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How To Incorporate Medtail in Retail Properties and What They’re Looking For

Photo Courtesy of yavyav.

Medical retail brands think more like retailers than physicians when choosing sites, CESO business development director Mike Pothast posted on LinkedIn. “I had one franchisee in the urgent care space tell me that they looked for sites adjacent to Main and Main in areas where consumers could frequently see they were there, but knowing they were an infrequent trip for their consumer,” he wrote. "They also mentioned they look for situations where they can compete directly with the major health network in the area because the experience in those environments still feels very institutional and cold.”

Growing medtail categories include vision, dermatology and vascular, according to Don Obermeier, also a CESO business development director, who recently launched a discussion on the ICSC Virtual Community around the topic.

Pothast suggested a concept like a food hall but for medicine and wellness would be a good reuse for some of the empty retail space out there. “Imagine some of the adaptive reuse opportunities to co-locate a dental practice, dermatologist, nutritionist, health foods retailer, pharmacy and holistic solutions, farm-to-table food and even potentially residential uses to create ‘wellness communities’ in aging mall properties and urban infill locations,” he wrote.

Because retailers aren’t expanding much during the pandemic, medical tenants are moving in and taking advantage of low rental rates, said KW Commercial managing director and broker associate Lynn Richter, of St. Louis. “Since COVID-19 hit the way office space is being leased, one half of my tenant rep clients have been medical and soft medical, and they are all moving from conventional office space to office in retail,” she posted in the ICSC Virtual Community. “Two of them are new medical franchises coming into town, and they went directly after the Class A to B-plus center locations. One will have traffic counts [of] nearly 85,000, which is a lot in this market. It makes sense. And some retail landlords are dropping their rents significantly to get vacancies leased. So far, we have been able to negotiate deals between $8 and $10 per square foot below their pre-COVID-19 rates.”

2021 will be a year when many medical users see exponential growth, said Coast 2 Coast Survey corp. multi-site director Tim West. Our firm is at the front end of tenant improvements, as-built surveys for design teams,” he posted in the ICSC Virtual Community. “For the past several months, our clients on the medical side have had a significant increase in the number of acquired spaces, whether in a strip center, bank building or other commercial space. [We] just signed up a new client [and are] anticipating about 65 this year.”

U.S. developers can look overseas for how to integrate medtail into retail and mixed-use centers, said NextRivet co-founder Kyle Spencer. “Internationally, there is less of a stigma for sure,” he posted in the ICSC Virtual Community. “Many malls outside of the U.S. have had medical-based tenants prior to the pandemic. In the U.S., finding that right mix with your current mix will be interesting.”

Health care has become an important part of mixed-use development, said Hobi Linhares, business development director for architecture and design firm RSP’s Miami office. “Some of our [health care] clients have been able to expand clinics into mixed-use developments that we are working on,” he posted in the ICSC Virtual Community. “It is a trend across the nation. They like the fact that the medical component mingles with retail and has critical mass. Interesting enough, a shopping mall client of ours in Brazil was already doing this 15 years ago, when he added a clinic and a lab to a regional mall we designed in Brasilia.”

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