Med Spas Are Booming Across The Country. But Their Real Estate Potential Comes With Fine Print

Medical spas are popping up in storefronts and office buildings across the land, creating a real estate boom fueled by high-margin procedures and minimal regulation. 

Med spa facilities that offer advanced, nonsurgical aesthetic treatments like Botox, fillers and GLP-1 injections represent a $17B industry that employs 100,000 people, according to the American Med Spa Association 2023 State of the Industry Report.

The number of med spas across the country jumped from about 8,900 in 2022 to roughly 10,500 in 2023, with average annual revenue coming in at about $1.4M. And with the average patient spend per visit of $527 and an average of 245 patients per month per spa, they're doing big business.

But as med spas become a common fixture in retail and mixed-use spaces, their rapid growth is testing the limits of existing oversight. An uneven regulatory landscape has created room for confusion and risk centered on who is qualified to perform certain procedures and how these businesses are operated, industry experts and legal professionals say.

Some worry the boom could bust.

For veteran aestheticians like Steven Dayan, the rapid-fire expansion of new med spas is a far cry from the state of play when he entered the industry in 2000. The board-certified facial plastic surgeon and founder of Impressions Face + Body in Chicago’s Old Town said there were far fewer doing this type of work 25 years ago.

“They're everywhere,” Dayan said. “Every week, another med spa. And they're opening up in malls and they're opening up in street corners, and beauty salons themselves are doing it.”

Linda Miriam, founder of Crunchy Buzz, which manages SEO, Google Ads and public relations for top-performing wellness brands and med spas in California, said many of her clients that started with one clinic are expanding and opening up in nearby suburbs, zeroing in on locations with high foot traffic. For many would-be tenants, it has been a grind. 

“It's also been really difficult to get a space, because there's all these considerations now, like if the landlord has another med spa within the area,” Miriam said.

One outstanding question is if the industry is at a saturation point, Dayan said.

But regulatory concerns are equally thorny and could put those hoping to cash in on the trend — and their patients — at risk. Some states are beginning to take action on the largely unregulated industry that now allows many nondoctors, like nurses, physician assistants and even unlicensed staff, to administer treatments such as Botox or laser resurfacing.

Lots of procedures have been performed safely. But the proliferation of med spa facilities and lack of regulation surrounding who can perform procedures have led to disastrous effects for some patients.

A Texas woman died after receiving an IV therapy treatment at a Texas-based spa from an unlicensed individual. An aspiring California-based influencer took treatments intended to boost her energy and burn off body fat, only to be left with a drug-resistant infection that would leave her scarred and still in recovery more than two years later.

Malpractice claims against med spas have led to big losses in recent years. In 2023, a court awarded a $1.2M judgment against a medical spa in Pennsylvania over botched chin injections given by a nurse who had a suspended license. 

“Within the balance of the law, these people are allowed to practice maybe when they're not quite as qualified to do so, and then it leads to this damage,” said Anne Schneider, an associate attorney with Fenton Jurkowitz Law Group, which represents and advises healthcare providers on litigation and regulatory matters. 

At the same time, it’s easier than ever to open medical spa facilities and for consumers to finance the procedures, making them hot real estate properties.

Mike Petrakis, founder and CEO of PowerPay, which partners with medical spas to provide consumer lending, told Bisnow in an email that he’s seen a significant increase in consumer demand for financing med spa procedures over the past few years. The trend accelerated postpandemic as consumers shifted spending priorities toward wellness, self-care and aesthetic enhancement, he said.

Med spa users are commonly financing treatments like body contouring, laser hair removal, skin tightening, injectables and microneedling or other skin rejuvenation therapies, Petrakis said. That has become a tool for operators to grow by reducing the cost barrier for treatment. 

“We’ve also seen financing play a key role in enabling med spas to expand into new retail because it increases their ability to attract a broader client base,” Petrakis said in a statement. 

But many operating such facilities have lower quality experience, Dayan said. Consumers may begin to push back if that becomes the standard. 

“There's only so many people that can be professional ball players, Navy SEALs, NASA astronauts,” Dayan said of unqualified practitioners in the industry.

“Eventually, when you keep training people, you get to a saturation point where you're not producing anyone good anymore … What's the complication from that? The average result is not as good because you regress to the mean.” 

When Dayan picked his new location in Old Town, he made sure there was space allotted for his operating room to perform certain procedures. But operators opening up a small medical spa to do Botox and fillers and some laser treatments can do “it in a shoebox.” 

Kimberly Mack, owner of Skin Laser & Med Spa and resident of Optima Signature in Chicago's Streeterville, told Bisnow in an email she had long dreamed of opening a med spa before setting up shop in her own multifamily building. She chose the location, a business suite in a residential building, so the shop could serve as an amenity for residents and other people in the neighborhood. 

Mack said the majority of her client base comes from outside of the building and through word of mouth. Residents who discover the business are often excited to have an easily accessible med spa, and she said several clients have ended up moving into the building after visiting her business.

“The growing cultural acceptance of aesthetic treatments for everyone is creating strong demand for med spa services in Chicago and the surrounding suburbs,” Mack said in a statement. “It’s a booming market and I expect it to continue to grow rapidly.”

Regulations on the industry are fairly patchwork across the country, though Illinois did recently tighten oversight by issuing guidance at the end of last year requiring that medical spas be owned and operated by licensed medical professionals and that procedures like Botox, fillers and lasers be performed or directly supervised by a doctor on-site.

Ohio's attorney general is cracking down on spas that offer weight-loss injectables, and Rhode Island has just enacted the Medical Spas Safety Act, allowing only physicians, physician assistants and advanced practice registered nurses to perform cosmetic medical procedures.

Most other states, however, are far more relaxed, with minimal oversight on who can own or operate med spas and little to no requirements for physician supervision during procedures.

Texas Gov. Greg Abbott vetoed a measure last month that would have prohibited barbers, cosmetologists and other unlicensed people from administering Botox and other injectables. The legislation was backed by the state House and Senate and could come up again.

“There's a balance between restricting business and restricting people who are technically legally able to have these practices and then the safety of the public,” Schneider said. “I think right now, if I had to guess, the whole subject isn't quite being taken very seriously.”

Petrakis said he anticipates increased regulatory oversight will eventually help build long-term trust in the industry, making medical spas a safer investment. And though Schneider acknowledged that risks to consumers remain high, she doesn’t expect interest to go away anytime soon.

“The old saying that beauty is pain seems to ring true, and it seems in this digital age, where there's a constant, constant perfection standard for beauty, that unfortunately, the public will not change their approach,” Schneider said.