The Globe and Mail: Developers cash in on Canada’s hydrotherapy obsession
- Design for Leisure
- Apr 2
- 5 min read
Original article published at The Globe and Mail here April 1, 2025
A few months after real estate developer Sky McLean acquired an old Holiday Inn, she had an ‘aha’ moment that would transform her business into a holistic wellness haven – a trend making waves in Canada’s commercial real estate sector.
Initially, Ms. McLean planned to redevelop the picturesque Canmore, Alta., property into a hotel called MTN House By Basecamp and to use the location’s extra 1.5 acres to build more accommodations. However, she saw an untapped opportunity that would allow her company to grow and appeal to a niche market. “We were standing out back, and the views were so beautiful,” she recalls. “I thought to myself, why wouldn’t we build a Nordic spa?”
Ms. McLean is the chief executive officer and owner of Basecamp Resorts, a company that operates 13 properties in western Canada and has an additional 12 in development. Already a fan of Nordic spas, she noticed they were more prevalent in eastern Canada than in western Canada and decided to capitalize on the opportunity.
With a $28-million budget, her team began designing the spa for the future hotel, which includes a salt exfoliation bar, three hot tubs and four saunas. Shortly afterward, Ms. McLean pivoted the idea for another one of her hotel properties in Fernie, B.C., to include a Nordic spa and acquired land in Calgary to build an $85-million standalone hydrotherapy spa.
Hotels and gyms introduce hydrotherapy
Don Genders is the CEO of Design for Leisure, a company that designs and manufactures hydrothermal bathing facilities – spas that include tranquil features such as hot tubs, saunas, steam rooms and cold plunges. Mr. Genders is also the chair of the hydrothermal initiative out of the Global Wellness Institute, a non-profit organization that conducts research on the wellness sector.
He says Nordic spas in hotels and resorts are a draw for both guests and the general public. “These bathhouses are not cheap to build,” he explains. “Attracting the community to the property gives you a big, everyday base income unaffected by hotel occupancy rates.”
According to Mr. Genders, a 5,000-square-foot hydrotherapy spa costs around U.S.$5.5-million to build. If the spa sees 120 guests a day at a cost of US$45 per visit, that could mean US$5,400 of daily revenue, which provides developers with returns on their investments within 36 months. At the same time, hotels with spas don’t always generate greater profits than traditional accommodations. For instance, Mr. Genders says hydrotherapy spas have a lifespan of about 15 years and estimates their overhead costs to be about 30 per cent of their annual income.
Gyms are another place where hydrothermal amenities are becoming popular. Altea Active is a fitness chain that features wellness facilities such as dry-heat saunas, steam cabins and Himalayan salt lounges, and boasts locations in Ottawa, Winnipeg, Toronto and Vancouver. Fitness studio Sweat and Tonic’s location at Toronto’s downtown The Well also has a private ‘hot-and-cold contrast suite’ with an infrared sauna and a cold plunge.
Adaptive reuse of an office building
Since hydrotherapy facilities require significant square footage, Mr. Genders says underused office buildings in urban centres offer opportunities for adaptive reuse. He points to a New York City project that will transform the former headquarters of AIG – a finance and insurance firm – into a two-storey hydrothermal facility intended to serve the building’s tenants. “There is most certainly a trend for the urban bathhouse operators to look to older, unused properties in which to start a business,” Mr. Genders says.
The office building-turned-spa concept is something Nicholas Kendrew, Colliers Canada’s senior vice-president and broker, has witnessed in his work. He recently sold a two-storey office building that was formerly used by an insurance business to a company that intends to convert it into a spa with social and hydrotherapy.
With the high investment required for spa conversions, Mr. Kendrew believes operators are more likely to purchase properties than to lease the spaces. “Because of the amount of money they’re going to spend on building out their own improvements, it makes more financial sense to buy the building outright,” he says.
According to a 2024 report by the Global Wellness Institute, the wellness real estate sector maintained an annual growth rate of 18.1 per cent between 2019 to 2023 – compared to a 5.1 per cent average annual growth for overall construction during the same time period. The organization also estimates that the wellness real estate market rose to US$438.2-billion in 2023, representing about 2.9 per cent of global annual construction output.
In Canada, the market is growing significantly, ranking eighth in the world at US$143.8-billion in 2023 behind large global economies, such as the U.S., China, Germany and Japan, and representing a 7.3 per cent growth rate between 2019 and 2023.
A ‘Rubik’s cube’ of components
Finding the right space for a hydrotherapy spa can be challenging. Mr. Kendrew, who represented the two-storey office building’s seller, says they were in talks with the spa company for about a year before signing the deal. “They had questions about how they could plan the different components,” Mr. Kendrew explains. “It’s almost a bit of a Rubik’s cube.”
Modern Nordic spas typically have large social spaces, multiple wet areas such as saunas, spas, hot tubs and plunge pools, as well as relaxation rooms, change areas, cafés, bars and restaurants. “It’s a lot more complicated than leasing 100,000 square feet to an office tenant who can put people anywhere,” says Mr. Kendrew. He notes that Canada could start seeing spas in spaces such as shopping malls and planned communities.
For Ms. McLean, future property acquisitions will take into account whether the land can accommodate a Nordic spa. “As we look for future properties, we’re looking for either an existing hotel with extra land or land where there’s room for both a spa and hotel,” she says.
She feels confident that the popularity of wellness real estate is here to stay. “To me, this isn’t a trend, but it’s a lifestyle,” Ms. McLean finishes. “It’s something that people, once they have the experience, will continue to do.”