Avoiding the Fancy Property Trap

A beautiful baseball complex opened roughly ten miles from our flagship facility a couple of years ago and the owners were eager to discuss the possibility of us opening a satellite facility on-site. The proposed space was 4,000+ square feet overlooking an aesthetically pleasing field, and provided unlimited field access for sprint work, throwing, and more at times that games were not being played.

There was, however, a hitch.

Two of them, actually.

The first issue was the fact that our clients started catching wind of the potential new location and location-change requests began to roll in from those who found the new option to be geographically more desirable than our current spot. With more than a third of our clients falling into this geographic category, we quickly realized that our fancy potential new space was going to cannibalize more business from our primary operation than it would initially add in new faces. Not good.

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The second problem was the price. This spot is situated adjacent to a major interstate, and across the street from a desirable shopping plaza. Despite being located on the field-facing back of the building, landlords intended to collect street-facing dollars, commanding as much as 2.5 times as many dollars per square foot as our gym just twenty minutes down the road.

We had to ask ourselves, is the newfound high-traffic location going to bring enough new faces through the door to justify spending nearly the same amount of monthly rent on 4,500 square feet as we were already paying on 15,000 elsewhere?

We ultimately passed on this opportunity roughly 36 months ago, and watched the space sit vacant until just the last month or two.

The lesson for me was twofold: First, don’t fall in love with the busiest address on the map, as storefront real estate fees are typically established to align with the earning potential of retail stores and restaurants, not performance centers that require ample space for movement training.

Secondly, if you’re considering a second location, you may want to find something that is inconvenient to get to in relation to your first space. Otherwise, you’ll quickly find yourself sharing clients, dealing with tracking payments and attendance spread over multiple locations, and subject to ongoing compare and contrast discussions relating to your two spots. There should be no grey area as to which location you are a member of, unless you offer an open-gym membership model.

** Please Note **

This article originally appeared in the continuing-ed forum of The Strength Faction, a community of professionals committed to advancing the fitness profession, and their own skills in general. I contribute business-specific content to this group in an ongoing basis, and would encourage all of my readers to check out the great work they're doing.

 

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