It’s fascinating to see how real estate has changed since COVID-19 swung into town. There’s less appetite for larger retail developments, as attention turns towards a semi-residential, semi-suburban ‘smaller is better’ retail model that enables 20-30 units to form part of a neighbourhood community.
Within that model, there’s greater appetite for wellness zones, evidenced by landlords’ increasing focus on tenants such as yoga, fitness and spa to fit a growing expectation of wellness options within communities.
This shift in real estate is allowing more choice for consumers. The ‘little and often’ drop-in wellness experience is easier for people to fit into their schedule when it’s delivered in high street city centre or residential locations, and although these smaller units mean less rent per square metre for landlords, they can attract a more diverse tenant mix.
It’s all about creating longer dwell times, attracting people to retail areas so they can enjoy a wellbeing experience, then have a coffee, lunch or shop. Regular spa clients visit at least once a month, which offers potential business benefits to adjacent retailers.
Regarding location, in the UK, we’ve seen two or three 5* spa and wellbeing projects recently move into central London and add childcare or medical solutions to their mix.
Although private operators and investors may head into these glamorous locations, we think the commercial wealth – investment banks and investment houses – will choose semi-residential areas, where they may already have properties, to develop spa and wellness offerings.
Business will be tougher for hotel operators that have bolted on spas to increase weekend occupancy at motorway junctions away from town centres, because people will be less willing to travel if they’re able to get a wellness experience closer to home. Typical conference business will be slow to return in 2022, due to long lead times, presenting something of a double-trouble for these locations.
Outside the UK, short-haul wellness destinations are likely to continue to appeal to European and British visitors. However, we’re not confident long-haul destinations, such as The Maldives and Mauritius, will be back up and running that quickly. They’re attractive for the European, Asian and UK markets, but the challenge now is getting and keeping staff due to the variables in current occupancy levels. These could be strong in peak periods, but other seasons are likely to be short and then the value of that real estate will drop.
More than ever, the operational practicalities will play an important part in property decision-making in 2022