Exercising Options

Two years ago, Guy Halperin, president of the board at 201 West. 89th Street, decided that his co-op needed more space for the growing kids and the grown-ups who looked after them. The board assembled a list of possible amenities - including an exercise room and a multipurpose playroom - gathered statistics on construction and timelines and sent out the information, asking shareholders for feedback. "We talked about security and cost and what the purpose of the room would be." In the end, "We had more responses to that survey than we had from any other communication from the board," laughs Halperin. Of the 105 units in the building, close to 80 replied, with an overwhelming majority in favor of some kind of exercise room that could be enjoyed by everyone. Now, the only question was: "Where do we start?"

Ever since co-op and condo boards first began delving into the construction of exercise rooms, building a fitness center inside a property has been considered one of the surest paths to increasing value. And although in-house health clubs can be designed with all kinds of eye-catching bells-and-whistles - pools, racquetball courts, steam rooms, saunas - you don't need a million dollars to build a fitness center that makes sense for your needs.

There are some key steps that you need to follow, however, for getting the most value for the installation: knowing what you want to provide in the space, coming up with a realistic budget to implement it, and getting the residents on your side.

RESEARCH

Probably the first step you should take is a preliminary survey of what the residents want to do with extra space. If they are interested in an exercise room, the hard part follows: you have to do extensive research and planning. At 201 West 89th Street, for instance, it took a lot of time and information-gathering to draw a full picture of the project's scope, recalls Halperin. First, the board members researched costs, construction timelines, and types of equipment. Then they drew up a list of frequently asked questions and included them in a survey sent to all the units, asking residents for feedback.

In the flood of responses, the shareholders overwhelmingly supported the idea, citing the convenience, the value, and the extra recreational space that everyone could enjoy. "Ultimately, the board was able to make a really comprehensive presentation - and for me, that was half the battle," explains Halperin. "Just getting the information and letting people make an intelligent decision. We didn't, as a board, want to make a decision that people could come back and say, 'Why did you do it?'"

One important part of the research process is looking at what other buildings have done. For example, the board went on a fact-finding tour, visiting more than a half-a-dozen exercise rooms around the neighborhood. At 250 West 94th Street, the directors were impressed with what they saw: the 20 exercise stations, unisex bathroom, shower, and sauna, and liked the membership participation: out of 146 units in the building, 70 units had joined the fitness club, with a total of 110 paid members. The costs were good, too: $110 per shareholder for the year, with a cap of $275 per apartment.

Some of the co-ops the board visited didn't charge anything for gym membership; the fitness room usage was included in the overall maintenance costs. Sometimes that worked out, sometimes it didn't, says Halperin, as the board visited exercise rooms that had not been well-designed, either being too large or too small, with few users or people crowded in on the equipment.

That's a classic mistake that boards make, says Daniel Allen, a principal with Allen + Killcoyne Architects. Many boards do not consider the extent to which the esthetics of a room will affect whether and how often people will use it. One of the most important aspects of designing an exercise room is understanding what makes sense and creating a pleasing atmosphere. Looking good does count, points out Allen. "If you don't really build a nice room, people don't go there. If you make the room well-appointed and well-lit, people will really use the space."

That said, sales representatives report that among the most popular cardiovascular equipment that co-ops and condos purchase today are elliptical machines, which start at about $2,000, and recumbent bikes, which start at $1,700. People also love treadmills; those with the extra features, like heart monitors, can cost between $4,500 and $6,000.

Often, a good design can overcome initial objections. When a group of shareholders at the Beresford, a 205-unit cooperative at 211 Central Park West, first raised the idea of building a gym almost 10 years ago, they knew exactly what they wanted: convenience - the ability to ride downstairs to a gym dressed in workout clothes - and exclusivity - a beautifully appointed space that was open only to those shareholders willing to pay hefty membership and annual maintenance fees.

