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Buying Gyms for Sale: Costs, Profits, Marketing, & More

Published: 09-21-23 Category: Buying

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After suffering significant declines thanks to the COVID-19 pandemic, the US fitness industry has shown steady post-pandemic growth. The US fitness industry collectively generated about $32 billion in revenue in 2022—back to about 80% of pre-pandemic levels.

Gym membership prices have also steadily grown since the pandemic, registering a 14% increase between 2019 and 2022. As more people return to a lifestyle that prioritizes health and wellness, buying a gym for sale and opening your own fitness center can be an excellent way to get in on the action.

Here, we'll cover the basics that commercial real estate investors and business owners should know before buying a gym for sale. We'll discuss gym revenue streams, operating costs, and profitability. We'll also touch on marketing your fitness operation.

Let's get to it.

Types of Gyms for Sale

There are several different types of gyms, each of which cater to specific clientele and fitness routines. Below is a quick breakdown of the different types of gym properties that commercial real estate investors and business owners can buy.

Membership gyms are meant for the widest range of clientele and are the most likely to have 24/7 access. They may or may not offer additional personal training or group sessions.
Personal training gyms are smaller and are geared towards one-on-one instruction or small group classes. Personal training gyms might also target specific injuries and conditions.
Powerlifting gyms feature specialized equipment for strength and sport lifting. They usually feature heavier dumbbells and machines that can handle higher weights.
Rock climbing gyms feature top rope and bouldering climbing sections and may also feature traditional gym equipment.
Crossfit gyms typically have a warehouse layout and contain exercise equipment for cardio and high-intensity weight lifting.

Regardless of what kind of gym for sale you buy, you should work with a commercial real estate broker. Brokers who specialize in health and wellness properties have more training and experience than your typical real estate agent and can provide valuable advice on financing, the commercial real estate buying process, and more.

A gym broker on your real estate team can help you identify the best properties for your business model and negotiate sales contracts on your behalf.

How Do Gym Owners Make Money?

Buying Gyms for Sale: Costs, Profits, Marketing, & More

Gym owners make the majority of their revenue through monthly membership fees, personal training fees, and group class fees. In other words, a gym owner's income is directly proportional to how many memberships and courses they can sell.

Gyms may also sell merchandise and food/drink for additional revenue.

What Operating Costs Are Involved With Gym Ownership?

Below are some of the most relevant recurring management and upkeep costs gym owners looking for a gym for sale need to budget for.

#1 – Staff Wages

Staff wages will most likely make up the majority of your monthly operating costs. The typical gym staff member makes an average of $56,060 per year, or an average of $27 per hour. For a small staff of 5 members, that amounts to over $20,000 a month in wages alone.

#2 – Equipment

Gym equipment, like treadmills, weight machines, and fitness bikes, can be extremely expensive to buy outright, so many gym owners instead lease gym equipment from a manufacturer. Leasing rates depend on the specific item but typically range between $60 and $100 a month per item.

#3 – Insurance

All recreational gyms will at least need to carry some kind of liability insurance to protect against injury lawsuits. Gyms may also need to carry workers' compensation insurance to cover medical bills from injuries staff might incur while on the job. The average business in the US pays a little over $1,000 a year for liability coverage.

#4 – Utilities

If your gym uses a lot of electrical exercise equipment, expect to pay a fair amount in electrical bills each month. Gyms that are open 24/7 will also have to deal with higher utility bills.

How Profitable Is Owning a Gym?

Exact figures are difficult to find, but surveys have reported that median profit margins for all types of fitness clubs hover between 15% and 20%. Average business profit margins in the US are about 7.7%, meaning that fitness clubs are more profitable than the average business.

In 2019, average annual gym revenue was $846,827 and the average gym member generated about $540 of revenue per year. According to data from Glassdoor, the typical gym owner earns a bit over $83,000 per year on average. The top 25% of gym owners in the US make more than $115,000 a year.

Should I Lease or Buy a Gym?

Like any commercial real estate business, gym owners have the option to rent or buy gym space. Buying a gym carries all the benefits of buying commercial property, such as having complete control over the building and owning a real estate asset that will appreciate in value.

Gyms are usually classified as special-purpose real estate, but owners can repurpose them for retail or industrial purposes, depending on what the local zoning laws are.

On the other hand, leasing gives you flexibility and freedom. You can focus on running your business instead of managing property and don't have to worry about selling the property if you vacate. Leasing a gym for sale might be a better option if property is not affordable or you don't want to deal with the complications of buying commercial property.

How Can I Effectively Market My Gym?

The trick to running a profitable gym for sale is keeping consistent membership rolls. Below are some ways that you can market your gym to maximize revenue per member.

Provide free one-on-one training with a membership purchase.
Create custom merchandise for your gym brand.
Offer discounts and member incentives to refer friends and family.
Run a social media blog and post about gym-related topics.
Find social media influencers to market your gym and products.
Run a giveaway or contest with members.

Opening a gym is one thing, but marketing is another. A solid marketing plan can help an independent gym distinguish itself and compete in a landscape saturated with competitors and larger franchise chains.

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