INDUSTRY VIEWS
LEISURE DB
A LANDLORD’S PERSPECTIVE EMBRACING BOUTIQUES AS PART OF AN AMENITY-LED APPROACH
When we’re working with landlords in central London, we plan for the buildings of tomorrow. Fitness and wellness is a big part of that. There’s a growing expectation that such services should be provided in any new building, making them integral to the amenity-led offerings landlords are introducing to encourage people back to the office – and to support people’s mental health and productivity while they’re there. But what should those fitness and wellness spaces look like? With hybrid working still the post-pandemic norm, and city-centre footfall slightly lower than it used to be, boutique fitness is a popular choice. Typically requiring just 1,000-4,000 sq ft, these studios can also share space with other businesses: boutique fitness in the basement where rent is cheaper, a third-party juice or coffee bar on the ground floor. Such collaborations make leases more complex, but they’re a good way for boutiques to spread costs and stick to what they do best. For any landlord looking to integrate boutique fitness, we’ll start by providing a shortlist of potential candidates. Landlords are often lent on to help with fit-out costs, so we really get under the bonnet of any business we’re thinking about putting forward. The top criterion is simply that you should be a really good operator. That’s easier to assess for established brands than for new business, as we can look at things like brand recognition, financial performance and potentially the availability of residential sites for home-working days. Another plus for us is when boutiques incorporate a retail element, especially in high street locations, as it provides diversity of income. You don’t always have to be established, though. Landlords are increasingly savvy about providing amenities with USPs, so if you have a strong business plan and a concept that sets you – and with it, the building – apart from the local competition, we’re interested. We’re always on the lookout for the next new thing; at the moment, it’s reformer pilates. The one thing that’s more difficult to work with on our projects is hot yoga, where operational costs are too high and practicalities such as condensation often too challenging. Instead, we’ll sometimes see landlords supplement boutique fitness with wellness services such as infrared saunas. Of course, the numbers also have to work. Studios will typically pay rents of £20-50/sq ft and sign leases of five to 15 years, but there are also business rates to pay, plus service charges of for example £4-7+/sq ft. All of this must be built in to the plans. We do act for landlords in residential areas such as Notting Hill Gate, Camden and Chelsea, and here boutiques can enjoy seven-day trading, but for City locations, the business case must establish whether a palatable fee structure can cover all costs based on people being in the office just three or four days a week.
Landlords are increasingly savvy about providing amenities with USPs. We’re always on the lookout for the next new thing.
STEVEN STEDMAN & WILL BROWN Central London Retail Division, CBRE
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LONDON BOUTIQUE STUDIO REPORT 2023
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