Retail Vacancies, Landlords Partner with Medical Tenants

by | 12 July 2022

Landlords looking to shore up on vacant anchor spaces at shopping centers and malls have tapped into a new tenant segment: broad-spectrum medical providers. In the crux of the retail slump, a handful of healthcare providers tested the waters of relocating outpatient facilities to underutilized vacancies in shopping malls. Right around this time, Target partnered with Kaiser Permanente to integrate medical health clinics into its store locations in Southern California.

Since then, the medical retail movement, also known as medtail, has expanded its reach into the live-work-play of mixed-use developments to include health. Over the last five years, we have seen an increase in healthcare-related tenants, taking on more than 36 million square feet of retail space with an average deal size of 3,894 square feet. Pandemic deals on leases enticed individual health care providers to take over former retail spaces to expand their practices and clinics. In a report by NRC Health, 51% of patients said the most critical factor when deciding on health care services is convenient access to care. The pandemic, and its proliferation of COVID-19 testing sites, underscored the benefits of offering patients accessible and affordable health care services.

Healthcare Investments Fund the Future of the Medical Mall 

Site selection in high-foot traffic areas offers clear benefits to hospitals in creating satellite centers for elective procedures. Some larger medical centers and hospitals take medtail to the next level, investing in super-regional mall properties vacated by anchor brands like Macy’s and Sears.

Retailers Partner with Medical

A handful of retailers are considering how to integrate primary care services in-store. The Walgreens Health unit has partnered with VillageMD to offer Village Medical services to its consumers with a dedicated doctor’s office and lab using 3,000 square feet of its retail imprint. Oak Street Health which caters specifically to Medicare-eligible patients, entered into a partnership with Walmart to open 28 clinics in select Texas locations. CVS plans include upending its retail business model to provide primary care health centers that offer care-centric services from yoga studios to chronic care management. And Amazon Care is also onboard to deliver virtual health services nationwide, expanding its in-person care to 20+ markets.

A Healthy Shift in Behavior

Facilities are only one component of the medical retail expansion. For example, the pandemic compelled physicians to adapt quickly to digital health technologies to diagnose and manage patients’ chronic pain and illnesses. According to the American Medical Association, physician usage of telehealth channels (video or telephone) jumped to nearly 80% in 2020, from 25% two years prior. In addition, PwC’s Health Research Institute reports 37% of consumers are open to virtual assistance for the initial assessment of the condition and 34% for its ongoing treatment.

Advanced health solutions like telemedicine and DIY health currently adopted by consumers only further support the future of modern health is happening right now.