When it comes to opening a new climbing gym in today’s macro environment, there’s not just one elephant in the room, but instead a whole party: interest rate hikes, supply chain snafus, transportation hiccups, construction delays, higher wages…the list goes on and on. Starting an indoor climbing gym is daunting enough since the pandemic hit without having to worry about other macro forces dragging your project down.
This year has been particularly difficult for those prospective owners looking to open their first gym, and it has also tested even the most seasoned operators looking to add a location to their existing portfolio.
An Altered Economic Landscape
So, what has happened? Well, simply, external economic forces have shifted and the tides have quickly turned. Gone are the days of a lender courting you, taking you out to multiple lunches, and selling their loan programs as some of the best in the industry. And gone are the days of construction firms coming in on time and under budget. Today, we are hearing more about ballooning budgets, eleventh-hour loan terminations and construction schedule adjustments, along with timelines being busted because workers or materials are not available.
What have you seen in your area? Has your loan been dropped because your bank’s underwriting department suddenly decided to move away from the fitness and gym space? Or maybe they just ghosted you entirely because their commercial lending arm decided to put the brakes on all new loan originations? Have you struggled to get competitive bids from your general contractors for renovating or building your space with the first three offers that went out? If you were lucky enough to get a timely bid, did you get sticker shock from the initial price, so much so that you sent it out twelve more times for more competitive pricing, before realizing that maybe your construction budget has been grossly underestimated? If you haven’t, consider yourself lucky, and know it is not a matter of if but when you experience some or all these phenomena.
If these statements strike a nerve or resonate with you, know also that you are not alone. There has been a seismic shift in our financial world in 2023, and its repercussions are being felt across the climbing industry.
Strength in Working Together
Navigating this complex financial climate can feel more manageable when you look around and see that you are not the only one in a room full of elephants. Having a partner in business to talk to who has both seen these forces at work and anticipated many of them could offer you a lifeline. Franchising with The Gravity Vault offers a model that provides you with the support and assistance you need to get your project over the finish line.
While The Gravity Vault has not been entirely immune to these macro forces, we do have a number of strategic partnerships in place and a network of professionals who can offer guidance and solutions when problems like these arise. Has a lender turned you down because you are a first-time gym owner? No problem, we still have lenders looking to lend in these market environments for first-time franchisees and gym owners. Has your wall budget been blown out with rising costs? No problem, our strategic alliance with multiple wall builders and our preferred brand pricing ensure that you are getting a top-notch product at some of the most favorable prices in the industry.
It doesn’t end there—our size and scale give us purchasing power and pricing breaks that get extended to each of our franchisees. When you partner with us, you can be sure you are getting the best preferred pricing in the industry we’ve seen, whether you are ordering big-ticket items like holds and flooring or simply replenishing one-off inventory for your retail shop.
Staying One Step Ahead of the Curve
Today at The Gravity Vault, we are still looking ahead. Our development pipeline remains robust, with multiple projects in different stages of development. We have seen delays with almost all our franchises in some capacity, but that occurrence has both led to opportunities and a chance to revisit overall timelines and budgets. We had one location take advantage of landlord delays by moving from a rental scenario into a land development, build-to-suit position. Another franchise was able to tailor their wall design to cut overall project cost without sacrificing square footage, and another was able to find a lower cost of borrowing after one lender pulled out late in the underwriting process.
We recommend staying fluid in this economic climate. In the past we had been working with banks that primarily offered fixed-rate loan packages, locking in low rates for fixed terms. As rates have shot up, however, we have recently recommended moving away from these fixed-rate loans, since they offer little upside; instead, we recommend looking at variable-rate products that have a better opportunity to help bring your payment lower as rates come down after last year’s quick, meteoric rise. While no one can predict the future, when times get tough, it is nice to know you have an experienced partner who can help find solutions and a community of franchise owners who all share the goal of lifting each other up past any crux we encounter in business.
Let us know how we can help you on your journey toward climbing gym ownership. Reach out to us at www.gravityvault.com/franchising.
This story was paid for by the sponsor and does not necessarily represent the views of the Climbing Business Journal editorial team.