But first they had a big hurdle to overcome: board member resistance. Worried about liability exposure and the cost of the new construction when the issue of building a gym was first brought up, the board members rejected it. But the interested shareholders refused to give up. They began to do their own research on construction costs and insurance liability, while surveying their fellow shareholders to see how many people would be interested in a new gym. At the end, 50 residents signed onto the idea, agreeing to use their own money to pay for construction. Presented with plans that would convert an unused storage room in the building's basement at no cost or insurance exposure for the building, the board finally relented and gave the new gym its blessing.

The success, today, is in the usage. Since the gym opened up five years ago, 88 shareholders are members - up from the original 50 - paying $3,000 to join and $250 annually for the gym's maintenance and upkeep. And it is well worth the price, believes one of the original shareholders who supported the gym and is a frequent user.

"It's light and airy and clean and beautiful. It's everything a gym should be. The only thing we don't have is a pool," says the shareholder, Elaine Flug, who adds that those Beresford residents who use the gym have been able to let their other health club memberships lapse. "All the time and effort has paid off, because we have something that everyone is fond of."

FUNDING A PLAN

The next step is to decide how you will fund the work. What can you afford? What do you really need? "Generally, when boards come to me they are just looking to create an exercise room or what we would call a training floor," says Gregory Cilek, president of New York-based Iowa Sports, a company that designs and manages in-house health clubs for co-ops, condos, and luxury rentals. "Depending on the children make-up of the building, they might want a playroom, too." But even before discussing the type of equipment that a co-op wants to purchase, "I try to make them realize the financial end of it. I try to get them to see the economics of it. You need fresh air. Electricity. You need a sound way to fund it."

Some of the ways exercise rooms are funded are through the reserve fund, or through maintenance increases to pay for a room's renovation and equipment installation. At one co-op, board members used money from flip taxes to pay for the creation of a new exercise room; at another co-op, directors used the proceeds from the sale of a co-op-owned apartment.

At 201 West 89th Street, the renovation and installation of the fitness room and multipurpose room next to it will come with a hefty price tag: $600,000. The biggest part of the bill was the excavation of the building's plaza and renovation of the basement, so the co-op could install the fitness room, says Halperin. Ultimately, with the added space that an excavation of the plaza would bring, the board decided on building two rooms: an exercise room - with state-of-the-art equipment, flat-screen televisions, and a bathroom - and a multipurpose room - with a basketball court, ping pong tables, and specific hours of the day set aside for the preadolescents and adolescents.

The two rooms are expected to open sometime before the end of the year. And because the building was able to draw on a hefty reserve fund (built up by flip taxes) for construction, Halperin estimates that the board will only charge the residents "a nominal fee," about $120 per person, to use the fitness room. The multipurpose room will be free.

To some extent, your budget will depend on how carefully you plan. Constructing a fitness room can take anywhere from three months to a year, according to health club design firms and equipment companies, and a board can stock a fitness room for as low as $25,000, or pay upwards of $600,000 for the design and installation of a state-of-the art exercise room. But a lot of time and effort can be wasted in planning the room and purchasing equipment, if the board doesn't first determine the fundamentals of a fitness room: who will use it, what the room will provide, and how it will be maintained and upgraded in the future.

For instance, when the board members of Nagle Apartment Corporation in Inwood went to build a fitness room, they knew they had to think small and think smart. The 111-unit complex, with two buildings located at 31-37 Nagle Avenue and a third building on 14 Bogardus, has a mixed demographic: younger married couples with children and senior citizens. Almost everyone there lives on an income of about $40,000 to $50,00 a year. The idea was to build an amenity that was convenient, added value, and would leave the board with enough money to realize a second dream, a music room next door.

The board identified a 20-by-20-foot storage space in the basement of one of the three buildings, and asked the super to clean it out. The walls will be painted, new lighting installed, and heavy rubber mats added to cushion the exercise.

The board plans to install two treadmills, a recumbent bike, an elliptical stair machine, and a nautilus machine with four workout stations. And because a resident of the building has offered to teach yoga classes a couple of times a week, the board has ordered a floor-length mirror and ballet bar to be installed. The room is expected to open at the end of October, and the entire cost of renovating the room, and buying and installing the equipment is estimated at less than $50,000, says the board treasurer, Maureen Neefus.

