The last two years have had us all thinking more about our heath. Whether it be a focus on self-care or a reluctance to be around large groups of sick people, the location and availability of heath care has never been more on our minds. Retail can provide the solution as urgent care centers are becoming the new doctors’ offices.
Brokers and CRE professionals have been trying to answer the retail vacancy problem for more than a decade. ‘For Lease’ signs are abundant, from big box anchored shopping malls to the local in-line shopping center. Healthcare providers could be the next tenant to backfill those long vacant spaces.
While business offices closed, and more people are working from home or in a hybrid situation, the Covid-19 pandemic is transforming the way developers and brokers look at vacant retail spaces. Healthcare service providers have been eager to open clinics and offices in an unlikely location – shopping centers. A Business Times article refers to this trend as “medtail – a reflection of the medical industry’s migration to retail properties.”
Health care providers with more of a focus on wellness – provide consumer focused care similar to other non-traditional retailers. Many people have been purchasing our prescription eyewear from medical providers in shopping malls for years. Co-star reports that retail space leased to medical service providers has increased 4% over the last decade, with heath care occupying roughly 20% of shopping center leased space.
The availability of retail space, coupled with reduced rents, make the retail spaces, including former big box spaces, very attractive to healthcare providers. National healthcare systems with a desire to open offsite medical/surgical centers, need large established spaces that former retailers such as Macys, Sears and JC Penny have left behind. Retrofitting or repurposing an existing structure can cut down on costs and construction timelines. In addition, parking is ample.
Medical tenants are attractive to landlords/property owners because they are typically well funded, part of a larger corporate group, and are willing to sign long-term leases. During the pandemic, the term ‘essential worker’ which for landlords leasing to healthcare agencies means no interruption. CRE professionals, want retail spaces filled with tenants that will remain open, and pay rent for the long haul: Medical services, healthcare facilities and pharmacies. Healthcare focused tenants also benefit traditional retail tenants by providing more foot traffic during the day when the shopping center is typically not as busy.
The pandemic has shown us the need for easily accessible healthcare and readily available treatment options. As traditional brick and mortar retail is on the decline, our need for available, on demand heath care, only increases. Retail shopping centers are poised to answer that call.