to fill empty retail space landlords tap doctors and dentists x3y3VBaK

You may find yourself in a space that was once stocked with frying pans and face creams the next time your teeth are cleaned or your blood pressure checked.

Health care providers are increasingly choosing former stores for their offices and clinics, in a trend known as medtail — a reflection of the medical industry’s migration to retail properties.

Their embrace of retail space has increased due to the pandemic. Depressed rents are allowing medical providers to open facilities in city streets. They also move into shopping centers and malls in suburban areas and rural areas, often occupying the same space as big-box and departmental stores.

In the past, landlords might not have welcomed such tenants — some just didn’t want sick people around their properties, experts say — but they are increasingly seeking them out to fill vacancies and help generate foot traffic that may benefit the other occupants. This is especially true of health care providers who are branded as wellness companies, and adopting the look and feeling of consumer-oriented retail outlets.

“The retailization of health care has really exploded,” said Barrie Scardina, a retail expert for Cushman & Wakefield.

The medtail idea has been growing in popularity for some time. According to data from CoStar Group research, 20% of leased medical space today is located in retail buildings. This compares to 16% in 2010.

It remains to see if health care tenants will be able to make a significant impact on retail vacancies that have resulted from the rise in e-commerce. This swing has been made worse by the pandemic. The challenges for health care start-ups include a competitive environment and high renovation costs.

“It’s challenging to predict,” said Carri W. Chan, the faculty director of the health care and pharmaceutical management program at the Columbia Business School.

Of course, many health care providers still choose to remain on hospital campuses and in medical office buildings, and some — eyeglass stores with optometrists on staff, for example — have long occupied retail settings.

However, the number of urgent care centres has increased over the past 20 years to expand the range of places consumers can go for medical attention. Such “doc-in-the-box” facilities — which fill the gap between a visit to a primary care physician and one to a hospital emergency room — tend to be near where people live and shop. They are easily integrated with the community thanks to their branding and signage that is retail-style.

Some supermarket chains and pharmacies have also started adding walk-in clinics to allow customers to get a flu shot, strep test, or pick up prescriptions or groceries. Such retail clinics are typically staffed with physician assistants or nurse practitioners (hence the nickname “nurse-in-a-box”). CVS opened its first clinics in 2005, and now has more than 1,100.

But now a range of providers — offering services like cosmetic dermatology, dental care, physical therapy and senior wellness — are seeking retail real estate. They are opening street-level stores and vacant department stores. This is a time when people might not feel comfortable going to the hospital due to coronavirus outbreaks. However, they are able to access medical attention in other places such as convention centers or city sidewalks by getting Covid shots and PCR tests.

The One Medical branch at Westfield UTC took over the space of a former Chico’s.Credit…Ariana Drehsler, for The New York Times

“Being able to go into a retail environment closer to home, a smaller facility, felt safer and more convenient and also felt newer and cleaner,” said Matthew A. Coursen, an executive managing director at JLL, a commercial real estate services company.

Tend, a boutique chain of dental offices, has been opening its offices in urban retail spaces, where rents are often 20% below preandemic levels. The company selects real estate in much the same way a retailer does — figuring out foot traffic patterns, demographic data and transportation options.

Tend picks a site and begins to install furnishings and finishes in that space. Even the wallpaper with swirly green and white to evoke mouthwash, Tend will match them. Andy Grover is a cofounder and chief development officer. He works in four metropolitan areas.

Landlords affected by the pandemic’s store closures will find it attractive to sign long-term leases with well-funded health providers.

“As the landlord thinks about what will happen if we ever go through a crisis again, they want things that won’t close — grocery stores, pharmacies and medical facilities,” said Ms. Scardina of Cushman & Wakefield.

These dynamics are reflected in suburban malls, where providers of health care are moving into empty spaces left by retailers that closed or consolidated. Because they are easy to reach, convenient and offer ample parking, malls are attractive to providers. The open floor plates in former big-box shops are another plus.

A survey by ICSC, a trade association representing owners of such properties, found that nearly seven in ten Americans visited a health care provider in a shopping centre, enclosed mall or strip center in early 2020.

Ellen Dunham Jones, a professor at Georgia Tech, has been monitoring the retrofitting and rehabilitation of ailing malls. She said that there are 32 enclosed malls across the nation with health care providers. Some of these providers are expanding university medical system.

The University of Rochester in upstate New York is creating a $227 million, 350,000-square-foot ambulatory orthopedic facility at The Marketplace Mall in Henrietta, four miles from the university’s campus. The property was built in 1982 and had four anchor tenants. One of these, a Sears, closed in 2019. The overall vacancy rate had risen to 30 percent before the project began, said Jonathan L. Dower, vice president of leasing for Wilmorite, the mall’s owner.

Wilmorite razed the Sears and adjacent mall sections to make way for this project. The university, with the support of Perkins&Will architecture firm, is converting Sears to an outpatient surgery center where patients can have knee or hip replacements. The adjacent space will provide physical therapy.

Landlords affected by store closures may find it attractive to have well-funded health providers.Credit…Ariana Drehsler, for The New York Times

Scott Hansche, a principal at SLAM, stated that repurposing existing structures is more cost-effective than starting from scratch. It is also beneficial for the environment to salvage old structures.

Conversions can be challenging because of the need to add natural light to spaces that are almost entirely enclosed.

One Medical, a membership-based primary care chain with about 125 locations, has been expanding into outdoor shopping centers rather than enclosed malls, said James Goldberg, the chain’s vice president of real estate and development. The company recently opened a branch in a former Chico’s near the Banana Republic and the Pottery Barn at Westfield UTC in San Diego, Calif.

“Landlords are becoming understanding about what tenants we want to be next to,” Mr. Goldberg said.

When building new properties, some landlords consider health care tenants.

“I do go after them now,” said Dotan Zuckerman, a consultant who handles retail leasing for ground-up mixed-use developments in the Southeast. “In a lot of these big projects, there’s only so much food and beverage you can do.”

Leave a Reply

Your email address will not be published.

Sign Up for Our Newsletters

Get notified of the best articles on our blog.

You May Also Like

31 Low Cost Business Ideas for Young Entrepreneurs (Teenagers & Students)

In the world we live in today, anyone from any age group…

Big Tech Makes a Big Bet: Offices Are Still the Future

TEMPE, Ariz. — Early in the pandemic, when shops along Mill Avenue in downtown Tempe closed their doors and students at nearby Arizona State …