Buy, build or rent a Warehouse ??

[goodlife47]

Hi all;

Wish the best for each and every one of you going forwards

Firstly, we seriously Thank You for having opened this thread and putting your time into it

We're hoping this thread will help someone like ourselves in the future, so I'll get straight to it, and hope you can give as much info as possible:

We want to open a Gym, and require a lot of space for different activities. Anywhere between 5-10,000 Sq Ft.
So we'd want this to be a permanent location for us. The vision we have is that it will look something like the ExCel Centre or the Olympia London.

We'd love to know your responses to the following Q's:

1) what your experiences have been with either buying, building or renting Warehouses (be it used as a retail space; events; etc) -- the good, bad, and ugly -- ie what you wished you'd know from outset; Tips and tricks; or any other heads up you'd like to share

2) Fees typically involved in running and maintaining a Warehouse annually

3) whether its better to buy an existing Warehouse Vs buying land and building our own Vs renting one

4) If we wanted to build one, what costs would be involved and who would be involved -- e.g Solicitors; Architects; Civil Engineers; a construction company; what planning permits would be needed; and does there need to be commercial permits given too, to classify the Business uses and rates, like A3 for restaurants

5) Any resources you'll recommend -- e.g books; articles; websites; YouTube videos; documentary's etc

6) if there is any other Q's we have forgotten to ask or overlooked, please throw it out there for us to take into consideration

We have a budget of about £400-600k in mind, if we were to build it ourselves -- so we're aware that Location will affect how viable this budget is

Should you require any further specs/details please let us know

Thanks in advance for all your contribution

And remember, dare to be bold

 

[Aniela]

Hi all;

Wish the best for each and every one of you going forwards

Firstly, we seriously Thank You for having opened this thread and putting your time into it

We're hoping this thread will help someone like ourselves in the future, so I'll get straight to it, and hope you can give as much info as possible:

We want to open a Gym, and require a lot of space for different activities. Anywhere between 5-10,000 Sq Ft.
So we'd want this to be a permanent location for us. The vision we have is that it will look something like the ExCel Centre or the Olympia London.

We'd love to know your responses to the following Q's:

1) what your experiences have been with either buying, building or renting Warehouses (be it used as a retail space; events; etc) -- the good, bad, and ugly -- ie what you wished you'd know from outset; Tips and tricks; or any other heads up you'd like to share

2) Fees typically involved in running and maintaining a Warehouse annually

3) whether its better to buy an existing Warehouse Vs buying land and building our own Vs renting one

4) If we wanted to build one, what costs would be involved and who would be involved -- e.g Solicitors; Architects; Civil Engineers; a construction company; what planning permits would be needed; and does there need to be commercial permits given too, to classify the Business uses and rates, like A3 for restaurants

5) if there is any other Q's we have forgotten to ask or overlooked, please throw it out there for us to take into consideration

We have a budget of about £400-600k in mind, if we were to build it ourselves -- so we're aware that Location will affect how viable this budget is

Should you require any further specs/details please let us know

Thanks in advance for all your contribution

And remember, dare to be bold

You're not going to build something like the exCel Centre or the Olympia London for £400-600k.

Nothing wrong with being ambitious, but this sounds like you may be trying to run before you can walk.

Do you have this money readily available or will it be via loans/mortgage? You may find it impossible to even get any processes started, during these current times with a mortgage etc, with the lack of industry knowledge.

1) Is your budget just for the land/building or does your 400-600k budget include fixtures/fittings, building out rooms inside etc?

2) Renting: One problem with renting a warehouse is that if the lease ends and doesn't get renewed or you need to move/expand, you've generally got to revert the building back to how it was when you entered. For something on the scale you want, the cost to do that is likely to be large.

Fan extraction systems installed? Yep, you're going to have to pay to remove all those. Toilet area for customers? If you installed that, that's all got to be removed and paid for by you.

This catches a lot of people out. They need to expand/relocate but can't afford the massive expenses of putting the property back to how it was. I've seen people lose businesses because the lease ends and they can't afford to revert, so the business collapses.

Renting can be a catch 22 also, if the business does take off. Your business is literally in someone else's hand, partially anyway.

Building/Buying: The biggest con is the larger deposit needed. If this is a new business/industry to you, which it sounds you are, you could be looking up to 50% deposit needed to buy a warehouse for your own business to operate in. Someone buying a warehouse, for their own new business to operate from is considered extremely high risk, hence the large deposit needed.

