The landscape of commercial real estate continues to evolve, driven by shifts in consumer behavior, technological advancements, and the enduring impact of the pandemic. Among the most transformative trends is the repurposing of retail and office spaces for healthcare use. This strategy not only addresses challenges in traditional real estate markets but also aligns with the healthcare sector’s focus on accessibility, convenience, and innovation.

The Perfect Match: Healthcare and Repurposed Spaces

Retail and office spaces often occupy prime locations with established infrastructure, ample parking, and high visibility – attributes that are equally desirable for healthcare providers. For consumers, the integration of healthcare services in these spaces provides convenient access to care closer to where they live and work.

This trend goes far beyond standalone clinics. Shopping malls are being reimagined as multi-specialty healthcare hubs, and office buildings are adapting into medical office buildings that host a mix of in-person care and telehealth operations. For instance, Hartford HealthCare has successfully repurposed a range of properties, including a shuttered Blockbuster store, a vacant Bed Bath & Beyond, and even a former funeral home, into thriving healthcare facilities.

Drivers of Change

1. Shifts in Consumer Expectations: Patients increasingly expect healthcare to be as accessible as other services in their daily lives. Retail and office spaces can meet this need by offering care closer to residential areas or shopping hubs.
2. Post-Pandemic Realities: Many office buildings remain underutilized as hybrid work models persist. At the same time, some retail properties face high vacancy rates due to changing shopping habits. Converting these spaces into healthcare facilities is a practical solution to address both issues.
3. Growth in Outpatient Care: The healthcare industry is moving away from hospital-centric care delivery models. Outpatient facilities are growing, emphasizing the need for flexible spaces that can accommodate medical technologies and patient-centric designs.
4. Cost Efficiency: Retrofitting existing structures is often more cost-effective than building new facilities, like the conversion highlighted here of a former Crate & Barrel store into a 34,000-square-foot ambulatory care center.

Unlocking Value for Communities and Stakeholders

Repurposing retail and office spaces for healthcare use delivers measurable benefits. For healthcare providers, these spaces enable faster, more cost-effective market entry, allowing them to expand their reach and serve patients where they are. For property owners, healthcare tenants offer long-term lease stability and the opportunity to revitalize underperforming assets, increasing both occupancy rates and property values. For communities, healthcare facilities breathe new life into vacant or declining properties.

Beyond enhancing access to care, these conversions play a crucial role in creating jobs and boosting local economies. Obsolete retail spaces, for instance, can be reimagined as vibrant centers for health and wellness, increasing foot traffic and breathing new life into communities. My colleague, Anjee Solanki, Colliers’ National Director of Retail Services & Practice Groups, perfectly captures this sentiment: “Repurposing retail and office spaces for healthcare is more than a trend; it’s a strategic evolution that meets the growing demand for accessible, convenient, and innovative care. By transforming underutilized properties into healthcare hubs, we unlock value for providers, property owners, and communities alike, creating a win-win scenario for all.”

Considerations for Successful Repurposing

While the potential benefits are clear, converting retail and office spaces for healthcare use requires careful planning. Here are some key considerations:

• Zoning and Compliance: Adapting a property for healthcare often requires rezoning and ensuring compliance with healthcare-specific building codes, such as HVAC standards and patient safety requirements.
• Infrastructure Upgrades: Healthcare spaces need specialized infrastructure for medical equipment, waste disposal, and patient privacy. Building owners and developers must factor these requirements into the conversion process. Tenants are often responsible for infrastructure costs, including upgrades necessary for their specific medical use.
• Community Alignment: Collaborating with local communities ensures that the new healthcare facility meets the needs of the surrounding population while addressing potential concerns about traffic, noise, or other impacts.

The shift toward adapting retail and office spaces for healthcare use is more than a temporary solution – it’s a long-term strategy to meet the evolving needs of patients, providers, and communities. As healthcare continues to prioritize convenience and accessibility, the demand for innovative, repurposed spaces will only grow.