Elaine Boyle's March 2021 Newsletter details the benefits associated with repurposing retail settings for medical office space.

1. BENEFITS OF RETAIL SETTINGS FOR MEDICAL OFFICE SPACE
More frequently than ever, former retail spaces, including big box grocery stores, department stores, malls, and other large
blocks of space, are being retrofitted and repurposed to accommodate health systems and physician practices. There are
numerous elements contributing to this convergence of retail and healthcare real estate.
First, it’s helpful to understand that most metropolitan areas are experiencing very low vacancy rates in traditional Medical
Office Buildings (“MOB’s”). Continued consolidation among health systems and physician practices, and their need to
provide more outpatient services to accommodate the increasing number of insured people and aging populations, is putting
pressure on existing MOB’s to be able to accommodate this growth. Large blocks of space in existing MOB’s are becoming
more difficult to find, and many of the existing MOB’s that do have sizeable space have become functionally obsolete in
today’s healthcare environment. Layer on top of that, the continual rise in construction costs and lack of affordable land in
the desired areas, and it makes the cost of developing new MOB’s very expensive in most cases.
Many factors make converting former retail spaces to medical office an attractive option for commercial property owners.
• Typically, retail centers and shopping malls are located on or near main corridors with high traffic counts, easy access
and great visibility.
• Retail centers provide an abundance of parking, unlike general office buildings that typically require less parking per
square foot.
• Signageandbrandingopportunitiesarefavorableinretailcenters,whichisbecomingincreasinglyimportanttohealthcare
providers as they continue to fight for market share.
• Retail centers create high foot traffic from shopping center patrons and regular patient commutes.
• Retail centers are often more centrally located to patrons than traditional hospitals settings.
• Repurposing non-medical facilities to healthcare uses generally have shorter delivery times than new construction and
can accelerate a healthcare provider’s speed to market.
• Perhaps most importantly, due to record high construction costs, shuttered big box retail spaces generally have lease
rates that are lower than what could otherwise be offered in a newly constructed MOB.
Healthcare providers are also interested in smaller footprints to fulfill their population health management strategies while
capturing market share. Healthcare providers are compelled to be in more retail locations in order to meet consumers’
demand for convenience. Converting former bank branches, car dealerships, auto care centers, mattress stores and other
smaller retail facilities allows healthcare providers to expand their urgent care, primary care, wellness and other ambulatory
services throughout their markets.
Flagship Healthcare Properties has been selected to represent the Landlord for a potential retail to medical conversion at
the Friendly Center, an upscale lifestyle center in Greensboro, NC. This property will appeal to many medical users offering
spaces from 1,500 square feet up to 26,000 square feet. Close to major hospitals, medical practices universities, medical
tenants will benefit from the excellent access, visibility and convenience that a retail center provides.
400 Ashville Avenue, Suite 340, Cary, North Carolina 27518 | office 704-442-0222 | fax 704-367-0196 | www.FlagshipHP.com
If you would like additional information, please
contact Elaine Boyle, VP Leasing and Brokerage at
919 348-7943 or Elaine@FlagshipHP.com
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