Jim Donnelly, CEO and co-founder of Restore Hyper Wellness, practices what he preaches.

Donnelly was hooked up to an intravenous drip in Austin, Texas, while being interviewed recently via Zoom. He had just flown back to his company's headquarters in the Lone Star State after attending a conference in Philadelphia, and he wanted to guard against coming down with an illness from his trip.

"When I'm on a plane and I go to a convention, I want to boost my immunity," Donnelly said.

Restore is the U.S. leader in a burgeoning industry: IV infusion centers. With Americans increasingly concerned about their health and wellness, and preventing and avoiding illnesses such as COVID-19, IV centers or lounges have popped up across the country offering drips for hydration as well as electrolyte, nutrient, vitamin, antioxidant, mineral, amino acid and hormone infusion.

They've emerged as a new type of tenant for retail properties, in lifestyle centers and grocery-anchored shopping strips. Patrons often visit to address a variety of issues: low energy, lack of sleep, chronic pain, aging, anxiety, weight and stress.

Proponents of IV therapy say the industry has an opportunity to grow and that it appeals to the young and old, men and women, Middle America as well as the two coasts. They maintain that it's not a fad. But at this juncture it is a highly fragmented industry, with many mom-and-pop shops and regional players, and some operators predict there will be an eventual shakeout of the small fries.

It's a complicated industry with different regulations in every state that can complicate national expansion. At last one, Alabama, has proposed imposing stricter rules for the centers and more careful monitoring of who is permitted to administer

Although IV therapy companies assert their treatments are safe, the industry has drawn scrutiny from the Food and Drug Administration, the Federal Trade Commission and the National Infusion Center Association. Concerns they raised include: a lack of or loose industry regulation; lack of proof the treatments are effective; unsubstantiated claims by some operators about results; and that IVs sometimes aren’t administered by properly trained staff. In 2018, the FTC took its first action against an IV drip business, one in Texas, for allegedly making false claims about treating illnesses with infusion cocktails.

Even so, the list of IV therapy operators is long and includes not only Restore but The DripBar, IV Nutrition, Whydrate, VitamINfuse, Refresh IV Bar, Liquivida Lounge, ICT IV and City Hydration. Restore is approaching 200 locations. The DripBar has roughly 28 centers, and expects to have about 60 nationwide by the end of the year, according to CEO Ben Crosbie. IV Nutrition, based in Kansas City, Kansas, is a growing chain. And Eric Casaburi, who founded the gym chain Retro Fitness, has started a company called Serotonin Centers, which is opening locations that offer IV infusions among other services.

The burgeoning industry will be holding what’s billed as its first major event, the IV Biz Bash, Friday and Saturday with about 500 attendees expected in Orlando, Florida. Donnelly and Crosbie are among those set to speak there.

The practice of administering IVs outside of a hospital for wellness has its roots in Las Vegas, according to Christie D'Arcy, founder and CEO of City Hydration, which is based in Philadelphia and has three IV therapy centers. In 2012, a physician launched a Hangover Heaven bus that traveled up and down The Strip offering revelers IVs that the business said could treat hangovers with a quick hydration session.

In a sign of the growing trend, in 2018 Hangover Heaven officially changed its name to Hangover Heaven IV Hydration "in an effort to emphasize the benefits of IV hydration," the company said in a news release. And it has also opened a physical site, which is where the industry has moved.

“IVs used to be the hangover remedy, therefore it started in places where people drink a lot," Donnelly said. "Vegas is the natural place for it to start. That is not the tenor of our business. We have people who come in, of course, after going out and having fun, but that’s not how we position Restore. That’s not the type of customer that we cater to.”

Restore last year received a strategic investment from General Atlantic, a private equity firm. And earlier this year, Restore said it was partnering with ex-NFL quarterback Tim Tebow and his wife Demi-Leigh Tebow, with the couple serving as investors in the firm and brand ambassadors.

Restore has adopted a franchise model. It has 165 centers open with another five "queued up" and ready to announce, according to Donnelly. About 28 are company owned. Restore opens a center every four days, he said.

"We have hundreds of development schedules ... over the next few years, so we have pretty clear visibility to get to well over 500 to 600," Donnelly said.

IV infusion centers such as Restore want storefronts in places with lots of foot traffic and available parking.

