The Convenient Doctor: ‘Medtail’ Medical Offices Filling Retail Shopping Centers

We are fast approaching the era of retail medicine where health care professionals are opening facilities in shopping centers. From dentists to chiropractors to urgent care facilities, we are seeing all facets of medicine opening their doors in retail shopping centers.

For consumers, the appeal is convenience, cost savings and ample parking. Shoppers often seek the convenience of combining a quick trip to the doctor with other errands. For Landlords, non-traditional users tend to have stronger credit, desire longer lease terms, and attract potential shoppers to the center. In an April 2015 study by Robert Wood Johnson it is noted that 76.2% of retail clinic users said the cost was lower than another source. 58.6% of U.S. families that used a retail clinic in the past 12 months said the hours were more convenient.

While retailers and health care users have many commonalities, there are also some differences worth noting. Landlords should take the following into consideration during lease negotiations with medical service providers: Permitted and exclusive uses, control of odors and tenant’s right of first refusal are three areas that differ.

Permitted and Exclusive Uses

Like other tenants of the shopping center, medical tenants want flexibility regarding their permitted use and defining which services and procedures can take place on premises. On the other hand, landlords want to retain some control rights over permissible uses by limiting the tenant’s use of the premises.

The healthcare tenant may want to define their permitted use provision on a broader spectrum, such as “medical or medically-related uses,” allowing the medical tenant to evolve and change as technological advances in medicine evolve. But landlords may be more hesitant when it comes to broader permitted use provisions.

Odors

It shouldn’t come as a surprise to a health care tenant that a neighboring restaurant tenant may have strong cooking smells emitting from their space. And while this smell is mostly enticing to shoppers, it could very well be disturbing to patients who may be undergoing certain types of treatment.  Landlords can address this issue by requiring restaurant tenants to install and maintain ventilation equipment in the space. Another area of concern is odors emitting from the trash area. Landlords would need to address this by including language in the lease agreements requiring tenants to have trash picked up regularly in order to eliminate odors.

Rights of First Refusal

Health care service providers may be more inclined to utilizing a right of first refusal than a retail tenant, as they often expand in their current location by adding complementary medical services or practices. They will want a right of first refusal for space within the same development to give them the opportunity to provide additional services to their patients.

The trend of ‘Medtail’ is expected to continue for many years to come, and is driven by the baby boom generation’s growing need for convenient medical services