Additionally, the trend toward purpose-built facilities and the sticky nature of tenants make veterinary real estate a strong investment opportunity.
Did you know that 82 million households in the United States own a pet? And these households spent $39.1 billion on veterinarian care and products in 2024, according to the American Pet Products Association National Pet Owners Survey.
This increased demand for veterinarian services has caught the attention of commercial real estate investors who are now looking to add veterinary clinics and practices to their portfolios. To gain more insight into this unique asset type, Connect CRE spoke with Terravet Real Estate CEO Daniel Eisenstadt.
Connect CRE: How do we define veterinary practices from a real estate perspective?
Daniel Eisenstadt: Veterinary practices fall under a niche category within commercial real estate as they possess characteristics of all traditional asset classes. They can be considered medical offices due to their specialized build-outs and strategic locations. However, general practice clinics also have good curb appeal and are typically located in major retail areas with high visibility.
Specialty or emergency animal hospitals tend to be destination locations sought out during emergencies rather than convenience-based like retail spaces. These types of clinics are often found near busy traffic corridors or highway intersections, sometimes even in light-industrial settings.
Connect CRE: What changes have been seen within this sector?
Daniel Eisenstadt : The industry has undergone significant changes recently due to an increase in pet ownership leading up demand for boarding services as well as veterinarian care services . This growth has attracted institutional investors such as private equity funds because consolidation is occurring within this industry thanks largely impart by private equity investments on behalf veterinarians themselves . While consolidation is less common among practice owners , it remains highly fragmented when it comes down owning actual property itself .
Connect CRE: Why is investing in veterinary properties attractive?
Daniel Eisenstadt : One key factor that makes investing appealing is having long-term tenants who rarely move once established at one location which creates stability . General practice clinics tend to draw patients from within a five-to-ten-mile radius, making it difficult for them to relocate without risking their patient base. Additionally, the high cost of building out modern veterinary facilities also makes moving an expensive option.
Connect CRE: What should investors consider when evaluating this type of real estate?
Daniel Eisenstadt : As with any net leased property, thorough evaluation is crucial and should include location analysis as well as lease and credit considerations. Other factors such as curb appeal, rent prices compared to market rates , creditworthiness of the tenant or guarantor on the lease agreement , and structure of the lease itself are all important aspects to consider . It’s also essential for investors to understand if there is room for expansion at a particular site or if additional veterinarians may be needed in order increase production .
Terravet plans on expanding its portfolio by acquiring more high-quality veterinary properties . This includes growing Terravet REIT which offers tax advantages while providing diversification opportunities.
Connect CRE: What is your outlook for this sector?
Daniel Eisenstadt : The future looks bright for veterinary real estate due in part because pet ownership continues rise along with demand boarding services veterinarian care services . With institutional interest increasing thanks consolidation efforts made private equity firms combined resilience industry sticky nature tenants make investing attractive opportunity .
Overall Daniel Eisenstadt believes that investing in quality veternary properties can provide long-term stability growth potential given current trends towards purpose-built facilities strong tenant retention rates.
