How To Invest in Veterinary Clinics Real Estate

The veterinary industry is quietly becoming one of the most attractive investment opportunities, and major players are taking notice. With the pet care market projected to soar past $236 billion by 2030, corporate groups and private equity firms are aggressively acquiring veterinary clinics — and the real estate they occupy.

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But why? Unlike traditional commercial properties, veterinary clinics are recession-resistant, e-commerce-proof, and backed by long-term leases. Investors who recognize this trend early are securing stable, high-yield assets in a market poised for long-term growth.

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If you’ve never considered veterinary clinic real estate, now is the time to pay attention. But how can you get started in this niche market and maximize your returns?

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Market Overview: The Rising Demand for Veterinary Clinics Real Estate

The Explosive Growth of the Pet Care Industry

Pet ownership is at an all-time high, fueling a multibillion-dollar industry that continues to expand. As of recent reports, 67% of United States households own at least one pet, translating to over 84.9 million homes that rely on veterinary care. This surge in pet ownership has driven the pet care market to $120 billion, with a steady 7% annual growth rate over the past decade.

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One of the most significant factors driving this growth is a shift in consumer behavior. Millennials, now the largest pet-owning demographic, are more willing than ever to invest in high-quality veterinary care. They view their pets as family members rather than just animals. This shift has led to increased spending on preventive treatments, specialized care, and emergency services, driving further demand for veterinary clinics.

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A Recession-Resistant Asset

While traditional commercial real estate (CRE) sectors like retail and office spaces have faced challenges, veterinary clinics have proven remarkably resilient, even during economic downturns. The COVID-19 pandemic reinforced this stability as pet ownership increased. Veterinarian clinics were deemed essential businesses, remaining open while other industries struggled.

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Unlike retail, which is vulnerable to e-commerce disruption, veterinary services require in-person care, making them immune to online competition. Additionally, pet owners prioritize their animals’ health, even in the face of financial hardship, leading to lower default rates on rent and mortgages for veterinary properties.

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A High-Demand, Low-Supply Opportunity

The rapid expansion of the pet care industry has created an unprecedented demand for veterinary real estate. However, available properties are scarce, making this an attractive niche for investors. Many veterinarians own both their practices and their real estate, often underestimating the actual market value of their properties.

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Over the last few years, the veterinary real estate sector has outperformed traditional retail properties, trading at higher rent multiples than well-located retail spaces. According to CoStar Group, the veterinary clinics' CRE sector recorded $850 million in sales volume from February 2022 to February 2024, reflecting strong investor demand and market activity. Additionally, veterinary clinics boast an average cap rate of 6.9%, making them an attractive alternative to other real estate asset classes. With average sales prices reaching $1.4 million per property, investors recognize the high-value potential of this market.

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With a growing industry, resistance to recession, and strong tenant demand, veterinary clinic real estate is positioning itself as a high-yield, low-risk asset class that savvy investors should not overlook.

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How To Invest in a Veterinary Clinic Real Estate: A Step-by-Step Guide

Now that we have covered the market trends affecting veterinary clinic real estate demand, it is time to focus on the actionable steps investors need to take. Whether you're a first-time investor or a seasoned CRE professional, following a structured approach will help you identify profitable opportunities, mitigate risks, and maximize returns.

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Step 1: Define Your Investment Strategy

Before entering the market, you need a clear investment strategy that aligns with your financial objectives. Consider the following:

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• Active vs. passive investment: Do you want to own and manage the property directly, or would you prefer a hands-off, triple-net lease (NNN) investment, where the tenant covers most expenses?
• Short-term vs. long-term hold: Are you looking for quick appreciation (buy and resell at a higher price) or a stable, long-term cash flow through rental income?
• Solo vs. group investment: Will you invest individually, or would you prefer to join a real estate syndicate, REIT, or partnership to pool resources and diversify risk?

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Your investment approach will influence which types of veterinary properties best fit you.

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Step 2: Research High-Growth Markets

Location is crucial to the success of veterinary real estate. Before acquiring a property, conduct thorough market research to identify areas with high demand:

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• Look for strong demographics – Invest in areas with high pet ownership rates, high median incomes, and growing populations to ensure long-term demand for veterinary services.
• Evaluate market growth and competition – Is the area underserved or saturated with veterinary clinics? A market with rising demand and limited competition is ideal.
• Check accessibility and visibility – Properties on high-traffic roads with good signage attract more clients, increasing clinic success and property value.
• Consider state tax laws and business climate – Some investors prefer to locate in tax-friendly states or regions that are business-friendly to optimize profitability.

