Shopping centers have increasingly become attractive locations for healthcare. The industry has long been a cornerstone of the retail sector, but its integration into shopping centers has reached new heights. Tenants like dental offices and urgent care facilities don’t just coexist with traditional retail spaces, they thrive together. Increasingly, healthcare firms can use repurposed vacant retail space and are interested in retail shopping centers.
The providers are desirable, typically with good credit and a solid flow of patients who are also consumers that can feed into other retail establishments, so there will be competition for them as tenants. Holland & Knight has eight suggestions for how to make a property more attractive to potential tenants.
One is to reserve parking spaces close to the front door of the location so ill or frail patients can have an easier experience entering the facilities. An extension of the idea is to have a canopy for a covered curbside location.
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Tenants that would operate outside of the shopping center’s typical business hours might need to be excused for restrictions and covenants, for example. There might be a need to ensure emergency vehicles.
Electrical power is critical for healthcare providers. Whatever types of services they provide, they will need electricity to run equipment, literally keep the lights on, and manage HVAC systems. If emergency power isn’t available, a tenant might need the ability to install its own emergency power system.
There may be use restrictions and covenants in a shopping center that can be a problem. An example is a restriction on having a pharmacy because a big box store might have one.
A prospective tenant might be concerned about whether a lease would comply with healthcare laws and so request changes to the document. That could include representations from the shopping center like a lack of physician ownership in the property.
Tenants might need physical changes to the premises for the installation of necessary equipment. Such alterations could include reinforcing a floor or beefing up power or improved HVAC.
Finally, a tenant might look for flexibility in insurance provisions in a standard lease form. A hospital or healthcare system might have combinations of self-insurance and blanket policies.
It’s not that the customer is always right, but missing factors like the one above can make it more difficult for a healthcare company to choose a location, no matter what else it has going for it.
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