Opening a gym and running into major hurdle

Discussion in 'Starting & Running a Business' started by Matthew D, 28th Oct, 2019.

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  1. Matthew D

    Matthew D Well-Known Member

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    Hey PC,

    So I’m in the process of getting leases signed for the purposes of opening a functional group training ‘gym’ in south west Sydney.

    There’s a major hurdle which I need help on.

    The unit is part of a brand new 50+ industrial strata unit complex. Each unit has allocated parking spaces. (Majority of the units have only two spaces)
    My unit (#1) has the most out of the whole complex with (7).
    After speaking to a few people including the architect of the complex and town planner, they’ve said parking may be an issue in getting DA/CDC.
    We need 12 car spaces in order to satisfy the requirements of 1 space per 22m2 of floor area. (Which means we need an additional 5 spaces)

    After hearing advice from the local government areas town planner, he says in order to get CDC, the neighbouring units will have to be included onto our application if we wish to use their car spaces (which I doubt they’ll agree to). Otherwise, to get DA, it’ll take 3-6 months and is merit based. So not guaranteed that we will get it over the line.

    To add to this, the leasing agent wants us to sign the lease within a few days.

    Any tips/advice or has anybody been in a similar situation? If so, how did it get resolved?
     
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I would pause and think very carefully before signing that lease.
    I agree that parking will be a very large issue and the best option I can think of is finding someone in the complex nearby who might have different hours so that you can come to a reciprocal parking agreement. For example if most of your classes are 6-9am and 4-9pm then there might be a business that will let you you use their bays if their hours are 9-5pm or something like that. However I suspect even an arrangement like that will require DA for approval.
     
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  3. larrylarry

    larrylarry Well-Known Member

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    Don’t be pressured to sign and be prepared to walk away from it all.
     
  4. Matthew D

    Matthew D Well-Known Member

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    Hey Westminster,

    I will be holding off on signing the lease until I get this parking issue under control.

    Yes, we are aware of our difference in peak times in relation to our neighbours, we have discussed this option with the leasing agent and town planner but pretty much the downside is that the particular unit will have to be included into our application. (If DA/CDC just required a simple letter from body corporate that states we have permission to use unit X and X’s spot then it’ll be much easier!)
     
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  5. Matthew D

    Matthew D Well-Known Member

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    Walking away will be the last resort. Trying to get as many possible solutions as I can before i move on.. put in so many hours to get everything sorted up to this point.
     
  6. chindonly

    chindonly Well-Known Member

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    Have been through this scenario several times in QLD for sport / recreation sites. It won't be easy with those numbers. Who or what are you actually trying to satisfy in this current process? Sounds like you don't have a DA for this use - have you checked that zoning allows for this activity? Some of the gyms up here open up without approval and in the wrong zoning. Some get into trouble, others don't. No advice!

    We went through a DA process with one LGA for a sport-based centre, and as it was zoned light industrial (albeit only about 6k from the city centre), it only received approval with a 10-year 'sunset clause' - meaning we can only use it for this purpose for 10 yrs, then it has to be reviewed.

    I remember reading through the DA applications for some of the 24/7 gym chains, and recall they were very creative with their wording in order to get approval for sites with low car park numbers. That might give you some ideas if you end up going through a DA process.
     
  7. Matthew D

    Matthew D Well-Known Member

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    Heh @chindonly

    I just want to do whatever it takes to get us DA.
    Regarding DA for this use, my understanding is that we don’t need to get DA for ‘first use’ (being a brand new unit)

    Yes I’ve noticed a few 24/7 gyms around Sydney with very very limited parking and wonder how they got it approved.
    Should I be approaching a solicitor in regards to the wording to get approval with minimal car parking?
     
  8. wylie

    wylie Moderator Staff Member

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    Even if you get approval, won’t the lack of parking be a big negative for potential customers?
     
  9. Matthew D

    Matthew D Well-Known Member

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    Hi @wylie

    It may be a disadvantage to our clients though As our class times are during the non business hours of our neighbours, there will be plenty of parking available within the entire complex.
     
