Medical Clinics Take Over Malls' Empty Spaces

Bloomberg Businessweek reports:

As retailers struggle to keep up with changing shopping trends, mall operators across the U.S. are looking to fill spaces left empty by the likes of Sears and RadioShack. One promising new group of tenants: walk-in medical clinics, staffed by doctors who can treat common ailments such as pink eye and minor injuries like sprains and burns.

The clinics—regional chains such as City Practice Group of New York and national ones like Concentra, the largest urgent-care organization in the U.S.—are a growing segment of the medical retail industry, says Scott Mason, executive managing director of Cushman & Wakefield’s health-care group. There were 9,400 walk-in clinics in the U.S. in 2013, according to the Urgent Care Association of America, a 20 percent increase since 2009. A little more than a third are located in strip malls and shopping centers.

For mall owners, urgent-care clinics make desirable tenants. Dave Henry, chief executive officer of Kimco Realty, a mall operator in New Hyde Park, N.Y., says clinics often pay higher rents (about $25 per square foot), have better credit, and tend to sign longer-term leases. In 2014 his company signed 40 medical clinic leases, an increase from the 34 it signed in 2013 and 27 in 2012. “For us, as a large landlord of lots of shopping centers, it’s nice,” he says.

Demand is driven by patients who don’t have a regular doctor or can’t get a last-minute appointment with one. Instead of an overcrowded hospital emergency room, they visit a walk-in clinic. The clinics “look for retail outlets with high visibility, high traffic patterns, and signage capabilities,” Mason says, an approach known as the Blockbuster strategy, after the video rental company that wound down last January, because its shuttered retail locations often suit the needs of mall clinics.

Square footage is square footage and it has to be used for something.