LONDON, United Kingdom — Premium fitness brand Third Space has reported a third consecutive year of revenue growth and unveiled ambitious plans to expand across the capital, despite turbulent market conditions for UK businesses.
Fuelled by annual revenue growth of 13.7% to £36.8 million, the Third Space Group – which incorporates food and drinks brand Natural Fitness Food and Another_Space boutique fitness studios – is following an ambitious expansion strategy, launching a new site every 12 to 18 months.
Last August, Third Space opened a £6.5 million, 27,000 sq. ft. club in the City of London, which it expects to reach maximum membership capacity within 12 months and in May, Natural Fitness Food opened its first standalone retail unit in Canary Wharf.
Following up on those launches, the group plans to open its sixth club this autumn, in the Islington Square retail and leisure complex. At a cost of over £10 million and footprint of 47,000 sq ft, it will be the largest club to open in London in over 10 years.
The group has also recently signed contracts with Canary Wharf Group to open a 40,000 sq ft club in the Wood Wharf development in 2021.
The premium experience
Colin Waggett, CEO of Third Space, believes the brand’s success story is bucking the trend of “budget clubs and functional fitness” models that have flourished in the past five years.
In a statement, Waggett said: “Third Space is more in demand than ever before. The growth story in the industry for the past five years has been all about budget clubs and functional fitness.
“Our performance demonstrates significant unfulfilled demand for a luxury lifestyle brand that provides a premium experience combining substance and style.”
According to Third Space’s reports, over 30% of its revenue is driven from in-club spend, including personal training and nutrition purchases, while revenue for Another_Space has increased 76% year-on-year and jumped 1,300% for Natural Fitness Food since its launch in 2015.
“Market and demographic trends are firmly in our favour and property owners are increasingly recognising that Third Space can provide a way to differentiate themselves in a changing consumer market,” added Waggett. “We see tremendous opportunity for further growth.”
Third Space, which launched in 2001, expects to deploy £50-80 million for growth investment over the next five years, with a view to at least double the number of total sites across the capital.
Bucking the trend
Despite Third Space’s strong financial performance, the past three years have been a testing time for premium gyms and wellness clubs in the capital, with digital at-home fitness alternatives, such as US-based Peloton, also challenging the boutique studio model.
In February the exclusive women-only health club Grace Belgravia shut, citing Brexit as the cause, and this month boutique spin studio Psycle will be closing its Canary Wharf studio, blaming delays to the opening of London’s Crossrail station.
A lack of footfall and tough trading conditions mean Psycle – which first launched in 2014 and last December expanded its flagship Mortimer Street studio – will scale back its offering to three studios, retaining its Clapham and Shoreditch locations.
Psycle CEO Rhian Stephenson said: “Since launching in June 2016, the success of Canary Wharf has largely depended on the promise of Crossrail. With one setback after the next and the subsequent loss of footfall, trading conditions have continued to be more difficult than we had anticipated.
“This has forced us to reconsider our options and ultimately led to this unfortunate decision. Although we are closing this studio, Psycle still has plans to grow and we’ll be announcing our next new studio shortly, so stay tuned for more information.”
Third Space, however, isn’t letting the mixed fortunes of its competitors slow its expansion. “We continue to invest in our existing clubs to enhance our member experience,” Waggett revealed.
“And we have a strong pipeline of iconic locations that will see us achieve strong growth over the next five years.