Leisure property management: what every landlord needs to know

Poor leisure property management can lead to disputes, operational disruptions, dilapidation claims and tenants who aren’t the right fit. And that can turn your investment into a financial liability rather than an asset. 

Most landlords don’t have the time or sector-specific knowledge to manage commercial leisure properties themselves, which is why it’s usually beneficial to hire a specialist. Professional property managers take care of everything from maintenance and repairs to rent collection and lease management to maximise your return and keep your asset in the best possible condition. 

However, whether you’re going to manage a commercial leisure property yourself or hire the professionals, it pays to know exactly what’s involved in the process. Here’s our guide to everything you need to know to keep your asset in the best possible health. 

Understanding the specific nature of leisure properties

Leisure properties, such as swimming pools, gyms, spas, cinemas, hotels and holiday parks, can deliver strong returns, long leases and steady footfall. However, they also pose unique operational challenges that must be carefully managed. For example:

• Specialist infrastructure, such as swimming pools, saunas and gyms, has specific heating, cooling, and maintenance requirements
• There can be heavy use of building systems, such as heating and ventilation, and fixtures and flooring in leisure facilities, requiring robust solutions and regular maintenance
• Energy costs tend to be high in leisure facilities, with sustainability and decarbonisation measures helping tenants make significant savings
• There can be greater complexity in the operation of leisure facilities, with specific health and safety rules, strict licensing requirements and unusual hours of operation
• The look, feel and condition of leisure buildings often play a more critical role than in other sectors, as tenants seek premises that reflect their brand and elevate the customer experience

Attracting tenants

Finding the right tenant can be one of the more challenging aspects of managing commercial leisure properties. Tenants in this sector often have unique operational needs, which makes the suitable pool of tenants smaller than for general retail or office space. But that doesn’t mean you should settle for a tenant whose business concept is a mismatch or whose performance is unstable. 

Using lease incentives, such as fit-out allowances and rent-free periods, can help you attract the right the tenant, but make sure those incentives don’t leave you exposed. You should also conduct thorough due diligence on any interested parties, taking into account their experience, track record, and financial stability. 

Drafting a solid lease agreement

Drafting a comprehensive lease agreement is a foundation of leisure property management that will help you avoid complications from day one. You must include:

• The rent, deposit and duration of the tenancy
• Maintenance and repair obligations, including who is responsible, what is expected and whether any specialist equipment is required 
• A schedule of condition to document the condition of the property at the start of the lease and make it easier to identify who is responsible for repairs
• The service charge and any shared costs that relate to the property, including how they’re calculated
• Details of rent reviews, break clauses, the conditions for termination and notice periods 
• The requirement to insure the property for liability, loss and other risks, and who is responsible for securing the cover
• Rules around fit-outs and alterations to the property, including whether the tenant can install new signage, partitions and equipment, and their obligation to remove them at the end of the lease
• The repairs required at the end of the lease and the condition the tenant must leave the property in

Setting an appropriate rent

As a landlord, setting the right rent is a crucial step to attracting tenants and optimising your return on investment. You must strike a careful balance between the property’s value and location while remaining competitive within the local market. 

Researching rental rates for comparable properties in the area can be a good starting point. Professional leisure property managers can be a crucial asset here. They use their vast databases of similar properties for market analysis and benchmarking. They also understand the impact of local supply and demand, and have access to qualified surveyors who provide accurate commercial property valuations.

Performing regular property maintenance

Their customer-facing nature and often unique features mean leisure building maintenance requirements are typically high. There’s heavy footfall, which can lead to damage and wear and tear, and you have to resolve any issues quickly to be fully operational. 

Leisure property maintenance requirements include:

• Regular inspections - Periodic inspections throughout the term of the lease are crucial for identifying and addressing issues quickly and preventing them from becoming costly repairs.
• Preventative maintenance - Scheduling regular, ongoing maintenance for integral systems, such as heating, plumbing, and ventilation, can help prevent breakdowns and disruptions.
• Record keeping - Document the details of all inspections, repairs, costs and correspondence with the tenant. This can be invaluable in the event of disputes and dilapidation claims. 

Navigating dilapidation claims and disputes

Disputes can be time-consuming and costly, so it’s best to avoid them whenever possible. Maintaining regular contact with tenants and establishing communication channels for reporting issues are crucial. You also need a clear lease to formalise costs and responsibilities and prevent misunderstandings.

Dilapidation claims, which arise when a tenant fails to meet their repair obligations at or near the end of a lease, are one of the most common causes of disputes. As a landlord, it’s wise to engage surveyors before a lease expires to determine a tenant’s repair and reinstatement obligations. That gives you sufficient time to negotiate with the tenant and carry out any works yourself, if required.

Ensuring compliance with licences and regulations

Another key responsibility when managing commercial leisure properties is to ensure the building and tenant comply with the relevant licences and regulations. Leisure properties typically face more regulation than retail or office space, so this is something to keep a close eye on. 

Common compliance requirements include:

• Health and safety - Leisure facilities are subject to a wide range of safety requirements, including fire safety, water hygiene, equipment maintenance, food hygiene and crowd management. As a landlord, you may share responsibility for meeting these standards, particularly in common or shared areas.
• Building regulations and accessibility - Landlords are typically responsible for ensuring their premises comply with building regulations. That includes the structural integrity of the building, the compliance of core systems, such as electrical and plumbing, and the safety and accessibility of common areas.   
• Energy efficiency and sustainability - Under the Minimum Energy Efficiency Standard (MEES) regulations, all commercial properties must have an EPC rating of E or above. As a landlord, you must have a valid EPC before letting the property and make sustainability improvements, if required, to meet those minimum standards. 

Partnering with a leisure property management team, like Eddisons, ensures that every aspect of your investment is professionally managed by specialists in your sector. 

Our knowledge of the leisure market enables us to maximise rental levels, minimise void periods and enhance your asset’s overall performance. We also handle the operational details on your behalf, including rent collection, maintenance scheduling, tenant communications and lease compliance.

Beyond the day-to-day, we support your long-term strategic planning, from advising on lease structures and fit-out requirements to managing dilapidations and staying ahead of health and safety and licensing rules.

Perhaps most importantly, a good property manager acts as your eyes and ears on the ground. We respond swiftly to issues, maintain strong relationships with tenants and keep your property running smoothly to enhance your long-term returns. 

Find out how Eddisons can enhance your leisure assets

At Eddisons, our commercial property managers provide UK-wide support for leisure facilities, taking care of everything from the fundamentals of property management to the value-adding extras. Find out more about our standalone and end-to-end leisure property services and get in touch to discuss your goals with our team.