3) Fee's is an open ended question as it varies depending on what's going inside it, how much it will be in use, location etc. Hard to answer without full details.

 

[Mr D]

Renting will tend to be a lot cheaper than buying.

Though you do have the rent each month to pay and whatever legal fees the lease needs before you start working on the unit.

Consider your conversion - possibly paint / cover the floor. Build areas seperate from each other.

Running a warehouse? Rent obviously, often car park, utilities etc which can all be bundled up in the rent payment. Insurance.
Heating & cooling - a building too cold or too warm for the users won't be popular.

A gym - so you'll want shower and changing areas. Warehouses tend not to have them so get them fitted. Lighting - decent lighting, maybe a drop ceiling rather than a 50 foot high space to heat above the human area.

I'd honestly wonder if your budget is big enough. I can imagine based on experience last year whether we have too many gyms now. Though a warehouse area with shower and changing facilities could be used for so much more than most gyms.

 

[goodlife47]

You're not going to build something like the exCel Centre or the Olympia London for £400-600k.

Nothing wrong with being ambitious, but this sounds like you may be trying to run before you can walk.

Do you have this money readily available or will it be via loans/mortgage? You may find it impossible to even get any processes started, during these current times with a mortgage etc, with the lack of industry knowledge.

1) Is your budget just for the land/building or does your 400-600k budget include fixtures/fittings, building out rooms inside etc?

2) Renting: One problem with renting a warehouse is that if the lease ends and doesn't get renewed or you need to move/expand, you've generally got to revert the building back to how it was when you entered. For something on the scale you want, the cost to do that is likely to be large.

Fan extraction systems installed? Yep, you're going to have to pay to remove all those. Toilet area for customers? If you installed that, that's all got to be removed and paid for by you.

This catches a lot of people out. They need to expand/relocate but can't afford the massive expenses of putting the property back to how it was. I've seen people lose businesses because the lease ends and they can't afford to revert, so the business collapses.

Renting can be a catch 22 also, if the business does take off. Your business is literally in someone else's hand, partially anyway.

Building/Buying: The biggest con is the larger deposit needed. If this is a new business/industry to you, which it sounds you are, you could be looking up to 50% deposit needed to buy a warehouse for your own business to operate in. Someone buying a warehouse, for their own new business to operate from is considered extremely high risk, hence the large deposit needed.

3) Fee's is an open ended question as it varies depending on what's going inside it, how much it will be in use, location etc. Hard to answer without full details.

You're not going to build something like the exCel Centre or the Olympia London for £400-600k.

Nothing wrong with being ambitious, but this sounds like you may be trying to run before you can walk.

Do you have this money readily available or will it be via loans/mortgage? You may find it impossible to even get any processes started, during these current times with a mortgage etc, with the lack of industry knowledge.

1) Is your budget just for the land/building or does your 400-600k budget include fixtures/fittings, building out rooms inside etc?

2) Renting: One problem with renting a warehouse is that if the lease ends and doesn't get renewed or you need to move/expand, you've generally got to revert the building back to how it was when you entered. For something on the scale you want, the cost to do that is likely to be large.

Fan extraction systems installed? Yep, you're going to have to pay to remove all those. Toilet area for customers? If you installed that, that's all got to be removed and paid for by you.

This catches a lot of people out. They need to expand/relocate but can't afford the massive expenses of putting the property back to how it was. I've seen people lose businesses because the lease ends and they can't afford to revert, so the business collapses.

Renting can be a catch 22 also, if the business does take off. Your business is literally in someone else's hand, partially anyway.

Building/Buying: The biggest con is the larger deposit needed. If this is a new business/industry to you, which it sounds you are, you could be looking up to 50% deposit needed to buy a warehouse for your own business to operate in. Someone buying a warehouse, for their own new business to operate from is considered extremely high risk, hence the large deposit needed.

3) Fee's is an open ended question as it varies depending on what's going inside it, how much it will be in use, location etc. Hard to answer without full details.

