Sign In
Free Newsletter
Last August the former home of Good ‘N Plenty restaurant in Ronks was purchased by Well Spring Care to be converted into a 24/7 medical clinic for the Amish.
The deal was a high-profile example of an increasingly common trend.
More than ever, medical services are leasing or buying traditional retail spaces, a special real estate category known as “medtail.” These locations are attractive to tenants because of foot traffic, visibility and convenience, and landlords like the long-term leases medical users sign.
A blog post on the topic at Rock Commercial Real Estate cited research from CoStar Group that indicated about 20% of leased medical space was in retail buildings in 2022, an increase from about 16% in 2010. A survey conducted by ICSC, a trade group representing owners of these properties, found in 2020 that almost seven in 10 adults in the U.S. were visiting a health care provider – whether urgent care or some other type of medical facility – in a shopping center, indoor mall or outdoor strip mall.
The Rock article noted that retail vacancy climbed during the COVID-19 pandemic as business owners started moving inventory online and away from brick-and-mortar locations. In 2020, retail vacancy in York County hung around 8% three-quarters of the year. With rents dropping as a consequence, opportunities grew.
Medical facilities’ leasing retail spaces is often seen as a win-win for tenants and landlords. Tenants gain access to high visibility and increased consumer foot traffic, while landlords know health care providers normally bring employed, insured patients who will spend at surrounding retailers. By eating lunch after an appointment, for instance.
Landlords also are partial to the normally long-term leases medical tenants sign, leases unaffected by economic downturns. The Rock post noted as well that medical tenants tend to have a higher success rate than restaurants and other retailers.
Another factor in medtail is the depressed office vacancy rate, hampered by minimal new construction. Rock Managing Partner David Bode explained in the blog post, “The evolution of medical transitioning into available retail facilities makes sense, especially with the very low vacancy rate in the office market. Medtail tenants receive the added benefits of better visibility, higher traffic counts, and moving into areas with greater concentration of residents.”
In a follow-up call, Bode said central Pennsylvania was different from major metro areas in having a lack of office inventory.
People today want convenience, he said, and they’re likely to head to an urgent care, a common example of medtail.
The cost to build a medical facility also drives providers to seek retail answers, in malls or elsewhere, Bode said.
In addition to Well Spring Care, the Rock blog post lists several other medtail projects, including 30,000 square feet leased by WellSpan Health Services at Queensgate Towne Center in York. The space was previously a Habitat for Humanity ReStore.
And Exeter Orthodontics signed a five-year lease for about 2,000 square feet in Millersville Commons, a retail strip center, while Drayer Physical Therapy leased about 1,700 square feet in Cloister Shopping Center, Ephrata.
Brad Rorabaugh, executive vice president of Bennett Williams Commercial, said it’s almost normal to have a medical provider – dentist, physical therapist, chiropractor, urgent care, etc. – in everyday shopping centers.
A recent one is Blue Mountain Veterinary Care, which opened in Forest Hills Commons, Harrisburg.
He said one advantage is that medtail providers are often more visible from the road than they would be in an office building.
The foot traffic, street signage and synergy with the other tenants “are ideal for them,” Rorabaugh said.
Powell Arms, senior vice president and managing director of retail for High Real Estate Group, said medtail is much more common these days.
He defines the trend as tending toward providers who do elective procedures, like cosmetic surgery, where the patients don’t pay with insurance and have discretionary money to spend. Both tenant and landlord like the foot traffic a retail space can offer a medical provider, which has the potential to benefit all the businesses in the shopping center.
Several medical services are interested in the retail section in Lancaster County’s The Crossings at Conestoga Creek, for example, he said.
“We are seeing a lot of it,” Arms said. “It’s a great, growing category of retail.”
Paula Wolf is a freelance writer
