Third Space Lands £88.5M For Expansion

Despite the downturn, Third Space is growing in the UK and abroad.

What’s happening: The luxury health club operator received £88.5M from OakNorth Bank and Searchlight Capital Partners. Countering the cost-of-living crisis and a cash crunch, the funds mean it can press on with long-held expansion plans.

Opening eight sites in the UK capital since launching in 2001, Third Space weathered the pandemic well – US equity firm KSL Capital Partners acquired a majority stake in the company in 2021. And, according to The Times, it notched up £50M in revenue in 2022, winning investor confidence.

In the foreseeable future, CEO Colin Waggett will open four residential-area sites: Wimbledon (winter 2023), Battersea (summer 2024), Clapham and Wood Wharf. Overall, he is eyeing up to 30 London locations, as well as cities overseas.

Why it matters: As budget chains like PureGym and TGG rebound post-pandemic, luxury players like Equinox have struggled.

While Third Space clinches a market-defying raise, other high-priced operators are also pressing on – Soho House recently revealed global growth plans, Pillar Wellbeing is opening at Raffles London, and The Club by Bamford launched in the Cotswolds.

City slickers. Undeterred by its £230-a-month premium price point, Waggett says Third Space is turning customers away to prevent overcrowding.

“We are seeing exceptionally strong demand for Third Space memberships, with most of our clubs operating with waiting lists. Our business sits at the heart of Londoners’ desire for health and fitness and luxury service, and Third Space is uniquely positioned to meet these demands.”

Takeaway: Securing a near £90M cash injection in a downturn is impressive and should give Third Space the resources to scale up its network from eight to 12. However, growth in and beyond the UK depends on keeping its core Londoners happy while hoping market conditions improve.