Crossfit gyms are the tell-tale sign of a neighborhood in transition because crossfit gyms are looking to pay a minimal lease amount in areas that are still convenient to their target demographic. What are the demographics of crossfit members?
According to data from Quantcast Analytics, over 43% of crossfit members are between the ages of 25 and 34. Only ~13% of the United States population is between 25 and 34, so crossfit overwhelmingly caters to this demographic. The Quantcast Analytics data also determined that over 50% of crossfit members make over $150,000 in annual income, and over 40% of crossfit members have post graduate degrees.
Crossfit gyms take a minimal amount of capital to start, and a minimal amount of capital to operate. Gold's Gym has recently started their own crossfit program, and some of these classes take place in their parking lot. Other crossfit gyms are basically garages with some tires, ropes, and kettle bells. Because of the minimal investment required, crossfit gyms have spread like wildfire. The low barriers to entry in the crossfit market can lead to market saturation, and an individual gym cannot command a premium over its competitors unless it is significantly differentiated. The difficulty to command a premium keeps prices low for members, but the lower prices means crossfit gyms must be located in low rent, underdeveloped properties. As neighborhoods develop and get more expensive, crossfit gyms have to look for the next low rent and underdeveloped area to survive.
So if you want to find the next transitioning area that has low land prices and is still attractive to a high income, young professional, demographic, keep your eye out for groups of people shuffling tires and doing crunches in parking lots. They could indicate that a crossfit gym is nearby, and thus an opportunity.
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