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Step 3: Find the Right Type of Veterinary Property

Not all veterinary clinics are the same, and the type of property you invest in affects risk and return. Consider these options:

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• Standalone veterinary clinics – Typically offer long-term, stable leases with well-established tenants.
• Multitenant medical buildings – Provide diversification by housing multiple healthcare providers, reducing reliance on a single tenant.
• Build-to-suit clinics – Custom-designed properties leased to veterinary groups, often on long-term agreements.
• Corporate vs. independent tenants – Corporate-backed leases provide lower risk and guaranteed rental income, while independent tenants may offer higher returns but require more due diligence.

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Step 4: Analyze the Lease Agreement & Financials

Since veterinary clinic real estate is valued based on lease terms, it is critical to review the lease structure, tenant strength, and income potential:

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• Check the lease term – Properties with 10-plus years remaining on the lease are more attractive to investors and lenders.
• Evaluate rent escalations – To ensure growing income, look for leases with 2%-3% annual rent increases or block increases every 5 years.
• Confirm lease type (NNN or absolute NNN preferred): NNN leases, in which the tenant pays property taxes, insurance, and maintenance, offer passive, low-maintenance cash flow.
• Assess tenant strength – Corporate veterinary groups or franchise-backed clinics reduce risk, while independent clinics may require financial vetting.
• Review market cap rates – Compare the property’s capitalization rate (cap rate) with similar sales in the area to determine whether the investment is reasonably priced.

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Step 5: Secure Financing & Structure the Deal

Once you have identified a substantial investment opportunity, you must structure the deal and secure financing:

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• Explore financing options – Depending on your investment size, you can use traditional bank loans, Small Business Administration (SBA) loans (for owner-operators), real estate investment funds, or private lenders.
• Negotiate favorable terms – Work with a real estate attorney and broker to negotiate the purchase price, lease terms, and contingencies.
• Consider a 1031 exchange (for tax savings) – A 1031 exchange can defer capital gains taxes if you're reinvesting from another property.

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Step 6: Close the Deal & Manage the Investment

After financing is secured and due diligence is completed, the deal can be closed, and the investment can be managed:

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• Ensure proper property management – If you own the clinic but lease it to a tenant, consider hiring a property manager to oversee leases and maintenance.
• Monitor market trends and lease renewals – To maintain profitability, monitor market appreciation, tenant performance, and lease renewals.
• Plan an exit strategy – Whether you hold for long-term cash flow, refinance, or sell, having a clear exit plan will help you maximize returns.

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What Determines the Value of Veterinary Clinic Real Estate?

Investing in veterinary clinic real estate requires understanding the factors that drive property value, marketability, and return on investment. Whether you’re looking to acquire, sell, or lease a veterinary property, knowing what influences its worth will help you make strategic decisions.

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The three primary factors that determine the value of veterinary clinic real estate are:

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1. The property – The clinic's land, building, and physical condition.
2. The lease agreement – The financial terms and security of the tenant’s lease.
3. Location – The surrounding market demographics, accessibility, and visibility.

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Let’s break down each component and how it impacts your investment.

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The Property: Understanding the Physical Asset

The building and land that house a veterinary clinic play a significant role in determining its value. Investors and buyers assess properties based on the following:

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• Age and condition – Newer buildings with modern infrastructure typically attract higher valuations, but even older properties with solid construction (e.g., concrete walls and metal roofing) can retain substantial value.
• Land size and usability – A larger parcel offers expansion potential and increased value, especially in areas with limited CRE availability.
• Building improvements and maintenance – If a landlord is responsible for roof repairs; heating, ventilation, and air conditioning (HVAC) systems; or structural maintenance, these costs factor into the investment appeal. Investors prefer properties where the tenant assumes these obligations (NNN or absolute NNN leases).

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Another critical aspect is how corporate veterinary groups handle their practice locations. Due to the nationwide shortage of veterinarians, companies may opt to relocate staff instead of maintaining multiple hospitals in the vicinity. This factor influences whether a property remains a long-term asset or becomes a higher-risk investment.

