Can Empty Big-Box Stores be Medical Office Buildings?

It’s a rough time to be a big-box store in the United States; just ask Sears, Kmart and J.C. Penney.

As these former retail giants vacate their shopping mall locations, will any of the empty big-box stores be leased to medical tenants?

Probably not, according to an expert who works at the nation’s largest owner of medical office buildings.

“I think it’s unrealistic to expect a wholesale shift for medical users to the shopping mall environment,” Scott Miller, senior vice president of development at Lillibridge, said during a panel presentation at the Midwest Health Care Real Estate 2017 event in Chicago on April 25.

The developers of most shopping malls are required to operate the mall as “a first-class shopping center,” and the “jury is out” on whether medical uses for an anchor spot—which was built and designed to drive retail traffic to the mall—is consistent with a first-class shopping center, Miller explained.

Plus, the size of an “anchor box” at a shopping mall can be greater than a few hundred thousand feet.

“It’s going to be few and far between that you find outpatient medical buildings that can occupy a couple hundred thousand square feet of retail space, and make sense of that,” Miller said.

Still, some medical tenants, like medical imaging groups or plastic surgery practices, will likely start taking up residence in malls or strip centers, Miller said. The move won’t be right for all medical practices, though.

“I don’t think you’re going to see wholesale migration of medical office to shopping malls,” Miller concluded.

Written by Mary Kate Nelson

Photo source: ‘Sears‘ by Mike Mozart, CC BY 2.0