----

Hi Aniela;

Thanks for your reply.
We really appreciate your input, which is essential for anyone like us going forwards

Yes, the 400-600k budget is just for the Property set up and doing a few building work in there (ie Not inc equipment costs). So, Ideally we'd want to built it ourselves as opposed to buying an existing one or renting it out [for reasons you've already highlighted].
Half the money would have to raised via mortgage or investment

You're quite right about how once a business like a Gym is set up, it'll be financially lethal to want to move. Hence, we want to get it right from the start, rather than killing ourselves to move, and waste time engaging with new customers again.

What I also take away from your message is that this is obviously going to be a financially demanding venture. So would you say its better to put the Capital we have in mind into building a warehouse that can fall within our budget, or something else?

And yh, anything close to Olympia London or ExCel is certainly an aspiration, and a model for us to keep in mind.

Thanks again

 

[goodlife47]

Hi Mr D;

We appreciate your input into the matter.

The budget is something we will have to work with, and see how large of a space we can build relative to it.

Renting for us will be a good option if and when we can find a really good Landlord or Real Estate company that is willing to be flexible and negotiate. As you'd probably know, there are hassles involved in not owning your own land (as Aniela raised a few above).

Could you clarify what you mean when you say "Though a warehouse area with shower and changing facilities could be used for so much more than most gyms". Do you mean the space could be better used? Or other facilities it can include??

Thanks in advance too

 

[Interestedobserver]

"We want to open a Gym, and require a lot of space for different activities. Anywhere between 5-10,000 Sq Ft.
So we'd want this to be a permanent location for us. The vision we have is that it will look something like the ExCel Centre or the Olympia London."

I'm totally confused

Have you actually visited the Excel?

How can a 5,000 to 10,000 square foot gym look anything remotely like the Excel?

 

[goodlife47]

I'm totally confused

Have you actually visited the Excel?

How can a 5,000 to 10,000 square foot gym look anything remotely like the Excel?

------

Yes, Should have been more specific.

We don't mean the whole of it, as that is around 100,000 sq m.
Instead something of the size of one of the Open exhibition spaces they house inside it.

I think Olympia London venues would be a more accurate representation of the idea (see "Olympia London organising")

Hope thats cleared it up

Thanks for your response too

 

[WaveJumper]

Putting all the issues of budget to one side as this has been adequately covered above i firmly believe the gym bubble has now burst. 1, the market was saturated before the lockdown and 2, judging by the amount of people I have spoken too they will not be returning to the gym any time soon as they realise they can get exercise in others ways and at the same time save a lot of money each month

 

[Mark T Jones]

One thing you need to understand is that commercial property doesn't behave in the same way as residential

Warehouse premises are currently in high demand - that could change completely in as little as 6 months in times if recession its quite usual to see entire estates of predominantly empty units

With a speculative venture like yours what you really need is the least-cost entry and exit points while you prove your concept

 

[BusterBloodvessel]

I'm not quite understand why you're fixed on this needing a "warehouse" ? Or this Olympia London idea?

Is it something you specifically need due to height reasons? Or just the way you want it to look? Or something else?

 

[Financial-Modeller]

Why buy/build/rent a warehouse that itsn't fit for your purpose, then incur conversion costs, when you could probably buy or rent a purpose-built and fitted out gym?

 

[goodlife47]

Putting all the issues of budget to one side as this has been adequately covered above i firmly believe the gym bubble has now burst. 1, the market was saturated before the lockdown and 2, judging by the amount of people I have spoken too they will not be returning to the gym any time soon as they realise they can get exercise in others ways and at the same time save a lot of money each month

-----
Hey WaveJumper

We welcome your concern, as of course all risks must be deliberated over and accepted before any venture is made

However, the point you highlight can be almost extended to any business idea. Whether someone wants to open up a retail or coffee shop in the challenging highstreets; a consulting business; a construction business; and everything else in between

The notion that its been done or that you only have to do an idea on trend is not smart nor viable business. Otherwise businesses would change with the seasons, metaphorically speaking. As humans we are creatures of habit, so there will be certain activities that will stay with us, even though they may evolve a little over time (e.g before we communicated in person, now we're used to communicating digitally)

For the way we see it, the ultimate success or failure of any business always comes done to the management and how they are handling running the whole show, so to speak.

Sure, we aren't offering anything new as an idea, but that shouldn't stop anyone from striving to be the best at that particular business they seek to do. Now be that venture a Gym, retail shop, a pub, or a cleaning service.

