Fitness Center Feasibility Study in the Grand Rapids-Wyoming-Kentwood, MI Metro Area

Third in the area, mid-table nationally

Fitness centers hold third place among the 39 asset classes of the Grand Rapids-Wyoming-Kentwood area, which is high for a class that is often a minor line in other metros. The area ranks 40 of 608 for the class nationally. SBA approved 70 loans from FY2017 to FY2026, for $24.0 million, and the location quotient of 0.93x puts the local share slightly under the national one.

Small loans in a wide band

The median loan of $153,000 is 0.59x the national median for fitness centers, so Grand Rapids borrowers have taken notably smaller loans than those elsewhere. The bulk of loans sit between $50,000 and $487,125, a spread that reflects both studio conversions and larger club build-outs. Franchise concepts account for 42.9% of loans. Both program counts are missing from the source for this cell, so no program split appears and none should be inferred.

A single dominant holder

The Huntington National Bank is the lender SBA lists most, with 40 loans worth $6.5 million, which is a large share of a 70-loan record. That count follows whoever SBA now lists as holder. Kent County has 48 of the area's loans. The area follows the July 2023 statistical delineation, so a gym outside Kent County but inside the area counts as part of this record.

Years and losses

Counts that can be shown: FY2017 with 11 loans and $1.3 million, FY2018 with 7 and $1.5 million, FY2020 with 6 and $3.8 million, FY2023 with 10 and $3.2 million, FY2024 with 14 and $5.9 million, FY2025 with 10 and $3.7 million, and FY2026 with 7 and $2.3 million. FY2019, FY2021 and FY2022 are withheld for thin counts. Cancellation reached 11.3% or more among approvals from FY2017 through FY2024; treat that as a floor. SBA gives no ceiling and no charge-off figure for the cell.

Testing a Grand Rapids fitness project

A fitness study should test membership demand within the drive-time of the site and the density of competing clubs and boutique studios, then check whether the membership price and churn assumptions can support lease and payroll. Build-out and equipment cost should be compared with a loan near the $153,000 median, since a much larger request has to be explained. Seasonality matters in a northern market. The loan payment should be covered even while memberships build slowly, and in the appraisal, equipment ought to sit apart from leasehold improvements.