The Wellness Edition | Issue 21
Most people hear "distressed real estate" and think disaster.
Overleveraged office buildings. Empty retail strips. Landlords who borrowed too much and can't find their way out. And yes, some of that is exactly what's happening right now in commercial real estate.
But not all distress is the same. And that distinction matters a lot if you're a wellness operator thinking about owning your building, or an investor looking for assets that will actually perform.
The deals that are coming to market right now aren't all broken. Some of them are just owned by people who need to exit on a timeline that works in your favor.
Here's What This Looks Like on the Ground
A dentist in the Westshore corridor has been writing a rent check to the same landlord for seven years. The space is good. The patient base is established. The practice is profitable. She's been told by two different people, her accountant and her attorney, that she should look at buying.
What she didn't know is that the strip center her practice anchors was refinanced in 2021, and that loan matures in late 2026. The owner has three options: inject a significant amount of new equity, find a lender willing to refinance at current rates and reduced LTV, or sell.
She is now in conversation about buying her building at a negotiated price, using an SBA 504 loan, with 10% down. Her monthly payment will be lower than her current rent. And the building she'll own has a second tenant; a physical therapy practice whose lease runs four more years.
That's not a hypothetical. That's what distress actually creates when you know how to find it.
Why the Window Is Open Right Now
The numbers behind this are specific. According to ATTOM Data Solutions and MSCI Real Assets, ccommercial foreclosure activity has climbed to its highest level since ATTOM began tracking the data in 2014, with volume up roughly 30% year over year in some recent periods.
That distress isn't evenly distributed. MSCI Real Assets tracks approximately $116 billion in distressed CRE assets currently on the market or in workout situations. The majority of that is in suburban office and struggling retail categories where the underlying demand story is broken and probably won't recover. Those are not the deals to chase.
The deals worth paying attention to are properties where the distress is financial, not functional. A well-located strip center with good bones, strong co-tenancy, and visible frontage owned by someone who simply can't make the refinancing math work. The real estate itself is fine. The capital stack is the problem.
For a wellness operator with an established business and solid financials, that gap between "property is fine" and "owner needs to exit" is exactly the entry point.
The Four Types of Deals Worth Understanding
Not every distressed situation works the same way. Here's a plain-English breakdown of the deal types that are most relevant for wellness buyers right now:
Motivated seller sale. Owner needs to exit before the loan matures and isn't willing (or able) to inject equity into a refinancing. They price the property to move. This is the most common scenario and the cleanest to execute.
REO acquisition. REO stands for Real Estate Owned meaning the bank has already taken the property back through foreclosure. Banks are not landlords and they don't want to be. They sell REO at discounts to get it off their books. These deals take longer and require more due diligence, but the pricing can be compelling.
Sale-leaseback. The current owner of the building sells it to you and simultaneously signs a long-term lease to stay as a tenant. For investors, this creates immediate cash flow. For operators, it can be a way to buy a building that currently has an anchor tenant already in place.
Distressed sale with repositioning potential. A property that needs work — deferred maintenance, a difficult tenant mix, outdated build-out — but sits in the right location for wellness use. The discount reflects the work required. The upside is in what you can turn it into.
Each of these has different due diligence requirements, different financing implications, and different risk profiles. The deal type determines the playbook.
The Math on Owning Versus Leasing
This is the part that surprises most operators when they see it laid out.
Take a wellness practice paying $8,500 per month in rent. Over a 10-year lease, that's $1,020,000 paid to a landlord — and at the end of the lease, the operator owns nothing. The landlord owns the building that's now worth more because a creditworthy healthcare tenant has occupied it for a decade.
Now run the ownership scenario. Same operator buys a $1.2 million building using an SBA 504 loan: 10% down ($120,000), 25-year fixed rate. Depending on current rates, the monthly mortgage payment on the remaining $1,080,000 is in the range of $6,200 to $6,800 per month meaningfully lower than the rent they were paying. They're building equity every month. The property appreciates. At the end of that same 10 years, they have an asset.
