Why investors can't do without a gym nobody will use

It's 2018 and the apartment market now includes buying and selling the idea of exercise. Not actual exercise, but the idea of it.

The same impulse that makes someone lean to a friend on New Year's Eve and, through slurs and hiccups, inform them that "I'll be getting into shape this year" is now a tradeable commodity in the property market.

An American survey published in the Wall Street Journal this month found 82 per cent of apartment renters across the US say an on-site fitness centre is an important building amenity - 55 per cent say they wouldn't rent in a building without one.

Despite that, just 42 per cent of respondents said they rarely or never use their building's gym. It's a similar story in Australia, experts say.

Apartment buyers increasingly won't do without a set of common facilities, which will, in reality, sit mostly unused. But, that's not really the point - buyer optimism is the key.

The trend towards high-end shared gym and pool facilities has only taken around five years to go from back-of-mind to a central consideration in every new apartment building, Hallmarc development manager Andrew Peters told Domain, and it's here to stay.

"I can reflect on some of our residential developments back completed around 2012 and 2013, which typically didn't include any common amenities. Today, we generally always include them," Mr Peters said, adding that it's "very rare" in 2018 to see any new large-scale apartment development without them.

"It's become an expectation ... even a requirement depending on the location and size of the development."

That means buyers need to know if, how, and why these amenities will affect their investment, even if they're hardly ever used ... and there are some surprisingly important factors.

Basement blues vs lofty heights: Location is crucial

Gone are the days of gyms being tucked away in a basement: they are now often seen as a focal point of the entire building, muscling out penthouses for rooftop views - and that's the way it should be, according to both exercise psychologists and property valuers.

In some cases a rooftop glamour-gym can influence apartment prices significantly, whereas the humble and only-recently-obsolete ground-floor workout-room is unlikely to move the dial at all, according to Regional Director Scott O'Dell of property valuation and advisory firm Opteon.

"For the luxury, high-end, 'six-star' buildings ... if you had one building with well-designed gym and lifestyle amenities on a roof top, compared with the same building next door, minus those gym and lifestyle amenities, you would be looking at up to 10 per cent increase [in value] if it were really well designed," Mr O'Dell said.

"And considering we're talking about the higher-end apartments, 10 per cent is a fair amount of money."

gyms

A rooftop gym located at Arthur Apartments in Melbourne's St Kilda Road precinct overlooks Albert Park Lake and sits next to a sauna, spa, infinity pool and dining space. Photo: Hallmarc

Will renters use the space?

Probably not. But as long as it's an attractive option, you're in business.

"It's called the intention-behaviour gap," explains Victoria University exercise psychology professor Melinda Craike. "A lot of people intend to be physically active, so they might see the facility during a tour of the building and say 'Great! If I have a gym close I'll be more active!' but unfortunately when it comes to transferring that into behaviour, barriers get in the way."

And a fair bit of the blame can be put on our aesthetic snobbery, according to chartered exercise and sports psychologist at University of Sydney, Dr Stephen Cobley.

"If the gym is down in the dungeon, and it's not visible and not seen as being a nice place to be, then the likelihood of you making the decision to go down there and act on that intent to be active might get lost," Dr Cobley said.

"It is absolutely important to get the location, design, outlook, interior - all the aspects and features of what that space will look like - to increase the likelihood of the people in that building to use that space."

The cost tightrope: Getting the amenity balance right

The exercise option is a powerful selling point for both developers selling to investors, and investors looking for strong rental returns, but a fine line must be toed when it comes to elevated ongoing costs, according to Mr O'Dell.

"The pitfall that you've got to watch out for are high strata levies," he said.

"Once a building has really high strata costs to maintain these facilities, and the stigma gets out about those, then we do see correlation in lower values."

But Mr Peters said it depends entirely on the facility. "A gym tends to require a relatively low contribution to owners' corporation fees due to low servicing and maintenance costs, whereas pools and spas may consume a lot of power and require regular maintenance, which can be costly."

This story Why investors can't do without a gym nobody will use first appeared on The Sydney Morning Herald.