What's Happening?
Med spas have significantly expanded their presence across the United States, transforming retail spaces traditionally occupied by goods-based retailers into wellness centers. According to a 17-year analysis by CoStar Group, med spas have been steadily
increasing their footprint in major markets such as Los Angeles, New York City, South Florida, and Chicago. This growth is part of a broader trend where wellness services, including IV hydration lounges and testosterone replacement clinics, have become mainstream, moving from exclusive boutique locations to neighborhood strip centers. The pandemic accelerated this trend, as Americans emerged with a heightened focus on personal health and appearance. The wellness sector, valued at $2.1 trillion in 2024, has seen med spas become one of the fastest-growing categories within personal care.
Why It's Important?
The expansion of med spas reflects a significant shift in consumer spending from goods to services, with wellness becoming a new status symbol. This trend has implications for the retail real estate market, as service-oriented tenants now lease more space than goods-based retailers for the first time. The rise of med spas also highlights the influence of social media on personal appearance and the impact of new weight loss drugs, which have shifted consumer priorities towards health and fitness. This transformation is supported by franchise investments, with a substantial portion of post-pandemic wealth being directed into wellness franchise ownership. However, the growth of med spas faces challenges such as limited retail space availability and rising rents, which could constrain future expansion.
What's Next?
As med spas continue to expand, they are likely to focus on affluent suburban areas where household incomes exceed $100,000. The tightening commercial real estate market, with reduced availability of small-format retail spaces and increased rents, will require med spas to have high revenue expectations to justify their locations. The future growth of med spas will depend on navigating these challenges and maintaining consumer interest in wellness services. Additionally, the full impact of 2025 leasing activity may not yet be visible due to delays in lease tracking, suggesting that the current data might underrepresent the sector's growth.
