Fitness Center Feasibility Study in Virginia

A strong local weighting

Fitness lending is concentrated in Virginia. The location quotient is 1.40x and the class stands 3 of 39 in Virginia's own ranking, while Virginia ranks only 17 of 54 states by loan count. Virginia approved 302 fitness loans worth $147.3 million in FY2017 through FY2026. Northern Virginia leads: Fairfax County holds 54, Loudoun 32, Prince William 22 and Arlington 18, with Virginia Beach city at 26.

None of the headline measures crosses the distinctness line we draw against both Virginia and fitness lending nationally. The Virginia median of $300,000 is 1.16x the national figure; half of Virginia gym loans sat between $100,000 and $541,200. Franchise concepts account for 50.3% of loans, and SBA 7(a) carried 283 against 19 under SBA 504.

Getting to closing is the hard part

Virginia gym approvals from FY2017 to FY2024 were cancelled at a rate no lower than 15.0%, and the ceiling, with undisbursed loans counted, is 16.8%. A cancellation in a franchise-heavy class can follow a lost lease, a site the brand rejects, or a build-out bid that comes in over budget, and a borrower should treat each as a risk to clear before applying. Losses after funding are real too: of 117 Virginia fitness loans funded FY2017 to FY2021, charge-off took 8.5% or more, and 4.3% failed within their first five years.

Manufacturers and Traders Trust Company holds 43 of the loans, The Huntington National Bank 36 and Wells Fargo Bank National Association 19, the last for $10.0 million. Stearns Bank National Association holds 16 and Live Oak Banking Company 13. Among certified development companies, 504 Capital Corporation holds 10 loans worth $15.2 million, larger real estate deals. Approvals dipped to 12 in FY2021 and reached 40 in FY2026, carrying $27.0 million.

Testing a Virginia fitness project

The study should resolve the usual causes of cancellation before the loan is requested: a signed lease or a site under control, brand approval where there is a brand, and a contractor's price on the build-out. Demand must be read county by county, since a Loudoun or Fairfax location and a Virginia Beach site draw on different households and different competitors. Debt service coverage should be shown through the presale and ramp months, with membership attrition built in, and the appraisal, where the deal includes real estate, has to support the building as something other than a gym.