‘Medtail’ Is Making Its Name In North Texas

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Changing consumer and practitioner mindsets are aligning with landowners to bring more healthcare tenants to the retail space.

So-called “medtail” is a growing trend in North Texas, in part due to hospital systems and real estate brokers both transitioning new developments away from large community hospitals and stand-alone healthcare buildings and into pared-down medical centers and retail locations.

The rise of medtail accompanies the growth of online shopping, decreasing the need for brick and mortar retail locations for consumer goods. But most healthcare services can’t be done online, making them great candidates for retail locations to drive foot traffic in a development.

Dallas-based Northwood Retail, which operates the Shops at Park Lane, has been at the forefront of this trend, signing retail leases with seven healthcare providers and nine wellness locations last year.

Retail is less about soft good clients, says Northwood President Ward Kampf, and much of that is due to a perfect storm of demographic changes. Aging baby boomers are in greater need of healthcare facilities, and younger Millennials and Gen Z consumers bring a heightened awareness of health and wellness to their discretionary income. While the older generation is looking to slow the aging process, social media growth means that young people today have more eyes on them than past generations. They want to look healthy and beautiful on camera, leading to a focus on health and wellness.

Consumers want convenience as well. Medtail allows them to get in and out quickly and avoid large medical centers and shopping malls with inconvenient parking. Ferrari Orthodontics in Lakewood and Westlake Dermatology across the street from SMU are new examples of health and beauty retail developments reflecting demographic shifts.

“Kids today are more aware of appearances,” Kampf says. “These businesses play to younger consumers.”

The growth of urgent care has been a beneficiary of this growing trend in North Texas. Children’s Health, Baylor Scott and White Health, Texas Health, and Medical City Healthcare all have their own outpatient urgent and primary care brands, which can be found in retail locations around DFW. Urgent care is meant to be convenient and efficient, and retail makes excellent sense for patients.

“As you look at the expansion of facilities, and what types of facilities we talk, the retailization of healthcare is about really two things: visibility of the brand and accessibility for the patients,” says Ethan Garner, senior vice president for JLL.

Foot traffic is an integral part of the equation too. Because of how we consume healthcare today, health and wellness locations can be significant drivers for shopping centers, so landowners are tapping health, wellness, and dental locations to fill empty retail space. Retail giants CVS and Walgreens have also launched their own health clinics, adding more providers to retail developments.

“Mindsets are changing,” Kampf says. “A doctor can drive traffic. People are asking, ‘Does it fit?’”

Concierge medical practices are another model that lends itself well to retail, and their growth has been a driver of the medtail trend. Administrative hassles and shrinking reimbursement rates have led many physicians to strike out independently and operate outside of the health insurance market. These physicians don’t want to retire but are tired of dealing with red tape, and if they can attract enough well-off patients, it can be lucrative.

“Doctors want to do their own thing and to get their own clientele,” Kampf says. “For families and older people, they want that ability or access 24/7 because they know they’re getting older, and they want quick access.”

Highland Park Village, one of the state’s most luxurious retail spaces (and its first), is not immune to the trend. Dr. Barbara Sturm recently opened a med spa offering wellness and skin care services. A generation ago, it would have been outlandish to find a physician’s office in between Prada and Gucci, but healthcare is increasingly seen as a prestige tenant.

“They’re going to be careful that their strip center is not going to get run down or have a vape shop next to them,” says Thomas Allen, CEO of Practice Real Estate. “They’re going to pay the rents to get the nice centers.”

Both luxury and mid-level retail landowners continue to see healthcare as an asset rather than an option of last resort because of the way we consume healthcare today.

“This is for all spectrums. Whether it’s the highest-end center or it’s about convenience, people want these services to be part of the retail mix,” Kampf says. “People want retail presence, footsteps, and awareness.”

 

Source: D CEO Magazine

Metro Nashville To Acquire Former Hickory Hollow Mall: Vanderbilt University Medical Center To Negotiate Lease Of 600,000+ Square Feet

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Mayor John Cooper and Councilwoman Joy Styles just announced the city’s plans to acquire the Global Mall at the Crossings, formerly known as Hickory Hollow Mall, along with a new vision for the cornerstone property in Southeast Nashville.

Metro has signed a Letter of Intent with Vanderbilt University Medical Center (VUMC) to negotiate a long-term lease of at least 600,000 square feet for health care related services, similar to VUMC’s repurposing of retail space at One Hundred Oaks.

