Fertility Clinics, Pet Spas and Other Emerging Retail Concepts

Retailers are having a moment as grocery, convenience and quick-service restaurant chains expand in growing metro areas across the country.

Who else is having a moment? Emerging nontraditional retail uses, including upscale veterinary clinics and hardware stores for home-grown cannabis.

Store openings in the U.S. are on pace to outnumber store closings for the first time in five years in 2022. While grocers and other essential services are leading the way, there’s also an opportunity for emerging retail concepts that may have been unimaginable just a few years ago.

While some of these concepts may seem fringe, their proprietors are now leasing space in traditional retail locations as they seek more foot traffic and as retail landlords work to fill space vacated during the pandemic. Locations near a big box retailer like Costco or inside shopping centers anchored by a grocery store are becoming increasingly common for nontraditional retail, said Anjee Solanki, a San Francisco-based national director for retail at Colliers.

“I think one of the major reasons why we see a lot of these nontraditional retailers look at shopping centers, especially grocery, or even mass merchandise-type centers where there's a Costco, for example, is because of the convenience, visibility and co-tenancy,” Solanki said.

Here are some of the nontraditional retail concepts on the rise:

Making primary healthcare clinics more accessible to customers has been another way the "medtail" trend of combining medical and retail facets of real estate has been growing. CoStar data shows that San Francisco-based startup Carbon Health, a growing primary and urgent care national chain, has opened at least seven clinics since the start of 2021. Most of those clinics opened in the San Francisco Bay area, but others have opened in Denver, Colorado San Diego, California and Richmond, Virginia. The clinics range from 2,500 to 3,000 square feet, with one location reporting rent at $57 per square foot.

A competing chain, One Medical, opened at least 10 locations since the start of 2021. Two of those locations are in the Bay Area, but others opened in Georgia, Massachusetts, Ohio, Texas, New York, Florida and Washington. The average size was nearly 4,700 square feet, with an average lease term of 10 years at $56.60 per square foot.

Other emerging healthcare concepts focus on a specific need. Kindbody fertility clinics, for example, have been opening across the country on triple net-leases. Other concepts, for instance, focus on cryotherapy or mental health.

“People are very focused on their well-being, and that well-being isn't any longer or just purely fitness. It's also mental well-being,” Solanki said. “And so having that mindfulness in terms of your life is an opportunity for new concepts, to become much more accessible and to expand.”

A Colliers spokeswoman said that on average, traditional national retail chains will expect to open between 20 and 30 new stores per year.

Some shoppers prefer value, and others prefer luxury. Increasingly, shoppers will be able to make that choice for their pets.

Upscale pet store and clinic hybrids are increasingly popping up in affluent parts of the country, Solanki said. Unlike traditional warehouse-style pet retailers, these clinics are counting on amenities and convenience to build customer loyalty and take market share. One such chain, Modern Animal, opened at least four new locations since the start of 2021: three in the Bay Area and one in Detroit. CoStar data shows the Modern Animal locations ranged from 4,300 to 15,500 square feet, with rent between $38 and $48 per square foot. Papaya is another growing national veterinary clinic chain.

“People are now starting to align their own likes and affinity to brands,” Solanki said. “When you experience that spa-like environment with your pet, you're going to most likely want to go back if you have that affinity.”

More traditional retailers have already taken notice in an attempt to maintain their market share. Petco announced a test program where it would open shop inside 14 Lowe’s stores this year. The test program marries two types of retail that benefitted during the pandemic: pet supply stores and home improvement stores.

It’s possible more retailers will "cohabitate" in the future as well.

This last category certainly isn’t garden-variety. As more and more states legalize cannabis, “hardware stores” focused on supporting home-grown cannabis operations are beginning to pop up. These stores can span up to 20,000 square feet and sell soil, specialized equipment and even provide training for DIY cannabis growing.

Colliers expects these types of retailers to open between five and seven locations a year in states where recreational cannabis is legal.

“This is definitely something that is going to become larger and larger in scale,” Solanki said.