THE WHAT? Service-based businesses such as spas, gyms and wellness studios now account for more retail space leasing in the US than traditional goods retailers.
THE DETAILS In 2025, service-oriented tenants leased just over 50% of total retail space, surpassing goods-based retailers for the first time, according to CoStar. This marks a significant shift from 15 years ago, when service tenants represented around 40%.
The growth is largely driven by the wellness and fitness sector, with gyms alone accounting for nearly 30% of service leases, up from 20% in 2016. The US wellness market reached US$2.1 trillion in 2024, fueling demand for concepts such as IV therapy, Botox clinics, cryotherapy, Pilates studios and facial spas.
At the same time, e-commerce growth—now representing 16.4% of retail sales—has reduced the need for physical retail space, with many traditional retailers downsizing or exiting locations. Landlords are increasingly repurposing these spaces for service tenants, which often generate higher rents and increased foot traffic.
THE WHY? The shift reflects changing consumer priorities toward experiences, health and self-care, alongside the continued impact of e-commerce on physical retail demand.
Source: The Wall Street Journal
