Weight-loss drugs could reshape commercial real estate

It’s not exactly Chaos Theory — a butterfly flaps its wings in Brazil causes a tsunami in Japan — but market shifts in one area can have an unexpected profound effect on real estate.

To wit: The growing popularity of weight-loss drugs like Ozempic, Wegovy and Mounjaro — known as GPL-1s — is expected to impact consumer behavior and subsequently influence commercial real estate trends, CoStar reported. 

Anton Pil, the global head of alternatives at J.P. Morgan Asset Management, anticipates that the surge in weight-loss-drug users, potentially reaching 50 to 100 million in the U.S., could have ripple effects on the real estate market.

At a recent market forecast event, Pil highlighted the potential consequences of altered consumer behavior, citing a 300 percent increase in GLP-1 users in the U.S. by the end of 2022. 

While the long-term and widespread impact is uncertain, spending patterns are already shifting among GLP-1 users, as indicated by anonymous data from 95 million J.P. Morgan Chase Bank customers.

Pil outlined four potential ways in which these spending patterns could influence real estate decisions:

• Decline in fast-food sales: Weight-loss-drug users may reduce spending on fast food by about 85 percent, prompting questions about how fast-food restaurants can adapt their offerings, which could impact real-estate footprints.

• Drop in alcohol sales: Individuals on these drugs might make a 60-70 percent reduction in their alcohol consumption, impacting liquor retailers.

• Shift in snack and soda preferences: Spending on snacks may decrease by 80 percent, and soda consumption may drop by 70 percent, potentially leading to increased spending at alternative venues like juice bars.

• Increased demand for fitness and apparel space: A shift towards a healthier lifestyle post GLP-1 usage could result in higher demand for spaces such as gyms, spa and beauty retailers, and apparel stores as consumers seek to support their new lifestyle.

Pil said seemingly small consumer decisions, like purchasing habits, can have substantial implications for real estate investors. 

— Ted Glanzer