View From Within: Sports Style Offices

In Moscow offices a place for sport is not usually provided, "as this requirement is not included in the classification of buildings and is a loss of space for the developer. Moreover, few companies equip such premises in their offices: sometimes due to its expensiveness, but more often because the management does not see any sense in sport in the office," says Georgy Kuzin, executive director RDR-Holding. According to Ilya Shershnev, director for development at Swiss Realty Group, "at current rental rates your own sports hall in the office is inadmissible luxury."

The set of options

Accommodation of sports infrastructure at modern offices, according to the majority of experts, is unprofitable. There are only a few examples of the contrary. Although minimum expenses, as a rule, are required.

"Sometimes at offices premises sports activities for employees are allocated, but as a rule, this concerns those companies which occupy premises in old buildings. For example, in an advertising agency located in an old building in the center of Moscow, fitness activities were organized for the employees right in their office," says Kira Butba, head of the commercial real estate department at Vesco Consulting. In this case activities were carried out in the mornings and evenings in the meeting room, equipped with mirrors. "In large companies where more than 150-200 people work, it is not always possible to do this or something similar. In this case it is more sensible to allocate separate premises specially intended for playing sports. It could be a big hall combining gym equipment and fitness zone where it is possible to put a ping-pong table, which will allow to capture the interests of all employees," says the expert.

According to Tatyana Menkova, an analyst at investment company Finam, sometimes at offices it is possible to see exercise bikes and punching bags. You rarely come across high-grade gyms. "It is possible to put a pool table, a few ping-pong tables, and mini-golf on a small area of up to 100-150 sq.m so that employees can relax after work or in their lunch break. Here everything depends on the policy of the company," says Dmitry Sazanchikov, director of marketing and regional development at GVA Sawyer.

According Olga Shirokova, head of the consulting department at Blackwood, there are several variants of organizing a premises for sports leisure at an office. "First is the creation of a sports hall on rented or bought office space. Such premises, as a rule, are closed to strangers and intended only for the employees of the company," the expert says. According to her, accommodation of proper fitness centers, an exercise room or a swimming pool belonging to the owner of the office premises, is possible when the premises was constructed as built-to-suit.

Second, the expert notes, is the rent or purchase of office premises in business centers where the tenant can use a fitness center located in the complex itself or nearby. According to Shirokova, a fitness club as a rule can only be located in large business centers, because on average they require 1,000 sq.m. As Menkova notes, besides the necessity of allocating space it is necessary for the developer to fork up for the equipment and personnel. "These are additional expenses which will not be demanded by all tenants. For the majority of companies such infrastructure will be excessive," the expert, says. First of all, according to her, the equipment for a fitness center can cost up to $100,000-$300,000, and expenditures on the premises will cost another $600,000-$800,000 per year. "It is necessary to spend at least $1 million a year. The majority of employees would prefer that this money be directed on strengthening their social package, and for playing sports in their chosen place," the expert summarizes. Therefore, as a rule, companies prefer to solve the problem of sports leisure of workers in other ways.

"At our office we don’t have any sports equipment, but on the streets next to our office there are quite a few fitness clubs, both of general character and specialized, for example dance centers, yoga classes, etc," says Yuri Yudakov, head of office real estate department at Praedium. According to him, there are rarely proper halls and gyms in offices. "More often there are separate elements: a ping-pong table, a basketball ring. Although in conditions of such high rent for quality office premises, even such sports elements are a rarity," he says.

"At our office we have no sports infrastructure," echoes Sergey Kolegov, general director of Prime City Properties. Moreover, according to him, in his many years of experience he hasn’t come across a company that was ready to organize their own sporting zones.

Use of table tennis equipment as the main kind of sports in offices has remained since Soviet times. For example, Avikom Servis which specializes in high technologies, has ping-pong tables and a gym. However it doesn’t own this equipment or the premises but rents them. The tables that it rents belong to the Academy of Civil Service where it rents an office, and its employees are obliged to pay an hourly payment for use of the tables. Putting such tables in modern office premises, especially in rented areas, is unprofitable.

The length of a ping-pong table is 2.74 m, and the width is 1.525 m, and it is necessary to add to this at least 0.5 m from each edge. As a result just one table requires 6 sq.m, at a rate of $1,000 per sq.m a year, and will cost $6,000, i.e. $500 a month. If a company is small and it rents a premises of just 100 sq.m, a loss of 6 sq.m is significant. In fact on this space it is possible to place one more workplace equipped with a computer, or place useful office equipment.

And darts, in the opinion of market participants, may damage monitors, and therefore should be played in a separate premise. As for mini golf, this can be played in the halls using a plastic glass from a water cooler as the hole. A set for mini golf, costs about 2000 rubles. But specialized areas for mini golf are rarely established, and in Russia this kind of office sport is not popular yet.

And for a basketball court in a courtyard it is necessary to use at least the space of five car park places. Considering the high cost of rent for car parking spaces - not less than $300 a month – every month the owner of the building would lose at least $1,500, and annually - $18,000. Then it is also necessary to fence the court, so the ball doesn’t damage parked cars around. In general, it’s not so simple with sport.

companies that are not interested in creating sports infrastructure in their office space, offer workers partial or full payment of membership to foreign fitness centers. "Workers can receive a discount or a completely paid card when paying for membership themselves," says Andrei Bushin, general director of MIEL Commercial Real Estate.

