Additionally, the industry is expected to continue consolidating, which will create more opportunities for investors in this space. Overall, we are confident that veterinary real estate will remain a strong and attractive asset class for years to come.
Did you know that according to the 2024 American Pet Products Association National Pet Owners Survey , there are 82 million U.S. households with pets? And these pet owners spent a whopping $39.1 billion on veterinarian care and products!
With such high demand for veterinarian services, commercial real estate investors have started looking into adding veterinary clinics and practices to their portfolios. We spoke with Terravet Real Estate CEO Daniel Eisenstadt about this growing trend.
Connect CRE: How do you define veterinary practices from a real estate perspective?
Daniel Eisenstadt : Veterinary practices fall under a unique category of commercial real estate as they combine elements of traditional asset classes like medical offices and retail spaces. They require specialized build-outs at significant cost but also have good curb appeal in prime retail locations.
Specialty/Emergency animal hospitals tend to be destination locations rather than convenience-based ones found in major traffic corridors or industrial areas.
Connect CRE: What changes have you seen in the veterinary sector?
Daniel Eisenstadt : The sector has undergone significant changes recently due to an increase in pet ownership leading to higher demand for boarding and vet services. This has attracted institutional investors like private equity funds who see potential through consolidation within the industry driven by private equity investments on the practice side of things.
While consolidation is less common on the real estate side where most properties are owned by individual veterinarians who own one or two locations, there is still growing interest from property owners as well.
Connect CRE: Why do investors find veterinary properties attractive?
Daniel Eisenstadt : One big draw for investors is how “sticky” tenants can be when it comes down owning net leased property – meaning once established profitable businesses don’t want move because it could threaten their patient base. This is especially true for general practice locations that tend to draw patients from a five-to-ten-mile radius.
Connect CRE: What should investors consider when evaluating veterinary properties?
Daniel Eisenstadt : As with any net leased property, investors should carefully evaluate location, lease terms and creditworthiness of the tenant. They should also take into account curb appeal, rent rates compared to market value and the number of full-time veterinarians employed at the facility.
Additionally, it’s important to consider the needs of the practice – will they need room for expansion? Are there enough veterinarians on staff? These factors can impact future profitability and success.
At Terravet Real Estate, we are focused on expanding our portfolio by acquiring high-quality veterinary properties. We also offer a tax-advantaged solution through Terravet REIT for owners looking to diversify their real estate investments.
Connect CRE: What is your outlook for this sector?
Daniel Eisenstadt : We have a positive outlook on veterinary real estate as pet ownership continues to rise and demand remains strong for boarding and vet services. With interest from institutional investors expected to continue driving consolidation within the industry, we believe this asset class will remain stable and attractive in years ahead.
