There are new brands of veterinary clinics popping up in more upscale urban retail spaces, attracting a large number of millennials who are open to pet ownership. During the COVID-19 lockdown, as childless millennials were craving companionship, there was an uptick of pet adoptions, at a rate of 15% more in 2020 than in 2019. In March, Morgan Stanley predicted that pet care will become a $275B industry in less than 10 years, and that by 2030 pet ownership will increase by 14%. Veterinary services are especially trending in the U.S., with the industry seeing a 3.3% increase per year over the last five years.
The latest clinics, forced to compete with big name brand in-store veterinary care services from Walmart, Petco and even Tractor Supply Company, are emphasizing ease and convenience, with many providing app-enabled scheduling and 24-hour vet availability via text teleconferencing that today’s younger generation has come to expect. Watch for PetWellClinic, Heart + Paw, easyvet, Bond Vet and Modern Animal to all expand their national presence, fulfilling the country’s ever-increasing pet care needs. Grocery-anchored strip centers and street-front retail districts near pet-friendly multifamily developments — especially those with features such as dog runs — will especially be favored locations for veterinary clinic brands. Preferred co-tenants include pet supply stores, fitness centers, coffee houses and fast-casual eateries that all attract the coveted millennial audience. Both urban and suburban markets in higher income neighborhoods with a larger number of 20- and 30-somethings are sought after.
PetWellClinic is on track to open at least 15 to 20 new units per year over the next two years, with that number likely increasing to 25 to 30 new units per year from 2023 onward as more franchisee deals are signed. Look for growth to be especially strong in Washington, D.C., Maryland and Northern Virginia, due to a franchisee, who has already found success opening franchised Orangetheory Fitness studios in the same region, signing on to open up to 25 PetWellClinics throughout the area. In addition, immediate expansion will take place throughout all of New Jersey, as well as New Hampshire, Denver, Pittsburgh and New York City. The walk-in veterinary brand looks for space in the 1,000- to 1,200-s.f. range (although space can be as small as 600 s.f.) in middle class grocery-anchored strip mall centers in both urban metro and suburban retail districts with high-traffic, wellness themed co-tenants, such as 24 Hour Fitness. In September of 2020, PetWellClinic began working with Oakscale Franchise Development for the sole purpose of increasing its reach into the top U.S. markets. Also in September, PetWellClinic received a capital investment from Westside Franchise Brands. PetWellClinic, which provides walk-in, affordable, non-surgical veterinary services in an open-format setting, utilizes its own proprietary software that tracks wait-times for customer convenience.
Heart + Paw, originally co-founded by the former CEO of Banfield Pet Hospital three years ago, also expects to open approximately 15 to 20 new units per year until 2024. Half of those openings are anticipated to be its own name brand clinics, with the other half being partnership deals with other veterinary mom-and-pop brands that will retain their own storefront names. Heart + Paw is primarily looking to expand throughout the Northeast and Mid-Atlantic states and is willing to partner with other veterinary clinics in Midwest destinations such as Ohio, Tennessee and Kentucky. Heart + Paw will open its first name brand unit in Maryland, coming to Baltimore by September, and in February it opened its first unit in the state of Virginia. Expect more growth in those states, in addition to continued expansion in Pennsylvania and New Jersey. Heart + Paw seeks end cap space, or space close to a high-traffic street, that is approximately 4,000 s.f., in urban mixed-use space and outlying suburban strip centers, power centers and lifestyle centers close to multifamily developments. Preferred co-tenants include popular high-end millennial brands such as ULTA Beauty, REI, Trader Joe’s, Whole Foods Market, Athleta, Nordstrom Rack, Starbucks and Panera Bread. Heart + Paw, whose interior mimics a spa setting rather than a sterile office, also provides services such as grooming, pet daycare, and dog and cat boarding. Investment firm Waud Capital Partners put $100M into the brand in 2019 to help with expansion goals.
The easyvet brand of animal clinics anticipates opening about 10 to 15 new units per year over next two years, as the franchise signed 30 franchisees deals in February. Expansion is expected to continue in the South, the Midwest and the Southwest, with Texas, Arizona, Alabama, Florida, Tennessee, Georgia, Indiana and Colorado being eyed for growth over the next two years. Easyvet primarily seeks inline space, in the 1,200- to 2,000-s.f. range, in mid- to upscale suburban grocery-anchored strip mall centers, near other health-related tenants, such as Aspen Dental or AFC Urgent Care, in addition to family-friendly fast-casual eateries such as Subway. Easyvet, which began franchising four years ago, offers walk-in services, and because it does not perform surgical procedures, the brand is able to occupy smaller retail spaces in convenient locations.
Bond Vet, which in November raised $17M of Series A funding from Talisman Capital Partners in order to increase its expansion goals, anticipates opening approximately five to 10 new units per year over the next three years. The veterinary clinic will expand outside of its base in New York City into outlying suburban markets in Long Island, in addition to eyeing upscale urban markets in the Northeast, including Washington, D.C., Boston and Chicago. Bond Vet seeks inline or end cap street-front space in the 2,000- to 2,500-s.f. range in high-density neighborhoods, including ground-floor retail of multifamily developments with a large proportion of affluent millennials. Space should be near fitness gyms and fast-casual restaurants that are popular with 20- to 30-somethings, including Starbucks and Sweetgreen. Bond Vet, which stays open until 8 p.m., allows walk-in visits and does not require a membership for booking an appointment. The chain provides urgent and primary care for pets, including surgical procedures, spay and neutering, vaccinations and dental cleanings. The clinic also offers its own app for texting vets with questions, and for scheduling purposes.
Based in Los Angeles, the Modern Animal veterinary clinic brand expects to open up to 12 new units per year over the next three years, with that number likely increasing from 2024 on. With growth continuing in mid- to higher-end communities in Southern California, Modern Animal anticipates having new units throughout the top MSAs in the Sunbelt states, including Texas and the Southeast, in addition to Denver and Phoenix. Modern Animal looks for infill, standalone and inline urban street-front space at a minimum of 3,500 s.f., including ground-floor units in mixed-use developments. The space does not necessarily need to be a part of a retail center, but the area should have a large demographic of 25- to 45-year olds. The veterinary brand charges $100 annually for a membership that includes routine visits, and online vet interactions are available 24/7 through its app.
