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How Big Will The Health Care In Malls Concept Get?

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The way America shops has changed, but some experiences are still better in person. The same can be said of health care.

Not long ago, outpatient health care and megamalls would have seemed like an odd marriage. But today’s consumers understand this is a marriage of convenience — one that can offer great benefits.

“The demand for health services detached from a large hospital is growing rapidly,” said Patrick Christensen, president of Sturtevant-based Horizon Retail Construction. “People are seeking out more options and want health care that is closest to them.”

Why Malls?

As much of retail has moved online, malls have one key commodity: space. And that space is getting more plentiful. According to Moody’s Analytics’ commercial real estate division, the mall vacancy rate in the first quarter of this year was a record high 11.4%.

Outpatient health care organizations can fill those spaces. The footprint of health care facilities can vary greatly. An urgent care clinic might fit well in a former bookstore. Other health care providers might require more square footage.

One Hundred Oaks mall in Nashville offers a case study for the ways outpatient health care facilities can revive a struggling retail space. Before 2009, stores were leaving and the mall was emptying out fast. Then Vanderbilt University Medical Center’s Vanderbilt Health facility moved in, taking up nearly half of the mall’s space. The new health care facility brought in foot traffic, which in turn attracted traditional retailers and breathed new life into the once-troubled shopping mall.

More Medical Malls?

The number of Americans 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, according to data from the U.S. Census Bureau. Demand for health care services should grow as the population ages.

Considering the benefits that malls offer patients — accessibility, physical space and proximity to other retailers and activities — the potential for continued growth of outpatient health care facilities in malls is immense.

“We are seeing a demand for more outpatient facilities off the campuses of large hospitals,” Christensen said.

Expertise in building care facilities

Sturtevant-based Horizon Retail Construction is uniquely positioned to help shape the way vendors and buyers experience malls. The company has extensive experience transforming retail spaces to make them more conducive to the needs of both retailers and consumers. Horizon’s clients in the health care space include VillageMD and Walgreens, Oak Street Health, Benchmark Physical Therapy and Humana.

The project with Oak Street was particularly ambitious: Horizon was responsible for opening the Chicago-based outfit’s first two clinics in Memphis.

“We are proud to be involved in the Oak Street Health program,” Christensen said. “They provide a great service to the community.”

For a health care industry that is ever changing, Horizon’s ability to “mobilize rapidly,” as Christensen says, could be an asset. Horizon employs more than 150 superintendents — none of whom are subcontractors. That workforce creates a speedy response time to client needs.

“We have shown the ability to quickly adapt to tenant needs,” Christensen said. “Because of that we are valuable working for both small and large businesses.”

 

Source: Waco Tribune-Herald

Demand For Senior Housing Ticks Up As Sector Continues COVID Recovery

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Demand for senior housing properties began recovering this quarter as vacancies dropped nationally and rent growth picked up across all four major care types.

According to a new report from Moody’s, Q2 vacancy for the asset class came in at 16.9%, still worse than the pre-COVID five-year average but 10 basis points below the peak of 17% earlier this year.

“It may be too early to say the stress has bottomed out, especially given the recent resurgence of the virus, but second quarter data did prompt a bit of optimism for the senior housing sector,” Moody’s economist Lu Chen writes, noting that the second quarter vacancy rate for independent living, memory care, and assisted living facilities all declined between 10 and 30 basis points, while the vacancy rate for skilled nursing properties remained flat.

Memory care facilities, which have been hardest hit by the pandemic, showed a vacancy decrease of 8.8%, ending the quarter at 19.9%. Assisted living and skilled nursing facilities vacancies ticked up 6.9% over the same period to 18.2% and 16.5% respectively, while the vacancy rate at independent living facilities ticked up 6.1% from 9.5% pre-pandemic to 15.9% in the second quarter of this year.

Rent growth has softened year-over-year, Chen says, since most senior housing properties post rent changes at the beginning of the year, but Moody’s data suggests that rent growth picked up across all care types. The assisted living sector posted the fastest year-over-year rent growth, followed by independent living facilities.

Meanwhile, net absorption increased into positive terrain for the first time since 2020. Memory care is back to Q1 2020 levels, while skilled nursing showed the biggest gains with 8,000 units absorbed so far this year.

“As a result of the weakness in sector fundamentals since the public health crisis, extended slowdown of new facilities coming to market is consistent with the increase in investor’s caution for senior housing,” Chen writes.

Moody’s is “cautiously optimistic” in its outlook for the sector, Chen says, citing Centers for Medicare and Medicaid Service data indicating that more than 83% of the nursing home residents are fully vaccinated. However, he notes just 26% of nursing home facilities across the US have hit the industry target of vaccinating 75% of their staff.

“Low vaccine rates among staff and residents in states such as Florida leaves the senior housing industry more vulnerable to the resurgence of the virus. Starting in the first week of July, there has been a noticeable uptick of confirmed cases among senior housing residents and staff,” Chen says. “With new mask and vaccination mandates starting to take place in many places, we will closely monitor how that’s shaping the industry demand and supply in the coming months.”

An analysis from JLL earlier this spring indicated the need to serve the middle-income population will increase, leading to opportunities for investors.

“Investors remain bullish on seniors housing and care investments,” said JLL Managing Director Zach Bowyer, MAI, head of Alternatives Asset Sectors, Valuation Advisory. “We anticipate market fundamentals to steadily improve and the market to re-stabilize between two and four years, depending on the location.”

 

Source: GlobeSt.