Climbing gyms?! Really, RealEstateAgent.com? What does indoor rock climbing have to do with Real Estate?
Well, brace yourself, but turns out that… a lot!
Climbing gyms, along with other types of gyms, help you work on your health-positive habits. These climbing gyms are on the rise as a hot commercial real estate trend! In the last 5 years a huge number of climbing gyms have popped up in America as a novelty fitness craze, sometimes just for people who enjoy indoor rock climbing, sometimes for people who use it as part of a larger HIT (High-Intensity Training) routine. According to an IBISWorld study, the climbing gym industry is bringing a revenue of $400 million per year in the US, and with the inclusion of climbing in the 2020 Olympic Games in Tokyo, the demand for commercial property to host the practice of indoor rock climbing (also known as bouldering) will likely keep growing.
However, this increase in demand for climbing gyms raises a string of questions: is commercial real estate ready (and willing) to ride this wave? If not, will it end up being the climbing gym craze’s biggest hurdle, and, ultimately, the nail in the coffin?
Here’s the deal: the supply of commercial property out there (independently of the real estate market you’re in) is insufficient to immediately meet all the specificities required by bouldering practitioners. That is mostly because you need really high ceilings to have an attractive indoor rock climbing facility; no one wants to climb just 10 feet high. Climbing walls are usually 25 to 45 feet, so it’s quite surprising how difficult it is to find a good amount of vacant dwellings with ceilings that tall around, since most commercial building and warehouses are not that tall.
Not only that, competition is very tough for climbing gyms when it comes to commercial real estate. In the post-recession era, Commercial Buildings have become the go-to real estate investment option for a large number of people due to its versatility. So, now, not only is it hard to find the proper location (industrial real estate is usually a bit away from downtown area) and the proper commercial property to host the practice of indoor rock climbing, but – what was supposed to be an incredible cheap opportunity to make a lot of money because of its rudimentary need of decoration, equipment etc. – has also become potentially expensive. Chances are you’ll get into a bidding war against players as big as retail stores that need extra storage, and as small as people that used to brew beer at home and are now starting to professionalize their operation.
The soft spot of climbing gyms has become sour, and whoever got in at the beginning is most likely reaping what they sowed.
So, what should one bouldering enthusiast, new to the game of investing do? Find something else?
Of course not!
What a lot of people have been doing is adapting and customizing any dwelling that is high enough to assemble rock climbing walls. Because of that, new climbing gyms have been popping up where there used to be power plants, movie theaters, and even churches! And the ones who did the best were the ones who didn’t try to hide that so much, but actually, use their former characteristics as their strength. Adding that kind of novelty made a lot of people that didn’t care for the sport before, stepping into the climbing gym, taking one free class and falling in love with bouldering. It’s amazing how sometimes, because of the difficulty imposed; human beings end up coming up with great concepts: imagine yourself climbing inside a beautiful bare church way up there feeling even closer to God… it’s pretty cool, right?
The biggest problem when turning those places into climbing gyms has been related to the high costs of insurance. A climbing gym owner needs to have a very strong and reliable liability insurance coverage even if their commercial property was tailor-made for bouldering: indoor rock climbing can be dangerous as it is; add in there the difficulties of building and adapting the equipment to these unique dwellings, and it becomes even more imperative to have good liability insurance because accidents are bound to happen.
But still, even those customizable commercial properties are not very easy to find.
Why not build from scratch, you ask?
The math of it would have to allow it. In smaller markets, maybe. In bigger, where the overall space is very limited, you could only find something affordable away from the city, which would reduce the number of clients and slow down the return over your investment.
So, as you can see, commercial real estate can be the biggest friend but also the biggest foe of climbing gyms and the popularization of indoor rock climbing. Only time will tell if in the future we’ll say “Climbing gym? That’s so late 2010’s” or if we’ll look back to this time and, from the top of a rock climbing wall, look down to the huge and constantly packed climbing gym and think “Oh, if only I had gotten into the climbing gym craze back then… I wouldn’t be an indoor rock climbing practitioner, but the owner of this commercial property worth millions of dollars!”.