The term “self-care” has recently emerged in popular culture to refer to an individual taking steps to ensure that they are carving out time and energy to take care of themselves; whether it be mentally, emotionally, spiritually or physically. The idea has caught on like wildfire on social media and in the self-help categories, but interestingly, the trend is also affecting commercial real estate retail leasing in a big way.
At the close of 2018, the retail industry in the Minneapolis-St. Paul market has seen a surge in the number of leases signed by beauty, health and wellness retailers, specifically specialty brands that fill a niche. Because part of the self-care trend is the freedom of the individual to curate a personalized menu of what this “care” means to them, new and unique concepts have been coming to market and are quickly expanding.
For example, an individual’s self-care regime could include: barre class twice a week, a massage and lash extensions once a month, a manicure every two weeks and spin class on the weekends, followed by a UV sauna. Wisely, these retailers and service providers have capitalized off of this consumer's established routine and many are offering monthly “membership packages” that provide access or services at a reduced rate. Rather than paying one-time, a la carte rates, the consumer receives a discount for essentially buying in bulk and the retailer now has this consumer on retainer; they know that they can count on monthly revenue.
This membership pricing structure is one of the driving factors that has led to the abundance of new-to-market concepts and expanding existing specialty service providers in the metro. The guaranteed income from memberships help these groups confidently sign leases in retail leasing markets that can be affected by rising rents, operating costs, taxes and labor.
Some fitness examples include: Orange Theory, Club Pilates, Pure Barre, Title Boxing, Cycle Bar, Row House and Core Power Yoga, all of which have monthly memberships, ranging from single classes to unlimited access. These boutique shops are unlike traditional gym memberships in that they specialize, or some could argue, excel, at one, highly-specific, niche type of workout catering to the individual. More traditional gym models are also thriving in the Twin Cities, for example the expansion of Xperience Fitness and Lifetime Fitness into vacant big boxes across the metro.
The expansion of specialty beauty concepts are also taking up small and mid-size vacancies in both urban and suburban submarkets and include: lash extension boutiques, nail salons, waxing centers and blow dry bars, many of which offer membership pricing for a certain number of services per month.
There are also hybrid concepts that match fitness and beauty with medical wellness such as: vein clinics, laser hair removal, stretch labs, spas that offer acupuncture, massage and UV sauna or even cool sculpting or other weight loss methods. Again, many of these concepts are creating spinoffs or expanding into new markets every day, due to the success they are experiencing with their membership pricing structures and well-located assets.
Not unlike the giants of membership, Amazon and Netflix which were founded on this structure, these smaller boutique groups have caught on to the economic benefit that monthly membership pricing structures offer them and have found success both locally and nationally, as consumers are notably spending more time, energy and money on living their best lives through the self-care trend.
Colliers International | Minneapolis - St. Paul
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