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Additionally, some veterinarians or corporations own multiple clinics and may choose to sell them as a portfolio. This can attract institutional buyers seeking diversified investments, but the decision should be evaluated in consultation with an experienced veterinary real estate broker to maximize value.

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The Lease Agreement: A Key Driver of Property Value

The lease is as important as the physical property in CRE. Investors evaluate veterinary clinic real estate based on the following:

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• Capitalization rate (cap rate) and net operating income (NOI) – Properties are valued using a cap rate, which reflects risk and return. A lower cap rate, indicating lower risk, is often observed in long-term leases with stable corporate tenants.
• Remaining lease term – Veterinary clinics with 10 years or more remaining on their leases are significantly more valuable than those with short-term agreements, as they provide long-term cash flow security.
• Annual rent increases – Most veterinary clinic leases include 2%-3% yearly rent escalations or 10% increases every 5 years. A lease without rent increases can limit property appreciation, reducing its value.
• Corporate guarantees – If backed, the investment is considered to be of lower risk. A veterinary clinic is leased to a corporate tenant with financial backing. Investors prefer clinics with corporate guarantees, as they offer financial security even if the individual practice experiences difficulties.
• Landlord responsibilities – In NNN leases, tenants pay taxes, insurance, and maintenance, making them ideal for passive investors. If the landlord is responsible for significant expenses, the property may be perceived as less attractive.

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An experienced real estate broker specializing in veterinary properties can help investors analyze lease agreements to ensure they align with their investment goals.

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Location: The Foundation of Real Estate Value

“Location, location, location” holds for veterinary real estate just as much as it does for retail or office properties. The best investment opportunities are often found in areas with:

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• Strong demographics – Investors consider population density, median income levels, and pet ownership rates to determine demand.
• Visibility and accessibility – High-traffic locations with easy access and good signage increase customer retention. A veterinary clinic tucked away on an unmarked road may struggle compared to one on a main thoroughfare.
• Market growth and competition – Areas with growing populations and limited veterinary services offer higher investment potential than oversaturated markets.

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Some investors target low-tax states or specific geographic regions based on their investment preferences. Understanding local market conditions and future growth projections is essential when evaluating a veterinary real estate investment.

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Start Investing in Veterinary Clinic Real Estate Today

Veterinary clinics are among the most stable and recession-resilient asset classes in today’s market.

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I’ve been investing in CRE for over 30 years, with billions of dollars in transactions and over $500 million in assets under management, and a 28% historical internal rate of return (IRR) to show for it.

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This isn’t about chasing deals. It’s about partnering with someone who knows how to find, underwrite, and operate high-performing assets that deliver.

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If you’re ready to grow your portfolio with durable cash flow and long-term upside, let’s connect and talk about how we can partner on your next investment.

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Frequently Asked Questions (FAQs)

How big is the pet care industry?

The pet care industry is currently valued at around $120 billion and is expected to exceed $236 billion by 2030, growing at an average annual rate of 7%. This growth is fueled by rising pet ownership, especially among millennials who treat pets as family and prioritize spending on preventive care and specialized veterinary services.

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What industry is pet care in?

Pet care falls within the broader healthcare and consumer services industries, specifically under the veterinary services and pet retail sector. It includes services like veterinary clinics, grooming, pet food, boarding and health-related products. As veterinary care remains essential and recession-resistant, it plays a critical role in the healthcare side of the pet care industry.

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What do pet shops do?

Pet shops typically sell a variety of pet supplies, including food, toys, grooming tools, and accessories. Many also offer live animals, like fish, birds, and small mammals. Some may provide basic services, such as grooming, nail trimming, and advice on pet care. They are often the first stop for new pet owners seeking to meet their animals' daily needs.

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How profitable is a veterinary practice?

Veterinary practices can be highly profitable, especially when paired with real estate ownership. According to the blog, these clinics are recession-resistant, offer long-term leases, and are often backed by corporate or franchise groups. Properties with veterinary tenants typically have average cap rates of around 6.9%, with sale prices usually reaching $1.4 million per property. Additionally, veterinary clinics remained open and operational during economic downturns, such as the COVID-19 pandemic, further demonstrating their financial stability.