  10. Foxdan

    Foxdan Well-Known Member

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    @Matthew D - I own and operate a recreational centre in northwestern Sydney. Below is what you have to do

    1. Your DA should state your peak hours and an explanation of why you only need X amount of car parking spots. Explain that during non peak hours that you only need the minimum spots because it’s your office hours or 1 on 1 session times
    2. Get written approval from any of your neighbours to access their car parking spots during the morning and evening during your peak hours.
    3. Speak to the real estate agent and tell him he has to organize those letters from his other tenants. If he wants ur property management commission and sign up bonus, make him work on your behalf
    4. Make sure your lease says it’s pending DA approval. If you get no approval - you walk away.

    I would highly recommend you get a town planner to do your DA to improve the chances of it going through first time.
    I would highly recommend you have a solicitor to read and negotiate your lease contracts to ensure you are adequately protected.

    Good luck
     
  11. Matthew D

    Matthew D Well-Known Member

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    @Foxdan - this sounds very positive! Very helpful. Thank you. I’ll get in contact with a town planner and we will take it from there.
     
  12. Matthew D

    Matthew D Well-Known Member

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    Just an update on the situation. I've engaged in a town planner and have all the documents necessary to submit the DA except for 'consent from the owner of the unit and a letter from body corp allowing us to use the unit as a fitness centre' (which i'm waiting for the leasing agent to send to me)

    The leasing agent does not allow us to include 'subject to DA' on the contract so I've offered to start the lease on an agreed date but if we find out DA does not get approved, we move out and return the unit to how it originally was. By then, we would've already paid rent on whatever we agreed to in the lease terms.

    I would see this as more beneficial to them as if we were to not sign the lease and walked away, the unit would be sitting there idle with no rental income at all.

    We're willing to take the risk (only because i'm pretty confident we will get DA) but the leasing agent/owner does not see it that way. They pretty much want the contract signed without 'subject to DA'.

    Any advice on this situation would be helpful!

    @Foxdan


    Matt
     
  13. Foxdan

    Foxdan Well-Known Member

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    Matt - the contract needs “subject to DA” or you don’t sign it. it’s a standard clause and tell the real estate agent to **** off. If you don’t get your DA, you will be stuck paying the rent there for whatever period you agreed

    Contract should also state lease date starts XX days after DA approval. Again, this is all normal.

    You need a solicitor to review your contract or it sounds like you are going to get screwed. Message me and I’ll send you details of who I use. Won’t even cost you 1000 bucks and will be money well spent for you.
     
    Last edited by a moderator: 28th Nov, 2019
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  14. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The REA isnt the one who will be stuck with insufficient parking. Dont assume there will be spare spaces. Its common each tenant will brand their parking and have issues with uyour clients using "their" spaces. If you stick to your guns the REA should be negotiating for parking changes or additional spaces close by in the complex. eg a overflow parking area not directly outside.
     
  15. Ketsle

    Ketsle Well-Known Member

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    how did the developer get approval over the line anyway if they didnt construct enough parking for each individual unit anyway?
     
  16. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Different types of uses need different amount of parking. So most likely most of the units on the DA would have been designated warehouse etc which might only need parking for employees etc not 20+ gym customers
     
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  17. Matthew D

    Matthew D Well-Known Member

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    just an update on this..
    We had to walk away from this, the owners did not allow 'subject to DA' clause.

    Thanks to all the contributors on this thread!
     
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  18. larrylarry

    larrylarry Well-Known Member

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    Keep looking!
     
  19. Foxdan

    Foxdan Well-Known Member

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    Good decision. Don’t do business with any party that doesn’t offer fair and reasonable terms for both sides.

    I’m moving out of a 170sqm unit in hills district to a bigger one at the moment. If you want a 170sqm space in hills district that’s already zoned for what you need, send me a DM and I’ll give you the owners details.
     

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