As location and proximity become increasingly important to patients when choosing a doctor, healthcare providers are seeking retail locations to improve patient accessibility amid an environment of tight medical office building (MOB) supply.
Location and proximity were the second-most important factors for choosing a provider, behind insurance considerations, according to a JLL report on the medtail sector. With rising occupancy and limited construction for purpose-built MOBs, some providers are looking to adjacent property types to secure conveniently located facilities in retail spaces.
Although the number of medical tenants moving into retail spaces has decreased since 2019, certain types of providers are gravitating toward medtail spaces, including physical therapists, chiropractors, dentists, optometrists and veterinarians, according to a JLL report on the sector. There is also a growing trend for concepts like IV drip clinics expanding into retail locations, especially in affluent areas, the report said.
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In the wake of the pandemic, urgent care move-ins soared in retail spaces, but the category has reached oversaturation and has readjusted to market conditions, said JLL. Veterinarians also expanded due to a surge in COVID-19 pet adoptions. Many communities are also underserved for veterinary care, the CRE firm said.
Certain medical services are seeing saturation or oversaturation in the market, including dialysis centers. Advances in new pharmaceuticals that help keep patients off dialysis have led to decreased openings, according to JLL.
Healthcare providers are often stable, long-term tenants due to the significant costs associated with moving specialized equipment and the importance of maintaining their patient base in a specific location. However, the co-tenancy benefits of healthcare providers are limited.
“The specialized nature of healthcare services can make it difficult to create a cohesive tenant mix that complements traditional retail and dining options,” said JLL. “For example, a dental office or urgent care facility may not naturally align with apparel or experiential retailers.”
Among all medtail user types, pharmacies are most likely to benefit as retail co-tenants, said the report.
Wellness, longevity clinics and concierge medicine, which typically operate on a subscription model and combine wellness and preventative care, will drive the future of medtail as they change the landscape for healthcare delivery, said JLL. An example is One Medical, which Amazon purchased in 2023. The provider now has over 200 locations in the United States offering in-office visits and 24/7 virtual care.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
