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Club Pilates Brand Stretches to Irvine

A new fitness-focused umbrella company anchored by Club Pilates—one of the country’s fastest-growing franchising businesses—plans to pump up the size of its Orange County headquarters and operations.

San Francisco-based private equity firm TPG, a recent investor in Costa Mesa-based Club Pilates Franchise LLC, announced last month that it created a company designed to oversee a growing portfolio of exercise companies it’s invested in.

Xponential Fitness LLC will be based at the Intersect office campus in Irvine near John Wayne Airport.

It’s leasing about 26,000 square feet at the recently renovated campus at the intersection of Main Street and Von Karman Avenue, brokers with the Irvine office of JLL who worked on the deal told the Business Journal.

Club Pilates, the biggest U.S. chain of Pilates studios, will move its headquarters to the new space in a big step up in size from its current Costa Mesa location, where it’s leased about 5,000 square feet. The new office should accommodate about 150 employees, three times its current corporate employment base, JLL officials said.

Club Pilates Chief Executive Anthony Geisler has been tapped to head Xponential Fitness, which also includes indoor cycling studio CycleBar, and StretchLab, which offers personalized stretching instruction.

The fitness firms are existing TPG investments under the TPG Growth investment platform and plan to employ aggressive franchising strategies to fuel growth. The goal is to build each brand to about 1,000 studios.

TPG is considering other fitness-related investments for the Xponential umbrella, according to Bloomberg, which was the first to report on TPG’s plans for the new company last month.

Each firm’s branding, franchising, back-office and other related-divisions will largely be run from the Irvine office.

Having a broad portfolio of fitness brands could allow TPG to take Xponential public at some point, the Bloomberg story said.

300 Studios

The headquarters move and new role at Xponential cap a busy year for Geisler, who previously owned Santa Ana-based LA Boxing, a franchise concept he sold in 2013 to UFC Gym.

Geisler became chief executive of Club Pilates, after he bought the company in 2015 on undisclosed terms.

TPG Growth announced in May that it made an undisclosed investment in Club Pilates, where Geisler stayed on as chief executive and kept a stake in the business.

Other Xponential Fitness managers and members include three TPG executives, state filings show.

At the time of Geisler’s 2015 purchase, Club Pilates—which uses a variety of stretching and strength-enhancing equipment designed to offer users physical benefits similar in some respects to yoga—was doing $2.9 million in sales and maintained 30 locations, according to news reports.

Club Pilates, which has been in business for a decade, reported $26.7 million in 2016 sales. The company said in a news release last month that it was opening nearly 20 studios every month and was on track to have nearly 300 open by the end of 2017. It said that as of December it had signed more than 660 franchise agreements.

Club Pilates franchisees typically pay about $200,000 for a studio—which includes a $49,500 franchise fee and location opening costs, including exercise equipment—Geisler told Inc. Magazine last year. He said the average franchisee owns about three units.

Club Pilates was ranked No. 4 on last year’s Inc. 5000 list of the country’s fastest-growing companies, based on its reported three-year sales growth of more than 21,000%.

And there’s no slowdown in plans for this year. Its projections call for opening 240 studios, bringing its total to nearly 540, and striking nearly 900 franchise agreements by the end of 2019.

Studios can reportedly bring in more than $4 million in annual retail sales through memberships that are sold on a monthly basis.

Intersect Addition

Don’t look for a new Pilates, cycling or stretching studio at the new Intersect campus, JLL brokers said, as the new headquarters will be strictly for office uses.

The new spot, though, will offer its share of benefits to the company.

“Xponential was looking for a ‘destination’ headquarters for both its clients and employees,” said JLL’s Scott Wetzel, who represented the company in the lease, along with colleague Matt Christensen.

The local office of Houston-based real estate investment firm Hines and Newport Beach-based Pacific Investment Management Co., owners of Intersect, were represented by JLL’s Wade Clark and Joe Bevan.

“The new headquarters will allow Xponential to establish a retail-like experience for its guests and employees, with the functionality of a creative office campus and the amenities of a modern hotel,” Wetzel said.

A new fitness center is among amenities Hines and PIMCO have added to Intersect since buying the 430,000-square-foot campus a couple of years ago.

Xponential will be the second-largest fitness-focused company based in the airport area. The parent company of health club chain LA Fitness, Fitness International LLC, is based in Irvine and leases nearly 91,000 square feet at the Michelson office tower at the Park Place campus, brokerage data show.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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