How the weight loss boom could affect the real estate market

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On the surface, it may appear that the use of weight-loss drugs has little to no relation with the demand for office spaces, shopping malls, and apartment buildings. Jonathan Petersen, a Jefferies analyst, begs for a different interpretation. He predicted that a fitter population would adopt a variety of new habits, which could have an impact on the economy. This could benefit some people while putting pressure on others. Petersen wrote in a Monday note to clients that while rebalancing your portfolio immediately on this trend is likely premature, we make predictions about how GLP-1 drug could transform Real Estate within the next decade. The glucagon like peptide receptor agonists are a new class of weight-loss drugs that have given hope to people with obesity and other chronic illnesses such as Type 2 diabetes or heart disease. Analysts predict that the use of these drugs, including Ozempic Wegovy, and Mounjaro will increase in the next few years because of the high number of people who could benefit from them. SPG mountain Simon shares are down 6% for the year. Petersen says the fallout could begin with an increase in foot traffic to malls, as patients who are on medication look for new clothes that fit their smaller frame. This would benefit mall operators like Simon Property, Federal Realty Investment Trust, and Macerich. Petersen says that restaurants may suffer as consumers consume less high-calorie food. This could be a blow for companies like NNN REIT, which owns a large number of restaurant properties. NNN REIT mountain shares are down more than 22 percent YTD. He speculates that a smaller population might be more social and seek out apartment buildings with shared amenities and spaces, such as pools. If this vision becomes a reality, it will boost apartment operators like Equity Residential, Avalonbay Communities, and Apartment Income REIT, among others. PEAK YTD, mountain Healthpeak’s shares have fallen 26% from January to a 52 week low on Tuesday. Petersen believes that the use of these medications will improve patient health over the long-term, which could lead to fewer doctor’s visits and longer life expectancy. This could benefit senior housing operators such as Welltower, but put pressure on operators of medical offices like Healthpeak. Healthpeak shares fell to a 52 week low on Tuesday while Welltower’s shares dropped more than 2%. Welltower is up almost 24% in the last year. Healthpeak’s shares have fallen by more than 26% in the same time period. Petersen’s not the first analyst who has looked at the implications of GLP-1 medications. Morgan Stanley has predicted that food and beverage manufacturers will suffer as patients who take these medications consume fewer calories. Medical device stocks do not need to wait for the knock-on effect. Investors have already hammered their stocks, predicting that fewer people would need insulin pumps, CPAP devices for sleep apnea or bariatric surgeries. Michael Bloom, a CNBC reporter, contributed to this article.