"It falls into the same generic category of all other medical uses becoming fully acceptable by retail landlords to fill vacant spaces," Chuck Lanyard, president of The Goldstein Group, a retail broker, said in an email to CoStar News. "The convenience of retail locations allows medical facilities to get the exposure and convenience of being in strip centers and also on highway locations, which put this type of use in a storefront rather than hidden in medical buildings. The success of vein clinics, Botox centers, minor plastic surgery centers, etc., are fine examples of these new type of retail tenants that landlords are so much more receptive to than they were in the past."

When Restore started out in 2015, Donnelly picked its initial location in a Class A shopping center, anchored by a Whole Foods Market, after he had a bad experience getting cryotherapy, a cold treatment used to fight inflammation and reduce muscle soreness, at a site tucked away in an office park.

“The idea was we wanted to be in the fabric of people’s lives," Donnelly said. "Being near a high-end grocery store, a nice grocery store, means that people are going to come by you again and again and again. And it would be convenient. So that was the level of sophistication at the beginning, i.e. not very sophisticated, just pick nice centers.”

The process now is much more complicated and extensive. Restore has a master broker and a real estate team to help determine suitable territories for its franchisees, according to Donnelly. But in general, the site preference is for outdoor lifestyle centers with appropriate co-tenants such as Orangetheory Fitness, European Wax and Massage Envy, he said.

Restore is usually seeking out locations that are 2,500 to 3,000 square feet, with its largest ones now about 4,000 square feet, Donnelly said.

The DripBar, a franchiser that's headquartered in Wrentham, Massachusetts, has similar requirements for its real estate. Both it and Restore want sites with daily walk-by traffic. The DripBar seeks locations that are 1,000 to 1,500 square feet with 20 feet of frontage at a strip mall or grocery-anchored shopping center, preferably next to a tenant such as an Orangetheory or a Starbucks, CEO Crosbie said.

"Landlords like us quite a bit because we’re unique," he said. "We don’t compete with their existing tenants. We're a value-add that brings more educated and higher net-worth clients into the plazas."

Restore's centers are larger than some of its competitors because it offers a very wide variety of services — including cryotherapy, hyperbaric oxygen treatment, red light therapy and aesthetician services — at its locations. Donnelly said he sees that as the best pathway to success, a way to bring customers in for numerous visits during a month, not just IV infusions.

IV therapy is popular with people spanning a wide array of demographics. Both Donnelly and Crosbie said their clientele is 50-50 men and women. For The DripBar, customers average 25 and older with an average household income of over $75,000.

It's a little different for D'Arcy's customers at City Hydration.

"Typically, the people we’re seeing are young, healthy, active," she said. "And they’re just doing this to support their immune systems and their lifestyles.”

And IV therapy appeals to Americans not only in places such as trend-setting and progressive California but also the Midwest, according to Donnelly. Restore has centers in place such as Lancaster, Pennsylvania, and Wichita, Kansas, as well as New York City and Beverly Hills, California, he said.

Growing franchise IV Nutrition has new locations slated for Alabama, Arkansas, Florida, Iowa, Minnesota, Montana and Tennessee.

“I think right now we’re at about 3% to 5% market penetration for this type of industry," Crosbie said. "I think there’s a tremendous amount of growth ahead of us.”

The DripBar has 450 locations in various stages of development, according to Crosbie.

Although nonprescription drips, such as those providing vitamins and nutrients, aren't medical services, IV wellness centers often have registered nurses or nurse practitioners to administer them, and doctors on staff, as well. The DripBar has over 200 doctors participating in its medical director program, according to Crosbie. Restore has a dedicated compliance department, a medical advisory board and a credentialed chief medical officer, Donnelly said.

There are, of course, outpatient medical IV centers, such as the regional chain Specialty Infusion Centers in the New York metropolitan area, where patients can get prescription drugs administered via drips, for ailments such as Crohn's disease and multiple sclerosis. Those operations continue to seek medical office, not retail, space.

Donnelly doesn't believe that wellness or nonmedical IV therapy is a fad that will fade once the threat of the coronavirus outbreak is completely gone. He expects Restore, and the industry, to grow as Americans pursue wellness.

“We were a rocket ship before COVID," said Donnelly, whose IV centers were allowed to remain open during the worst of the pandemic as an essential business. "We were a rocket ship during COVID. We were a rocket ship after COVID. I see zero change in that dynamic for us.”