months.

26 March 2014, Words by Savills Research

 

The UK Health & Fitness industry total market value has grown by 1.5% to £3.92bn over the 12 month period to March 2013 (State of the UK Fitness Industry Report 2013). The sector has also seen a 3% rise in the number of fitness facilities and a 4.5% rise in the number of members (The Leisure Database Company). As these figures imply, we are witnessing the dawn of a new age in the Health & Fitness sector, driven by strong performances in the private and public sector, particularly from the budget sector, which now accounts for 6% of the total clubs and 14% of private sector membership (The Leisure database company).

These budget operators are continuing to expand aggressively and the recent merger of Pure Gym and The Gym presents a formidable force in this sector. The combined group dominate with over 100 clubs between them, with a further 27 sites in the pipeline. easyGym, advised by Savills, are also looking to open a further six clubs this year on top of their existing 10, with a Greater London focus. Fit4less, Xercise4Less and Lifestyle Fitness are also on the expansion drive and JD Sports are set to launch their own chain of value fitness centres.

The mid-market continued to be “squeezed” throughout 2013, leaving many of the operators such as Nuffield, LA Fitness and Fitness First now concentrating on retaining membership and refurbishing top performing clubs. Following in Fitness First’s footsteps, LA Fitness were the next to enter into a company voluntary arrangement (CVA) in February 2014, which will see 33 of its existing 80 gyms closed and more focus on protecting the profitable assets in the portfolio. However, mid-market operators are beginning to respond to the threat from behind. Fitness First have recently under-gone a major ad campaign for their new “Classes Only,” concept and David Lloyd have secured rights to the US concept involving high street personal training studios.

2013 also witnessed the beginning of a push away from the traditional gym model of large floor-plates and extensive equipment and machinery. An increasing number of specialist independent operators and popup concepts are cashing in on the “new age of fitness”, with a focus on innovative and dynamic ways of keeping fit, such as spin gyms, boot camps and cross-fit. This sector will continue to grow throughout 2014, albeit with a London centric bias. Brands to watch include US concept Barry’s Bootcamp (high intensity indoor fitness operating from floorplates as small as 5,000 sq. ft), Soul-Cycle and Psycle (spin-only concepts), HotPod (yoga classes in inflatable pods) and Bikram yoga.

The last 12 months has seen a surge in transactional activity in the Health & Fitness sector compared to previous years. Fitness First shed a number of clubs as part of its CVA, with many picked up by budget brands and David Lloyd was subject to one of the year’s largest buyouts. Looking forward, we would expect to continue to see a rise in activity, as well as organic expansion by successful brands, throughout 2014 especially given the upturn in economic activity and return of consumer confidence.

■ Who's Hot and Who's Not?

↑ Pure Gym/The Gym

The recent merger of the two leading brands positions the brand as a formidable market leader in the low-cost sector, with a top covenant and property portfolio to rival the more established mid-market players in number.

↑ easyGym

With a more selective acquisition programme, the brand has managed to secure some enviable Greater London locations, including their Oxford Street flagship. With 10 sites in the UK and the best equipment and fit-out in the low-cost sector, easyGym are one to watch for 2014.

↑ Microgyms

Barry’s Bootcamp, Boom Cycle, Barrecore, these high-intensity microgyms have exploded onto London’s Health & Fitness scene with all targeting further openings throughout 2014. The smaller size requirements will help drive their successes in securing key sites in a competitive market.

↑↓ Fitness First

In May 2012, Fitness First underwent a financial restructuring followed by a CVA to avoid going into administration. After closing 80 sites, the firm is looking to re-position itself as a more up market brand specialising in classes only.

↓ LA Fitness

Early in 2014, LA Fitness called in administrators to look at a CVA to shed 33 of the loss-making sites in order to reduce debt.

 
 

Key Contacts

Mat Oakley

Mat Oakley

Director
Commercial Research

Savills Margaret Street

+44 (0) 20 7409 8781

 

James Hurst

James Hurst

Director
Retail Warehouse & Leisure Investment

Savills Margaret Street

+44 (0) 20 7409 9927

 

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