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As a banker, Austin Thomas had financed several health clubs. 'I became
interested in the industry through that experience,' he recalls. In 2000, he
heard about a fitness center in Washington, North Carolina that might be
going out of business. Thomas and his wife, Amy, bought the struggling club,
and moved to the small town located 125 miles east of Raleigh.
Fitness Unlimited of Beaufort County, Inc. was a two-level,10,000 square
foot located in an old chemical warehouse. It was 'chopped up,' explains
Thomas. 'We remodeled and expanded it, but there were still separate rooms
for cardio, strength training and other activities.'
Just one year later, Thomas began hearing rumors that his business might be
affected by a planned highway project. It wasn't until early 2005 that he
received written notification: The North Carolina Department of
Transportation (DOT) had developed a highway improvement project in Beaufort
County, and was exercising the power of eminent domain to condemn the land
owned by Thomas and others.
'We were concerned,' he recalls. 'We were only told that we were being
bought, but we had no idea where to go or by when we had to be out.'
For nearly two years, the couple operated the club, knowing it would
eventually close or move, but not knowing when. 'We would be told of certain
dates, which would then pass uneventfully,' says Thomas.
In the fall of 2006, he was notified that the final eviction date was
December 20. 'When we finally learned of the date, we had less than four
months to get out and open a new club, since we wanted a seamless transition
for our members,' explains Thomas.
Austin and Amy Thomas aren't the only club owners to be faced with this
issue. In January of 2007, the mayor of Newport Beach announced that the
city was no longer interested in the tennis club property at Newport Beach
Country Club as the site for a new city hall facility.
This news came as a relief to controlling owner Robert O. Hill, who had
steadfastly said the 7-acre property wasn't for sale. City leaders had
nonetheless appraised the land, and until recently, they would not rule out
eminent domain as a means of acquisition.
Local citizens, businesses and community leaders formed a coalition called
Protect Newport Beach Country Club. In addition, Hill retained a consultant,
who mobilized many of the club's 1,500 members and launched a blog (protectnbcc.blogspot.com)
in opposition to the use of eminent domain.
Circumstances were quite different for Thomas, despite the fact that he had
contacts at the DOT and the construction company that was overseeing the
highway project. 'I realized very quickly that it would have been a complete
waste of time to fight it,' he says.
Thus, Thomas set his sights on getting what he deemed to be fair market
value for the property. His status as a licensed provisional real estate
broker in North Carolina would prove valuable in this endeavor.
The DOT sent out an appraiser from Winston-Salem, which is located more than
200 miles from Washington. 'He knew nothing about Beaufort County and used a
cookie-cutter approach to appraising our property,' says Thomas. 'The first
offer was only $5,000 above what it was appraised for when we bought it back
in 2000, before we renovated the property and added square footage!'
Thomas says he was very displeased, especially since property values in the
county had increased significantly in recent years.
Through a great deal of negotiation ' and with assistance and data from
Thomas' sales manager at the Rich Company, where he sells real estate
full-time ' they arrived at an acceptable figure. Thomas won't disclose the
final settlement, but he calls it 'very fair.'
The next step was finding a new location. 'When we initially learned we
would be moving, we wanted to do new construction,' recalls Thomas. However,
the timing didn't allow it. 'We would have had to close, and our members
would have gone elsewhere in the interim.'
Of two viable possibilities for a new location in the area, Thomas decided
on 20,000 square feet in the west side of a Kmart that had closed. It is
situated in the middle of town, just 1.5 miles from the previous club.
'The new facility is bigger, has a better location and is more modern,'
explains Thomas, who raised membership dues slightly after the move. 'Most
of the equipment is new, the locker rooms are nicer, and we added a smoothie
bar, a steam room, babysitting and full-court basketball.'
Since Fitness Unlimited opened in its new location, there has been a steady
flow of traffic. 'Any time you do something new, people get curious,' says
Thomas.
While he doesn't know of any members who quit for reasons related to the
transition, Thomas suspects he missed out on at least a few prospective
members. 'A lot of folks didn't know whether we would reopen, which made it
difficult to sell any type of long-term membership before we moved,' he
explains. 'People waited to see what the new club was like before making a
decision.'
Other than that, Thomas says the most significant downside of the entire
experience was the ongoing uncertainty. 'Fortunately, it affected Amy and I
much more than it did our members,' he notes. Thomas is especially glad to
have the stressful ordeal behind him since his wife is expecting twins this
summer.
'I don't know how we completed the move so smoothly and in such a short
time,' he says, 'but we did!'
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