by J Brown
The unforgiving trajectory of real estate markets poses the greatest challenge for independent yoga centers. In order to survive, smaller centers need to locate in popular areas where residents can afford the service they provide. But there seems to be an unmistakable time limit on how long the profitability of a yoga class can keep pace with ever rising rents.
Full disclosure: I own and operate an independent yoga center in the now extremely popular neighborhood of Williamsburg, Brooklyn, NY. I opened seven and half years ago when it was not so extremely popular. And that was my plan. I figured: “If I get in now and can survive for a few years then it’s only a matter of time before the real estate folks catch up.” I thought that being in a growing neighborhood was precisely the thing needed to grow a business.
And it proved to be true. Each year, as the neighborhood has boomed, the center has grown. More students and revenue. What I never realized then, but is abundantly clear now, is that those profits are largely offset by increasing overhead costs, primarily rent. The small 3% bumps each year baked into a commercial lease feel manageable. It’s the 15%+ hikes at the lease renewals that really do you in.
Anyone who has been attending yoga classes at smaller centers for more than fifteen years has seen at least one close. Probably more.
A lot of centers close after a year or two. There is simply not a student base to support it. The reasons for this vary. It takes a confluence of factors, both financial and professional, that lead to a self-sustaining yoga center. I won’t attempt to explain what exactly those factors might be. I don’t think anyone can. But it’s safe to say that you need some good teachers and an enclave of people who are interested in what they are teaching. And then, someone has to have enough savvy to leverage that into a business that can support the space they occupy.
The striking thing to me is how many of the centers that are able to accomplish what every independent yoga center owner wants, a thriving center that has lots of classes and people coming all having wonderful yoga, still end up closing after fifteen years. Now I know why. Two and half years into my second lease, I am feeling confident that I’ll make it through the next lease renewal. I’ll have to raise rates some to do it. But I think we can survive and get a third lease for another five years. But that fourth lease, the one at fifteen years, that is another question.
Last month, my landlord dropped a bomb on me. According to the center’s lease, I’m responsible for paying for the water we use. However, he had never asked me to pay it before because he lives upstairs and I already pay such high rent. Unfortunately, the price of water has doubled and he no longer is going to do this. He offered to either install a meter or raise the rent. After doing the math, I determined that installing a meter might end up costing more. So I opted for the rent increase and resigned myself to passing that cost along to the students.
The plight of independent yoga centers is linked to a crumbling sense of community. In the absence of other vehicles, yoga classes are a space where people come together with shared purpose.
I decided to just tell the students exactly what was happening and why the rates were going up. I included numbers. I debated with myself about whether to disclose so much in notifying the students. Some people find it inappropriate to talk about money or numbers. But I decided to go with my gut and exercise “radical transparency.” And I am so glad I did. Because an amazing thing happened. After receiving my note, two different people decided to check my numbers and discovered that I had made a mistake.
It’s a little embarrassing. But I calculated for 7.48 gallons instead of 748 gallons. Turns out, there is no way that we need to be paying the kind of money the landlord was talking about. My inept math, and fear of bureaucracy, led me to believe that he was doing me a favor. In fact, he just has an unusually large water bill and assumed it was us when it is not. I spoke with the landlord and told him that I have more accurate numbers now and would prefer that we install the meter. According to the new calculations, the cost should be nominal. I notified the students of my mistake and that there would be no change. Had I not been so open about the money, the rent and prices would still be going up.
Small yoga centers, where people come together and inquire into themselves and share with others, are often special places in people’s lives. When people attend yoga classes at a center consistently over time, the people and the place become more than just a business providing a service. Unfortunately, to a landlord, that never seems to outweigh the bottom line. Truth is, I’m good for another seven years or so. But then, either something changes in the real estate market or I face the same as my predecessors. Either pack it in or migrate. Fifteen years is the mark. We’ll see.
J. Brown is a yoga teacher, writer and founder of Abhyasa Yoga Center in Brooklyn, NY. His writing has been featured in Yoga Therapy Today, the International Journal of Yoga Therapy, and across the yoga blogosphere. Visit his website at jbrownyoga.com
As a commercial real estate broker as well as an avid yoga practitioner, I feel your pain.
Most of the independent yoga studios here in Miami are all going through the same “priced out” dilemma, as there business grows and stabilizes, rent and/or utilities substantially increase which must ultimately be passed on to the students’ membership fees. A number of studios have been closing up shop because they don’t see a way out of this Catch 22 situation.
I propose to my clients that they purchase their building, as an alternative strategy when seeking to open their studio. They are now in better control of their costs, they keep and can depreciate their build outs. If the building is large enough, they can lease out a portion of the building to generate additional income, but most importantly, they will one day sell their building for hopefully a substantial profit, more than what the business can generate.
This gives the operator the freedom to operate his/her business with no interuptions and draw peace of mind that they will not become priced-out.
I have got an idea: turn some high-rolling members into actual stakeholders (investors) in the studio separate and apart from spawning more yoga teachers/franchisees/chain studio spinoffs/”here’s my card” artisanpreneurs. Just give real estate or sheer (if leased-venue) business value for $$ contributed. Where the rubber meets the road is in direct holdership of the business—no oversaturation of teachers, no brand dilution. Just like troubled full service gyms have done in the past.
But that’s not “spiritual” enough for ya …
15 years? The typical business model seems to be to get in a variety of good teachers offering enough classes that none are crowded for about 4 years and then cut down to the most popular (usually the least challenging ones) once a regular clientele is in place.
At that point I move on to the next new studio, which is in the keen to expand, rather than cut costs and enjoy profits, stage.
No, I am not interested in those who ride a “trend” or cater to a certain “youth” or “physical challenge” market. Those in it for the long haul, know who and what they are. But they have to sacrifice “making a killing” or “brand expansion” for something independent of being all spiritual, and in a different way …