It is safe to say the COVID-19 pandemic has changed just about every business you can think of. The residential/real estate business is no exception. Many businesses had to rethink their strategy given the strict rules regarding lockdowns and quarantines, just to stay in business. However, as far as multi-family building rentals are concerned, it is more subtle than that. Sure, people are moving to different states and cities like never before, but they will need a place to stay wherever they go. Families looking at apartments to stay in are also looking for places with fitness centers as part of the package.
Give residents easy access to fitness centers, and the chances of you renting out a multi-family unit will go up substantially, even in these difficult times. In fact, the National Apartment Association (NAA) has noted that apartment complexes offering well equipped and well-run fitness centers are attracting more offers from potential residents compared to apartment complexes that do not have fitness centers.
As rules start to relax regarding places where people can congregate, multi-family building rental companies are highlighting access to fitness centers in marketing campaigns. As with any business plan, there are variables to consider, and selling apartment space with gym access is no different. The following are some of the things to keep in mind when offering apartment rentals that come with fitness centers.
Get Outside Help
No longer will a room at the end of the corridor with some weights and cardio machines installed be enough to be considered as a good fitness center. A well designed and equipped gym requires professional help. A professional gym designer will figure out how to maximize space and add extras such as towel stands and ballet bars to make sense. Ever since the marriage between apartment complexes and fitness centers began, fitness center designers have been sprouting up. Designing fitness centers has grown to become a cottage industry. Consult with one before deciding on where to put the gym. Once you have decided to put in a gym, keep the following in mind:
Location, location, location, is a mantra in the real estate business, and this applies to where to put facilities like gyms in an apartment complex. In the early days of apartments with gyms, they were usually put somewhere down in the basement. Not so anymore. Multi-family buildings with fitness centers somewhere above ground, preferably with a good view, or even outdoors, is the new trend. Apart from good locations for fitness centers, the size of the gym also plays a part. Generally, the size of the gym will be proportionate to the size of the apartment complex. According to the NAA, around 60% of the residents will exercise daily. Therefore, the larger the gym area, the better.
It is All about the Bottom Line
Once a fitness center has been made available, you will notice more interest in your multi-family building complex almost immediately. Your ability to attract and retain wealthier clients will be instantly noticeable. Property value will also increase. You live in an era where being health conscious is very fashionable. Therefore, the apartment complex needs to be “fit” as well.
With the reality of the COVID-19 pandemic, there is a steady rise in demand for home gym equipment. It makes a lot of sense for Peloton, an interactive fitness bike maker to purchase a provider of gym machines to fitness centers and hotels, Precor. With a price tag of $420 million, Precor is Peloton's biggest acquisition to date.
The rise in demand for home fitness equipment is leading to delays in delivery and an increase in customer complaints. In a statement, Peloton said Precor's manufacturing presence of over 625,000 square feet of manufacturing capacity in Washington and North Carolina will boost its effort to meet the demand. With this acquisition, Peloton can address delays in delivery, and control the entire process of production.
Prior to the acquisition of Precor, Peloton's manufacturing network included Tonic plants in Taiwan and third-party manufactures in the United States.
James Hardiman, Wedbush analyst said in a report, "It is quite obvious that a surge in demand for fitness products would have Peloton scrambling to meet the rising demand."
COVID-driven disruptions had a significant effect in slowing down freight from Asia. The move to expand domestic manufacturing is not only a smart decision but one that is necessary.
According to its website, Precor delivered the world's first elliptical in 1995. In the same statement, Precor also promises, through its president Rob Barker, to give Peloton the industry's "largest commercial network."
Precor can offer Peloton experience in serving commercial customers. The deal is expected to finalize in early 2021. Once the deal is done, Peloton's interactive products will be made available to Precor's commercial customers.
According to John Blackledge, an analyst for Cowen, this acquisition underscores the untapped enterprise opportunity. Precor may help Peloton expand its brand internally. Based in Greater Seattle, Precor sells to over a hundred countries. This fitness equipment manufacture has offices in Europe, the Middle East, the Americas, and Asia. Apart from a global footprint, Peloton can benefit by adding nearly 100 R&D employees to its research and development team.
With the pandemic keeping people in their homes, Peloton has benefited from the demand for home workout equipment. In the Fiscal first-quarter that ended September 30, the Peloton reported $757.9 million in sales (over a triple of the previous quarter). Apart from selling fitness bikes, Peloton also makes money from customer subscriptions to its services in on-demand fitness classes. This revenue stream doubled to $1.3 million.
Peloton has also expanded its product offerings to fitness apparel and shoes. This move is pitting the company against athleisure brands like Lululemon and Nike