Having said all this, we still do agree with you that a business needs to be nimble, and that any business must make financial sense from the outset. Otherwise there is no stability or sustainability.
So in context of Gyms, it certainly must be redefined and readapted in such a way that is appealing and 'fit for the times'

Thanks again for your points

 

[goodlife47]

With a speculative venture like yours what you really need is the least-cost entry and exit points while you prove your concept

----

Hi Mark;

Thats for your very direct points of highlight

Though, initially we opened the thread to understand the costings of operating in a Warehouse and challenges we'll face, I think your last point is very terse, in a good sense.

Because to micro-scale it in the way you mention serves as a pilot version of the vision we have, and possible be a better allocation of our capital, whilst we can tweak things faster.

We sure have considered that option too, but we wanted to put the 'big idea' out there to see what others like yourself think too!!

We'd always welcome any further comments, as it'll help others out too in the future

Really appreciate your insight, as well as everyone who has taken the time to share their thoughts

Thanks

 

[goodlife47]

I'm not quite understand why you're fixed on this needing a "warehouse" ? Or this Olympia London idea?

Is it something you specifically need due to height reasons? Or just the way you want it to look? Or something else?

-----

Hi BusterBloodvessel;

We want to work towards building this open space for Gyms, almost like an amusement park for exercising and keeping fit.

So yes, our focus on the idea of a Warehouse is based on this.

We just wanted to get a sense of what others thought of how viable it could be, and the challenges we will face venturing out, both financially and logistically

From the general consensus we're getting is that we need to go back to the drawing board, and adapt the model once more to see how to go forwards.

Thanks for your comments!!

 

[goodlife47]

Why buy/build/rent a warehouse that itsn't fit for your purpose, then incur conversion costs, when you could probably buy or rent a purpose-built and fitted out gym?

----

Hey Financial Modeller;

A really great point -- wasn't aware that such spaces and facilities existed for rent

Seriously appreciate highlighting that blind side of ours

Is there any Gym companies you know that operate on this basis? Or even an Estate provider that rent's out 'purpose built gyms'?

We'll do our own research into it in the meantime

Thanks again for the pointer !!

 

[BusterBloodvessel]

You sure have read a lot of business books and picked up the lingo.

 

[Mark T Jones]

From your responses I get the distinct impression that you have had an idea and are now enthusiastically selling it to yourself - and anyone else who will listen

What market research have you done?

Have you looked into the costings of fitting out a gym of this type?
Do you understand membership models?
Who us your target customer?

 

[Interestedobserver]

-----

Hi BusterBloodvessel;

We want to work towards building this open space for Gyms, almost like an amusement park for exercising and keeping fit.

So yes, our focus on the idea of a Warehouse is based on this.

We just wanted to get a sense of what others thought of how viable it could be, and the challenges we will face venturing out, both financially and logistically

From the general consensus we're getting is that we need to go back to the drawing board, and adapt the model once more to see how to go forwards.

Thanks for your comments!!

There are plenty of gyms that are "like adventure playgrounds" for exercising already as far as I know

Cross fit very big now

 

[MarkOnline]

I think you need to alter your vision to match your budget. I too have a vision, I could move into an empty department store (I hear there are a few available) and create the next generation of health destinations a state of the art gym, hydrotherapy. Maybe a healthfood store. A theatre showing films promoting healthy living, juice bars vegan takeaway, sushi sounds healthy too.

But allas Ive had to shelve my dream altogether, as I dont have the finance (think I will need £5million of my own funds) If only I had bought ****** 15 years ago and held it. And then I have the problem that I have never done this before and dont have the necessary experience to do this without incurring possible further costs that could lead to me losing everything.

Its a shame as I really really believe this will work.

 

[Chris Ashdown]

I wonder how many people have brought their own gym equipment during the last year for home use be it in a garage or shed and would be reluctant to move back to the old ways

 

[Mark T Jones]

I wonder how many people have brought their own gym equipment during the last year for home use be it in a garage or shed and would be reluctant to move back to the old ways

They mostly become very expensive washing lines!

 

[Mark T Jones]

Interesting - I've just had an email from one of our more flexible lenders which categorically states that they won't offer finance to gyms under any circumstances (for context, they do consider start-up restaurants).

Not that you necessarily want to borrow, but when this end of the finance market puts blanket embargoes you do need to question the level of failures.