And if they ever decide to sell the practice, the real estate can go with it or stay behind as income-producing property. That's a different exit than a lease allows.
The SBA 504 program is specifically designed for owner-occupant commercial real estate. For many wellness operators it can mean as little as 10% down, fixed rates with terms up to 25 years, and up to $5.5 million in SBA-backed financing on the 504 portion, as long as you occupy at least 51% of the property.
What to Look For Before You Make an Offer
Distressed doesn't mean defective. But it does mean you have to look harder before you commit. These are the things that matter most:
Location demographics first. A good deal on a bad location is still a bad deal. Before you look at the price, look at who lives within a three-mile radius, what the income profile looks like, and whether the co-tenancy supports your patient base.
Zoning and use compliance. Some properties have been used in ways that created code violations or required permits that were never pulled. If you're buying distressed, have a real estate attorney pull the full permit history before you're under contract.
Infrastructure capacity. Wellness and healthcare build-outs have specific requirements: HVAC load, plumbing rough-ins, electrical capacity, ADA compliance. A property that looks right from the parking lot may need $200,000 in infrastructure work before it's functional. Know that number before you negotiate the price.
Environmental history. If the property has ever housed a dry cleaner, a gas station, or certain types of industrial tenants, get a Phase I environmental assessment. This is non-negotiable.
Existing tenant leases. If there are existing tenants, review every lease before closing. Assignment clauses, termination rights, and co-tenancy provisions all affect what you're actually buying.
The seller's actual timeline. Understanding why someone is selling and how urgently directly affects your negotiating position. A seller with six months before a balloon payment is due will negotiate differently than a seller with eighteen months.
My Take
Before I was evaluating deals from the buyer's side, I spent years on the operator side deciding whether a new location made sense. Not just whether the space was available — whether the location would support the clinical model, whether the patient demographic matched the service line, whether the real estate decision would actually help the business grow or just add overhead.
That background changes how I look at a distressed acquisition. Most investors underwrite these deals purely on the numbers: cap rate, price per square foot, NOI. I do that too. But I also run a second pass that asks whether this property would attract the kind of tenant or owner-operator who will make it perform over time.
A well-located building in a high-income corridor with good visibility and parking, priced at a discount because the current owner has a financing problem? That's not a troubled asset. That's an underpriced one. And the wellness sector's occupancy story gives the buyer real staying power through whatever comes next in the credit cycle.
The investors who are going to do well in the next two to three years are the ones who learn to separate financial distress from fundamental distress. Those are very different problems with very different trajectories.
Most people are waiting for the market to settle. The operators who buy during this window won't be waiting for anything.
Your Move
RESERVE YOUR SPOT
Scaling to Location #2: The Real Estate Playbook for Multi-Location Wellness Businesses
45-Minute Live Panel | $97/Seat | Tampa Bay | March 2026
Everything in this issue is the setup. The March Lunch and Learn is where you work through what to actually do about it.
Four panelists covering the ownership question from every angle:
Where should your next location be, and how do you evaluate a property before you commit? (Leigh Brower, eXp Commercial)
Who are your next patients and how do you find them before you open? Ebony Langston of The Patient Experience Strategist covers patient acquisition for practices entering new markets.
SBA 504 versus conventional financing: what’s the difference, which fits your situation, and what lenders actually look for when a wellness operator applies. Citizens Bank walks through both options.
What does the build-out actually cost, what decisions lock you in early, and what should you budget before you sign a lease? Britney Mroczkowski covers construction timelines and what to watch.
Every ticket includes a one-on-one strategy session. Attendees get a special rate on the Patient Demographic Heat Map and Market Analysis the tool that shows you where your next patients are before you pick your next address.
Until next week,
Leigh A. Brower
Fractional Chief Real Estate Officer
The Next Gen Dev | The Wellness Edition
The Next Gen Dev - Wellness Edition is your weekly briefing on the strategies and frameworks that separate wellness businesses building the future from those stuck in the past.
