Healthy Growth

An evolving leasing landscape for health & wellness tenants in Houston reflects local and national trends

The commercial real estate landscape in Houston is among the nation’s most competitive, and the health and wellness space has been one of the best performing industry segments in recent years. When you put those two together, the result offers some fascinating leasing dynamics in both market-specific influences and broader industry trends that may reveal some interesting insights into the future of health and wellness in Houston.

Space remains at a premium

The leasing environment remains historically constricted in Houston, and throughout all major markets in Texas, with inventory in such short supply relative to demand that finding quality space is as challenging as it has ever been.

Health and wellness leasing might not be quite as cutthroat as restaurant leasing, but there are plenty of similarities in the sense that Houston continues to see persistently high demand in the sector. While every deal is different, the reality is that landlords are experiencing more leverage in the current market and are consequently being more thoughtful, strategic, and selective when it comes to tenant mix. They have an abundance of interest and are likely weighing multiple options for the same space.

Brand- and segment-specific nuances

A prerequisite to understanding health and wellness in Houston is recognizing the industry is not a monolith. Health and wellness includes a wide range of segments and sub-segments ranging from fitness concepts to healthcare offerings. Fitness includes categories like large-format fitness concepts (e.g. EōS Fitness and Planet Fitness), boutique group fitness brands such as [solidcore], and plenty of local and regional operators, as well. The factors that go into site selection for the operators can vary considerably from one sub-segment to the next.

For example, whether they are on the fitness side or in the service space like healthcare or spa providers, many of these brands are keenly focused on convenience when identifying new expansion possibilities. Almost no health and wellness segment has been as active in the last few years as urgent care. Operators in this extremely competitive segment recognize that consumers have ample options and that when it comes to choosing a provider, the decision-making process for patients often boils down to visibility, proximity, and familiarity. Convenience is therefore a non-negotiable priority.

Expansion and equilibrium

In Houston, many of the trends we are seeing in health and wellness reflect broader national tendencies. While urgent care has been arguably the most active of any health and wellness sub-category, expansion has started to slow slightly. There is a growing sense that with so much competition in the market, we may be approaching a balance point between supply and demand. Anecdotally, that movement toward equilibrium seems to mirror a broader national trend, where the post-COVID surge in urgent care expansion may have ebbed somewhat.

On the fitness side, popular large-format fitness concepts like EōS Fitness and Planet Fitness continue to expand. Select boutique fitness brands like the aforementioned [solidcore] are also expanding, but this isn’t the case for all users in the smaller-footprint category. Some concepts are continuing to be aggressive, while others have eased off the accelerator. Here in Houston, we continue to also see regional and local operators doing one-off deals—not necessarily expanding on a large scale, but those that can offer unique concepts are finding a foothold.

On the healthcare side of the equation, innovative providers like Kelsey-Seybold have been extremely active in the greater Houston market. The Kelsey-Seybold clinic is a self-described “one-stop shop” that offers “advanced imaging, diagnostic and lab services” all under one roof—a hybrid urgent care/hospital concept that now has 40 locations in and around Houston.

Some of the seeming disparities we are seeing from one health and wellness brand to the next in terms of expansion strategies, and activity specifically in Houston, are a testament to the diversity of this commercial real estate segment. In Houston, as it is throughout the nation, brands will ultimately sink or swim not based on external market factors, but on their ability to carve out a distinctive space for themselves in a crowded and sophisticated health and wellness landscape.