This announcement concludes a decade of uncertainty at the site and begins its long-awaited community-driven revival. The purchase is the latest in a series of recent investments in Southeast Nashville, including a new police precinct and a new city park off Tusculum Road. It is anticipated that if successfully negotiated, the long-term ground lease with VUMC will materially offset Metro’s purchase price.

Once the largest retail space in the state of Tennessee, the mall site will again serve as a community hub following a decade of underuse. In addition to the potential VUMC presence, the property may include space dedicated to community needs expressed through surveys and public meetings. These expressed community needs could include a facility for the arts, after-school youth programming, childcare, Metro offices and services, and entrepreneur and small business development opportunities. Health care, arts and youth programming would add to a broader site that already includes Nashville State Community College, the Ford Ice Center, the Southeast Community Center, and the Nashville Public Library’s Southeast Branch.

“This is incredible news for our area. After so many years of the mall sitting vacant, we are finally able to move forward with its new future for the community. I am grateful that Vanderbilt has recognized Antioch as a critical investment for community health care. I am also elated that with the purchase of the mall, we can now have a permanent arts space, an Antioch Performing Arts Center, to bring arts to Antioch,” Councilwoman Joy Styles said.

“We are investing in one of our fastest-growing neighborhoods, and it will pay major dividends for our city and Southeast Nashville in particular,” Mayor Cooper said. “World-class health care is just the start of what this site can do for the community. I look forward to seeing residents shape how we can best serve them with this site through community benefits like additional greenspace, dedicated space for the arts, and resources for entrepreneurs.”

Mayor Cooper and Councilwoman Styles will file legislation with the Metro Council allowing Metro Nashville to purchase the two separate properties for a combined $44 million. The first property is the former mall building itself, consisting of 650,000 square feet of rentable space. The other is an office building on the East side of the former mall building consisting of 160,000 square feet of rentable space. Metro Nashville will acquire the former mall site for $24 million and the office building for $20 million.

The decision to purchase and repurpose the former mall property follows extensive grassroots community engagement, including surveying more than 500 Antioch residents. Mayor John Cooper and Councilwoman Styles have worked closely with sustainable real estate developer Clay Haynes to assess opportunities to activate the property for area residents.

The Vanderbilt University Medical Center partnership represents the first phase of the project, focusing on increasing access to health care services and jobs. The second phase of the project will be guided by an extensive community planning process, to build on the 500 community responses already received. The Joe C. Davis Foundation has also agreed to help Metro Nashville activate the property and make it a true community asset.

 

Source: Nashville.gov

Where Medical Office Acquisition Opportunities Are

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Healthcare real estate in the US is in a state of absorption and expansion, as networks and organizations battle it out to claim the best practices and locations.

There is flux within the sphere, reported NAI Global last week, with medical REITs among the most active buyers in 2021, looking for product and paying big numbers.

One acquisition opportunity are point-of-access clinics, located within diverse communities. Another increasingly popular acquisition target are independent specialty practices—regardless of size—which are being absorbed by large systems. Meanwhile, other clinics are looking to break away, creating real estate disposition opportunities.

Buyers And Sellers In State of War

Additionally, off-campus, multi-specialty clinics and ambulatory surgical centers are seeking strategic locations for expansion and geographic reach, representing more opportunities. The current and foreseeable climate is one of “war,” according to one commentator to NAI Global, as firms compete for market share and dominance.

Medical office buildings have been incredibly stable throughout the pandemic with occupancy rates remaining unchanged and asking rates increasing. Their stability compared to other classes continues to draw interest from investors who see it as a “safe” investment despite construction costs increasing in 2021.

Finding Historically Low Cap Rates

Fully leased MOBs with credit tenants are expected to continue to trade at historically low cap rates in 2022. Large institutional owners have maintained their rentals, concession packages, and the like, while local landlords with mixed tenant profiles are more willing to offer competitive lease packages and incentives to attract and secure medical tenants.

The sector does face specific challenges though, NAI Global also says. Staffing shortages, including burnout of healthcare workers, will continue in 2022, resulting in pressure to both provide care and remain profitable. Additionally, costs for care will outpace inflation, as the overwhelming demand requires additional expenses.

 

Source: GlobeSt.