Four Ways the Rise of Ozempic Could Shift Real Estate Investments – CoStar Group

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More people are taking Ozempic and similar types of weight-loss drugs these days, a surge that could lead to changes in demand for life science and other types of commercial property.

The executive overseeing investment bank J.P. Morgan’s alternative business arm, with most of its $213 billion of assets under management in U.S. real estate, expects the drugs prescribed for weight loss like Ozempic, known as GLP-1s, could alter consumer behavior, causing ripple effects on property use.

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Between 50 million and 100 million users eventually could take GLP-1s in the United States, said Anton Pil, J.P. Morgan Asset Management’s global head of alternatives. Pil spoke at retail commercial real estate brokerage Weitzman’s annual market forecast in Dallas on Jan. 11. About 9 million people in the United States were on GLP-1s at the end of 2022, a 300% increase from early 2020, according to a report from data analytics firm Trilliant Health.

Seemingly small decisions made by consumers — such as whether to buy a coffee at Starbucks — can turn into much larger real estate decisions by investors. For example, if J.P. Morgan Asset Management puts a Starbucks in the ground-floor retail space of an apartment building it owns, the firm can charge between $350 and $400 more in monthly rent on residential units in the building, Pil said.

From left, Herb Weitzman, founder and executive chairman of Dallas-based Weitzman, speaks with J.P. Morgan Asset Management’s Global Head of Alternatives Anton Pil about his thoughts on real estate at the George W. Bush Presidential Center in Dallas. (Candace Carlisle/CoStar News)

While there’s no guarantee the popularity of the drug will grow or that any behavioral changes will be long-lasting or widespread, spending patterns already are changing for people who are taking GLP-1s, according to anonymous data from 95 million J.P. Morgan Chase Bank customers, Pil said. Here are four ways he said those spending patterns could trickle into real estate decisions:

Sales at fast-food restaurants may decline. Pil said spending on fast food could drop about 85% for people who take a GLP-1, leaving him to wonder how fast-food restaurants can pivot from offering a $1 burger to other food offerings.

Alcohol sales for individuals taking these drugs could drop 60% to 70%. Pil said about 20% of the population consumes about 80% of the alcohol in the United States. This population could become prime candidates for GLP-1s and U.S. alcohol sales could tank, affecting some retailers.

Snacks and sodas may become less appealing, making room for other treats. Pil said spending on snacks drops 80% for consumers on a GLP-1, while spending on sodas decreases 70%. This could leave room in a consumer’s budget to spend at a juice bar for an afternoon indulgence.

More demand for space may be needed from gyms, spa and beauty retailers and apparel stores. To support a person’s new lifestyle after taking an Ozempic-like drug, Pil said consumers will need a place to exercise and support their new healthy lifestyle. This could include a new wardrobe.

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