Employees of Mirax Group can be members on special conditions of Sky Club, their own fitness club located in Gold keys - 2 residential complex. It also plans to open corporate branches of Sky Club in different premises of Mirax Group for employees. "Mirax has its own sports association - Sky Sport – which carries out monthly corporate football and volleyball tournaments. One month ago, for example, on its own football field it carried out a mini-football championship in which 12 teams participated," says Kirill Masliev, director for the development of sports at Mirax Group.

"The creation of sports premises on companies’ own premises is only appropriate when the company has at least 1,500 employees, which will form the client base of the fitness center, or in cases when corporate rules require employees to use them," considers Bushin.

But he doesn’t know any such examples. Although it is quite common for operators of fitness clubs to be tenants in business centers, oriented for both workers in the building, and visitors.

Business plus fitness

"Sports infrastructure within the structure of office premises is an additional advantage and promotes the maintenance of health and fitness of employees, allowing them, for example, to play tennis in their break. Equipping offices with just power lifting equipment is not appropriate, as within the working day time it is difficult to spend much time on working out and after or before work it is more preferable to use the services professional fitness centers," Bushin argues. In his opinion, a well-thought out concept for an office complex with a sports center within its structure can be successful.

"High-grade sports clubs are often part of multipurpose complexes in which offices are located. Employees simply get join and visit them during their free time from work. Sports halls and gyms are rarely come across in offices for several reasons. The equipment for such a premises is quite expensive. The operation of a hall also demands the observance of certain technical, medical and hygienic regulations," Yudakov says.

According to Kolegov, many modern business centers develop infrastructure not just for banks, restaurants and shopping galleries, but also due to the accommodation of fitness centers. "For example, in the Ha Spartakovskoi business center people can take advantage of the sports club in which there are two tennis courts and an athletics field for basketball and mini-football. On these courts the following tennis tournaments are carried out: Bolshaya Shlyapa, MMBA Cup, HAUFOR Cup. And the Citidel business centre includes a fitness center with a swimming pool and SPA zone," says the expert.

According to market participants, fitness centers can be used by tenants of such complexes, as Smolensky Passazh, Citidel, Romanov Dvor, Northern Tower, Riga Land business center, Central City Tower-I, Neftyanoi Dom, etc." The placement of fitness centers in office buildings is profitable for operators of such establishments. In business centers usually there are quite a lot of potential visitors of fitness clubs. These are, as a rule, people with an average and above average level of income. Doing fitness right after work is also convenient. On the other hand, owners of business centers willingly cooperate with fitness centers and as a result improves the infrastructure of the premises," says Svetlana Fufayeva, press secretary of MIAN group.

But, as a rule, the client base of proper fitness centers, depending on the target audience and the useful area, as a rule, totals 1,500 or more people, Not one office building can provide such passability, considers Fufayeva considers. According to Kolegov, some developers prefer that only employees of companies renting offices in a business center use the sports infrastructure. For example, according to him, in Dayev Plaza business center the sports club was closed to extraneous visitors, but it turns out that this scheme is unprofitable.

Membership costs in fitness centers open to external visitors quite high. In particular, according to Sazanchikov, in World Class Romanov on Romanov Dvor, an external client has to pay 135,000 rubles for annual subscription, in Reebok fitness center in the Northern Tower office center it costs 70,000 rubles and in Neftyanoi Dom it costs 65,000 rubles.

Despite the general positive attitude of experts to sports clubs in offices, some market participants have a different point of view. "Proper fitness centers in office buildings are rare. They are an expensive kind of infrastructure because professional fitness center, especially with a swimming pool, demand large areas, certain height ceilings, and additional air-conditioning and ventilation systems. They can only be in specially designed premises," Kuzin considers.

"Such complexes are rare. In average business centers there may be a small hall for tenants or proper fitness for all customers. It is done by the developer to improve the image of the business center with the ultimate goal of maximizing the rent of office premises," says the expert. On the whole, according to Kuzin, it is possible to draw a parallel between infrastructural premises in residential and office complexes. "In both cases these complexes are effective only in larger premises and when working with external visitors. They slightly improve the image of a premises and do not bring big profit. For this reason there are few of them in business centers. Such infrastructure was popular in elite residential real estate 5-10 years ago, but quickly passed," says the expert.

Sporting prospects

On the whole Kuzin notes two tendencies. "First, companies are more and more taking care of their employees especially those firms, where there a lot of "expensive" employees on whose activity a lot depends on, for example, in the sphere of consulting. Here a diversion is objectively necessary for the personnel. In these cases pool tables and ping-pong tables may be installed, and in doing so there is a sense," says the expert. Second, according to him, is integration in the market of office premises and expansion of infrastructure, among which can be fitness centers. "Prospects in this case can be assessed as the most promising, including in connection with the fact that a healthy way of life is becoming more and more popular in Russia," Yudakov notes.

Moreover, in Menkova's opinion, the possibility of organizing sports activities in immediate proximity to the workplace has become one of the main requirements of modern office buildings.

"It is probable, that the tendency to include premises for playing sports in business centers will continue," she predicts.