Service-oriented businesses such as gyms, medical spas and specialty salons have overtaken goods-based retailers in leasing activity for the first time on record in the United States, according to data from CoStar reported by The Wall Street Journal. Service-based tenants now lease more than 50 percent of total retail square footage in 2025, up from 40 percent 15 years ago.
The shift reflects a change in consumer priorities, with spending on experiences like yoga classes and high-end facials replacing traditional luxury goods. Brandon Svec, national director of U.S. retail analytics for CoStar, noted that “a handbag used to be the luxury symbol,” but today’s consumers prefer to invest in wellness.
The U.S. wellness market reached $2.1 trillion in 2024, according to the Global Wellness Institute. The country accounts for 32 percent of the global wellness economy and grew by over $130 billion between 2023 and 2024 alone.
E-commerce, which accounted for 16.4 percent of retail activity last year, has driven traditional retailers to downsize. Property owners are subdividing vacated spaces into smaller units for service businesses. Brian Finnegan, CEO of Brixmor, cited a former liquor store in Philadelphia split into an animal hospital, facial spa, stretching studio and nail salon, generating 20 percent more rent.
Noah Neiman, co-founder of boxing chain Rumble, described gyms as “the new happy hour,” where people socialise through activity rather than alcohol. Despite the shift, U.S. retail vacancy remains low at 4.4 percent, just above the 2024 record low of 4.1 percent.
