Read for Free: 2024 State of the UK Fitness Industry Report

INDUSTRY VIEWS

THE FUTURE IS ‘WELLCARE’ MEDICAL HEALTH & PHYSICAL WELLBEING ARE FINALLY COLLIDING

SLIMMER PICKINGS GYMS FACE NEW COMPETITION IN THE LONDON PROPERTY MARKET

In last year’s report, my bets were on the expansion of ‘WellCare’. Time to consider whether I was right… It’s no surprise that demand for holistic wellness took a front seat in the last financial year, with consumers considering medical health and physical wellbeing as a combined entity. It is well established that nutrition, exercise and sleep are instrinsically linked to illness, injury, stress and other health conditions; it’s hard to believe these two sectors haven’t collided in such a big way sooner. As expected, there’s been a continued focus on data-driven, science-backed health and wellness solutions, with businesses that straddle healthcare and wellness shining through as investor favourites. The focus for consumers and investors is now firmly on life improvement and enrichment. The female health data gap has been acknowledged, with extensive data continually being uncovered about previously neglected conditions such as endometriosis and PCOS. Innovation around personalised solutions – from menopause management and hormone tracking to fertility, contraception and data-assisted IVF – is attracting investors. Against an economically challenging backdrop, there were fewer deals in 2023, but the average size of WellCare deals reportedly rose – particularly within women’s health, and specifically FemTech. Investors’ and insurers’ piqued interest, combined with wider societal buy-in to tackling taboos, have resulted in a slow but steady increase in investment levels. MenTech has seen a similar upward trend, with sexual health, fertility and hair loss high on the agenda. There’s continued interest in wearables, with one interesting deal from 2023 being the acquisition by insurance provider MACSF (Mutuelle d’Assurances du Corps de Santé Français) of a stake in RDS SAS – a company engaged with miniature, connected, wearable medical strips for real-time monitoring of several key cardiac and respiratory parameters. Corporate wellness platforms have also flourished as employee wellbeing programmes have been re-evaluated. The old-school £20-a-month gym membership contributions have made way for holistic services that span mindfulness, doctor-on- call, mortgage advice lines… even a virtual tooth fairy! One notable recent deal in this area: eGym’s acquisition of Archway Fitness/Hussle. Whether provided by employers or subscribed for personally by consumers, mobile apps – from Calm and Headspace to MyFitnessPal, Strava, Runna and Flo – are still plugging the gaps between the wellness industry and the healthcare system. My view is that WellCare is nowhere near its peak, and the message is clear: knowledge is power. Consumers will continue to challenge existing systems to gain a more in-depth understanding of their health status and overall wellness. The goal now has to be an even more personalised approach, with cross-sector collaboration to embrace and analyse all aspects of physical, mental, financial and medical health. It appears investors agree. Watch this space.

London is an interesting and now highly competitive market for gym operators. We focus on office blocks and residential developments, where landlords increasingly allocate significant space for a range of amenities. However, where fitness would previously have been the first and sometimes only choice, there are now more options – and landlords are considering them all. Say you have a 15,000–20,000sq ft space. That would suit a big box gym. But increasingly, these opportunities are also being targeted by ‘competitive socialising’ – things like virtual cricket, virtual clay pigeon shooting, football, Formula 1 driving simulators, even new-look funfairs. Some of these businesses turn over £100k–200k a week once F&B is factored in, so they can afford to pay £30–40 per square foot. Gyms generally aim for £20–30 per square foot. In central London, and indeed within the M25, they’re being priced out of spaces they would previously have dominated. The boutique model is also a challenger, as multiple studios can fit in the same footprint as one full-service club – and generally, each will pay higher rent per square foot than a big box. In one current residential project, we’ve had four separate, single-discipline fitness studios take space next to each other. In addition to higher rent for the landlord, this brings more variety for the consumer. To compete, big box clubs wanting this space must cater for all these different interests. In residential projects, they must also consider the cost and time implications of the new building safety regulations. There is still room for big box gyms, as many landlords remain keen to offer wellbeing, but the market has slimmed down massively. You have to be the best in the game now, and the market has polarised: Anytime Fitness maintains a good presence, but generally it’s either the leading low-cost operators – PureGym and The Gym Group – or high-end brands such as Third Space, and even more super-premium, on landlords’ radar. If landlords are going to be tempted by an independent business, it’s likely to be one that brings something different to the table: health services, physiotherapy and so on. Certainly, with the economic climate meaning landlords have to put more into these projects themselves, the choice tends to come down only to established brands with covenants and finances that can be relied upon. And then it’s a case of saturation. How many gyms can each brand support, and is there a risk – as hybrid working continues – that new central London openings could cannibalise other sites that aren’t even yet back to capacity? Other landlords are building their own gyms to offer tenants a finished product; while a boutique may still thrive in that area, big boxes may not, as building occupants will likely use on-site facilities. However, the main dynamic is now fitness vs competitive socialising – and landlords are certainly weighing up all the options.

My view is that WellCare is nowhere near its peak, and the message is clear: knowledge is power SAMANTHA TRELEAVEN Senior Associate, Pinsent Masons

The main dynamic is now fitness vs competitive socialising, and landlords are weighing up all the options STEVEN STEDMAN & WILL BROWN Central London Retail Division, CBRE

STATE OF THE UK FITNESS INDUSTRY REPORT 2024

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