"The board got together and thought this would be a great idea and allocated some money for it," she says, adding that the seven members were unanimous on the decision to build the fitness room, and plan to pay for the installation and future upgrades with money from the sale of a co-op-owned apartment. Because the board wants the room to be an amenity and not a revenue generator, the fee will be kept to a nominal amount, from $10 to $20 a month.

Planning and patience can help a board make the best decisions, points out Nigel Anderson, a salesman with the Gym Source, a New York City-based fitness supply company. "You can spend $20,000 on five strength machines, or, if the space allows, we recommend one machine [such as a four-station nautilus or universal] that lets four people get on it at once." In his experience, most boards want more machines than can comfortably fit in the allotted space. The job of fitness management companies, he adds is "to sort of reel you back to reality and show you what will work on paper."

Taking their time in planning what they wanted their fitness room to ultimately look like has worked out well for the shareholders at Imperial House, at 150 East 69th Street. The 378-unit co-op, which first opened its in-house gym in 1995, expanded the space in 1999 to include a workout area for residents who want to practice yoga, step classes, or floor exercises. The fitness room "is the best thing we have done for the building," reports the general manager, Mark Hamilton, of Charles Greenthal & Company. "It's also one of the first things prospective purchasers want to see after viewing the prospective apartment."

That took a lot of planning and patience. After years of putting up with bad basement flooding in an unused ironing room, the board finally decided to stop cleaning the room, and start benefiting from it. The floor was ripped up, pipes were installed to redirect water that used to flood the room, and the idea for a fitness center slowly took shape.

A new floor was installed. Treadmills, two stairmasters, three bicycles, a free-weight machine, and dumbbells were added, along with a pec-deck machine for exercising chest muscles, a cable machine for exercising biceps and lateral muscles, a leg-curl machine, a leg press machine, an abdomen board for sit-ups, and two elliptical machines.

The board also removed the one ancient television and installed five new sets that can be heard by plugging earphones into the cardiovascular equipment, such as the treadmills, stairmasters, bicycles, and elliptical machines. Fresh air is pulled in via air conditioners, and ceiling fans circulate the air. The fitness room is free to the shareholders, who are issued a card key for access to the room. In case of an emergency, there is a fire extinguisher on hand, an exit to 68th Street, and a panic button, which sounds an alarm loud enough to be heard all over the basement and in the lobby. As an additional security measure, there is an in-house phone.

Keeping the equipment up-to-date and running smoothly is also part of the board's long-term planning. The co-op has an ongoing contract with its equipment supply company: for roughly $1,500 a year, the company will come in every four weeks and clean the equipment and check it for wear and tear.

When it comes to the issue of insurance for fitness rooms, co-ops need to be sure to speak with their carrier about whether their general liability policy will extend to the new amenity, warns Barbara Strauss, executive vice president with York International Agency, an insurance broker. "If it's just an exercise room, if there is no one on duty giving you instruction, normally it's included [under the general policy]," says Strauss. "When you get involved in things other than that - like having a trainer or instructor on duty - then it become a totally different exposure. The liability will not cover trainers."

GET SUPPORT

Finally, the board should use all the information it has gathered to make a careful presentation to the residents. Getting their support is essential. Without the backing of the owners, dreams for a fitness room, in whatever size or shape, are unlikely to materialize. "Just make sure you have widespread support," urges Halperin. "You really have to promote it, and be honest about the numbers."

Allen, the architect, believes that the better boards work together in designing a room, the better the project will be once it goes on line. "Most buildings in New York don't have any kind of community space and this is the space where you get to meet your neighbor. It becomes an ad hoc community room," so the greater the effort the board members take in planning the use of the space, the longer overall value they will derive from the new amenity once it is up and running.

For Halperin, "It's been a labor of love." And having a majority of shareholders with him all the way has made it that much easier. With their support, the board was able to move forward and make the best possible choices for the building. "In the end, you want to be sure you are doing the right thing. These are your neighbors. You have to face them. You don't want to have bad relations."