Real State

To Fill Empty Retail Space, Landlords Tap Doctors and Dentists

For landlords hit by store closures during the pandemic, well-funded health care providers, which tend to sign long-term leases, are suddenly desirable.

“As the landlord thinks about what will happen if we ever go through a crisis again, they want things that won’t close — grocery stores, pharmacies and medical facilities,” said Ms. Scardina of Cushman & Wakefield.

Some of these dynamics are playing out in suburban malls, where health care providers are moving into spaces vacated when retailers consolidated or went out of business. The providers consider malls attractive because they are familiar to residents, easy to get to and have ample parking. The open floor plates of former big-box stores are another plus.

By early 2020, nearly seven in 10 adults in the United States were visiting a health care provider in a shopping center, enclosed mall or strip mall, according to a survey by ICSC, a trade group representing owners of such properties.

Thirty-two enclosed malls across the country have health care providers taking up substantial square footage or, in some cases, the entire property, said Ellen Dunham-Jones, a professor at Georgia Tech who has been tracking the retrofitting of ailing malls. Some of the providers are expanding university medical systems.

The University of Rochester in upstate New York is creating a $227 million, 350,000-square-foot ambulatory orthopedic facility at The Marketplace Mall in Henrietta, four miles from the university’s campus. The property, built in 1982, once had four anchor tenants, but one of them, a Sears store, closed in 2019. The overall vacancy rate had risen to 30 percent before the project began, said Jonathan L. Dower, vice president of leasing for Wilmorite, the mall’s owner.

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