The Seven Numbers I Would Want Before Signing a Gym Lease

Most gyms that fail were dead before the doors opened. Not because the training was bad. Not because the marketing was bad. Because of a piece of paper they signed a year and a half earlier. The lease.

I have spent years on the other side of the table from gym founders, and I can tell you the pattern. The ones that make it walk into the lease negotiation with seven numbers. The ones that struggle walk in with a dream and a deposit.

Here are the seven numbers. Write them down. Do not sign anything until you have all seven.

Quick context on why I get to say this. I am Niall Wogan. I run VERVE Fitness, and we fit out commercial gyms right across Australia. That means every week I see the equipment lists, the floor plans and the budgets behind gyms that are about to open. I am not a landlord and I am not a leasing agent. I would just rather supply a gym that is still open in five years.

1. Your all-in occupancy cost as a share of realistic revenue

Not just the rent. Rent, plus outgoings, plus GST. Body corporate, council rates, the insurance the landlord passes through. Ask for every line, add them up, and get one monthly number. That is what the building really costs.

Now put that against realistic revenue. Not the spreadsheet where every month is better than the last. The membership price you can honestly charge in that suburb, times the member count a gym like yours actually reaches in year one.

The healthy zone is occupancy under about twenty per cent of revenue. The gyms that struggle are usually handing twenty five, thirty, sometimes thirty five per cent of everything they make straight to the landlord. At that level you are not running a gym. You are running a fundraiser for a property owner.

If the building takes more than a fifth of your revenue before you have paid a single wage, renegotiate or walk. There is always another shed.

2. The fit-out cost quoted for that exact shell

Two identical looking warehouses can be a hundred thousand dollars apart. One has three phase power, plumbing where you need it, and a slab that will take a rig. The other has none of that, and you find out after you have signed.

The traps, in the order they hurt. Power: cardio floors, saunas and air conditioning chew through it, and bringing three phase into a building is not a small invoice. Amenities: toilets, showers and change rooms are the most expensive square metres in the building, because they are plumbing, waterproofing and certification. Air: a tin shed in an Australian summer without proper ventilation is not a gym, it is an oven. And the slab: if members are dropping deadlifts or you are bolting down a rig, the concrete has to be up to the job.

So get a builder through the space before you sign, not after, and get the certifier's requirements in the quote.

On the equipment itself, here is real data from our side of the industry. Most complete first fit-outs land somewhere between forty and a hundred and twenty thousand dollars, and a big commercial floor goes well past two fifty. Here is the thing though. The equipment is usually not what blows the budget. The building is.

3. Your break-even member count at your real price

The maths is simple and almost nobody does it out loud. Add up your monthly fixed costs. The occupancy number from the first check. Wages, the real ones, including paying yourself something. The loan repayment on the fit-out. Software, insurance, power, cleaning.

Say that lands at forty thousand a month. If your average member really pays you eighty dollars a month, after the discounts and the pauses and the mates rates, you need five hundred members before you have made your first dollar. If you are boutique and the average is one sixty, you need two hundred and fifty.

Whatever your number is, say it out loud. Because now the lease conversation is not about the building any more. It is about whether that suburb has five hundred people who will pay you eighty dollars a month, within driving distance, past the three other gyms between them and you.

4. The months to reach it at an honest join rate

The spreadsheet fantasy says three hundred members by Christmas. Real gyms tell a different story. A strong opening month from pre-sales, then a long grind of steady joins, minus the cancellations nobody puts in the plan.

Ask other owners in the area what their first year actually looked like. Not their Instagram. Their numbers. If honest join rates put break-even a year and a half away, then your lease, your loan and your savings all have to survive a year and a half. Which brings us to the number that actually decides survival.

5. The cash left after the fit-out

This is the one that kills gyms. Founders spend everything getting the doors open. The fit-out swallows the savings, the equipment goes on finance, and they open with six hundred dollars and a dream. Then week three delivers a quiet fortnight, a broken air conditioner and a rent invoice, all in the same week.

My rule: six months of fixed costs in the bank on opening day. Rent, wages, loan, power. If you cannot open with that buffer, open smaller. A modest shed with six months of runway beats a flagship with none, every single time. You can upgrade a gym that is alive. You cannot resuscitate one that ran out of cash in month four.

The capital you have left after opening matters more than the capital you spent before it.

6. The make-good clause, capped in writing

Almost every commercial lease in Australia has one. When you leave, you return the space to the condition you found it in. Sounds fair, until you price it. Ripping out the mezzanine, the bathrooms, the flooring, the rig anchors. Patching the slab. Repainting the lot. For a fitted out gym that is routinely tens of thousands of dollars, and it arrives at the exact moment you are leaving, which is rarely your richest moment.

Negotiate it before you sign. Cap it at a fixed dollar figure, or agree in writing which improvements stay. A landlord who just got a free bathroom upgrade out of you does not always need it demolished on the way out.

7. The incentive package you should have asked for

Commercial landlords compete for good tenants, and a gym on a long lease is a good tenant. Incentives are normal in this market. Rent-free months while you fit out. A landlord contribution toward the fit-out itself. Reduced rent in the early period while you build your member base.

If nobody has mentioned an incentive, then you are the incentive.

Ask what the deal includes. Get it in writing. And read the clawback clause, because incentives can become repayable if you leave early. A few months rent-free while you build is often the difference between opening with runway and opening broke, and it costs you exactly one question.

The seven, together

That is the seven. All-in occupancy under twenty per cent of realistic revenue. The fit-out quoted on the actual shell. Break-even members at your real price. The months to get there at an honest join rate. Six months of cash after the fit-out. A make-good with a cap on it. And the incentive you asked for.

If the seven numbers do not work on paper, the lease does not work in person, and no amount of hustle changes arithmetic. Take this list to the inspection. Make the agent wait while you do the maths.