Though it’s always been ‘big business’, the past several years has seen a dramatic spike in the number of people prioritising health and wellbeing. The wellness lens has been applied to everything from tourism to shopping and fine dining, and of course, we’ve seen growth in how wellness is factored into the built environment — especially in terms of improved amenities in both residential and commercial space.
In fact, a recent report from the Global Wellness Institute (GWI) shows that expenditure on the construction of wellness real estate grew to $718 billion (NZD) in 2023, and it’s still growing. Over the next several years, GWI projects a CAGR (Compound Annual Growth Rate) of 15.8% for the wellness real estate market, boosting its value to $1,495 billion (NZD) by 2028.
In 2023, that translated to nearly 3% of annual global construction output. And given that much of that construction was within commercial real estate (CRE) sectors, it’s a trend that any CRE professional should be keeping an eye on.
What Is Wellness Real Estate?
GWI defines wellness real estate as: “the construction of residential and commercial/ institutional (i.e. office, hospitality, mixed-use/multifamily, medical, leisure, etc.) properties that incorporate intentional wellness elements in their design, materials, buildings, amenities, services, and/or programming.”
While that definition covers a wide range of possibilities, there are some common themes in the space. For example:
Physical wellness includes factors that promote physical activity (recreational amenities; walkability), the use of non-toxic materials during construction, and facilities that improve indoor air quality.
Meanwhile, mental wellness improvements include biophilic design (think office space with rooftop gardens) and designs that incorporate quiet areas and resting spaces.
Other factors that increase the wellness credentials of space include buildings designed with climate concerns in mind or using energy-efficient and waste-reducing systems.
A Growing Trend In CRE
In purely CRE terms the wellness market spans several growing trends. We’ve seen a shift towards wellness in senior housing, for example, with residents increasingly opting for developments that prioritise amenities and social interaction.
Other sectors, like retail, have seen a higher expectation from consumers around experiential shopping, especially in terms of experiences that boost a sense of wellbeing. Similarly, figures from the hospitality industry show that properties that prioritise wellness offerings often outperform their “no-wellness” contemporaries.
Meanwhile in the office sector, prioritising wellness typically means ensuring office buildings meet high standards in terms of cleaner environments, spaces that encourage movement, rest and interaction, and the inclusion of natural materials and light. In some cases, that includes seeking out certifications to prove a commitment to health and wellness ideals.
Navigating New Terminology
Naturally, as with any developing trend, the growth of the wellness real estate market also means a lot of new buzzwords are making their way into the space. One recent example is the increasing interest in designating specific buildings, towns, or neighbourhoods as “Blue Zones.”
If you’re familiar with that term, you’ll know it refers to regions of the world where populations live longer, healthier lives. Often because of healthier diets, strong social ties, and staying active. There’s also been some pushback on the term among residents in proposed “Blue Zone” areas who feel the designation comes into competition with other initiatives in their communities.
Keeping Well
While specific buzzwords and trends may fluctuate, it’s clear that the overall move toward wellness real estate is here to stay. For the savvy real estate professional, keeping on top of terminology and developments in this space offers another way to add real value for clients and bolster dealmaking.
As always, however, brokers should be keeping a sharp eye on the bottom line when it comes to determining the value-add of wellness certifications and amenities. Doing so ensures that wellness initiatives combine “doing better” with making the kinds of sustainable long-term choices that will keep properties performing at peak value.
Source: NAI Global