Veterinary Real Estate Update
Veterinary clinics have seen a rise in demand in recent years as work-from-home (WFH) policies, and hybrid schedules have increased following the COVID-19 shutdown, leading to increased pet adoption and ownership. According to the American Pet Products Association (APPA), 48% of pet owners decided to foster or adopt a new pet post-pandemic since they were spending more time at home. This, in conjunction with the rise of remote work and office closures, represents a significant lifestyle shift for Americans nationwide. New data suggests that this notable rise in pet ownership will have long-lasting effects on the veterinary real estate market.
2024 U.S. Pet Ownership Metrics
In the last 30 years, American pet ownership has grown tremendously. As of Q1 2024, 66% of U.S. households own a pet, according to Forbes Advisor. To put that growth in perspective, 56% of households owned a pet in 1988.
Dogs are the favored choice among pets, with 65.1 million households owning one. Cats come next in popularity, with 46.5 million households, followed by freshwater fish at 11.1 million households.
The age group that makes up the largest percentage of pet owners at 33% is millennials, closely followed by Gen X at 25% and baby boomers at 24%.
The majority of Americans consider their pets a part of their family and do not hesitate to spend their money on their four-legged friends if they have adequate resources. In fact, in 2022, American pet owners spent close to $137 billion on their pets, up 11% from 2021. This comprises $58.1 billion allocated for pet food and treats, $31.5 billion for supplies, live animals, and over-the-counter medications, $35.9 billion for veterinary care, and $11.4 billion for additional services such as boarding, grooming, pet insurance, and training.
Veterinary Clinics Market Analysis
According to Market Research 365, the U.S. Veterinary Services market is expected to surpass $47.92 billion in total revenue in 2035, growing at a CAGR of over 6.29% between 2024 and 2035. The main market drivers are the increasing number of animals, the adoption of pet insurance, and the rise in spending on the well-being of pets.
The Veterinary Clinics commercial real estate sector has experienced an excellent market in the last two years. According to CoStar Group, the sector amounted to $850 million in sales volume from February 2022 to February 2024, proving to investors why it is such a lucrative asset type.
Veterinary Real Estate Sector | CoStar Group By the Numbers | Last 24 Months
- Cap Rate: 6.9%
- Sale Price/SF: $258
- Average Sale Price: $1.4M
- Sales Volume: $850M
- Average SF: 6K
Investing in Veterinary Real Estate
The combination of stable demand, long-term lease agreements, resilience during economic downturns, and opportunities for value-add investments makes Veterinary real estate an attractive option for investors seeking consistent returns in the commercial real estate market. This and the recent surge in the value of veterinary real estate have pushed more investors to shift their heads to Veterinary Clinics as a top investment choice.
