Perhaps more strongly than ever, participants of panels at RECon this year made the case that health care users and shopping centers are natural partners. Shopping center owners may have originally turned to health care tenants as a way to protect against e-commerce intrusions, but changes in regulations, technology, spending and demographics continue to create common ground between the two industries and to topple concerns about parking and exclusivity agreements, panelists said.
A study JLL released at RECon on Tuesday backed up the assertion. An estimated 2,800 medical clinics were located in retail spaces in the U.S. at the end of 2017, up from 351 a decade earlier, the brokerage found. And the number of health care tenants has grown by 47 percent over the past three years alone.
For shopping centers, the partnership typically means more traffic. “Today anything that drives traffic, we like,” said Yaromir Steiner, founder and CEO of Steiner & Associates, addressing the Here Comes Health Care panel discussion on Monday. Incorporating health care tenants into the tenant mix represents a natural extension of the broader wellness movement, he said. This has brought not only large and boutique fitness operators to shopping centers, he said, but also community-centered health events such as yoga sessions or charity runs.
Meanwhile, for health care users that want to provide more convenience to their customers, piggybacking on the work of developers is a no-brainer, said Dana Garcia, vice president of corporate real estate at health care provider Highmark Health, who joined Steiner on the panel, along with Terry Wood, senior vice president of Kaiser Permanente.
“Developers have done exhaustive research to know exactly where to put these shopping centers to draw the most people,” Garcia said. “If we’re trying to make our services convenient to our members, why would we try to reinvent that?”
Kaiser Permanente’s experience shows just how much thinking about health care and retail has changed. That provider, which operates in eight states and the District of Columbia, owns about 86 percent of its facilities and never considered retail locations as an option, said Wood. “But it’s clear now that if we’re going to meet the needs of our members, retail is in play,” he said. “There are interactions between retail opportunities and where we need to target our facilities.”
Indeed, over the past year alone, Kaiser Permanente leased space for several small retail clinics, quickly ramping up services in the state of Washington following a merger with a company there, according to Ethan Sullivan, executive director of national real estate at the health care provider. “That’s been a new experience for Kaiser Permanente,” said Sullivan, who shared the organization’s retail real estate strategy during a discussion in the Health & Wellness Center on Tuesday. “We are now on a journey to learn about retail leasing and how it’s going to be a part of our delivery solution going forward.”
Kaiser Permanente is primarily looking for locations that can serve its members living a fair distance from its more traditional hub settings. In addition to this proximity, the ability to include prominent branding signage at a highly visible site is among Kaiser Permanente’s key location requirements, said Sullivan. Additionally, the organization’s focus on preventative care could disqualify centers that include certain fast-food restaurants, liquor stores or tobacco shops.
By Joe Gose
Contributor, Shopping Centers Today