Written by: Shawn Janus
As National Director | Healthcare for the USA, Shawn's focus is to cultivate a strong, value-driven platform in the healthcare space, allowing Colliers to raise the bar in delivering innovative and successful solutions to our healthcare clients. Check out his post on Colliers Knowledge Leader here.
Lifestyle shifts brought on by the pandemic, such as the rise in remote work and online shopping, left many offices and stores empty. In Q2 of 2021, Colliers reported that office vacancies hit 14.7%, and retail vacancies topped 20% during the second quarter of 2020, according to Statista.
This abundance of newly available space has shone a beacon of opportunity for healthcare groups looking to expand or open new locations. Converting vacant space for medical purposes can have many benefits and is a growing trend across the sector.
Benefits of Conversion
Becker’s Healthcare reported that in January of this year alone, at least 12 ambulatory surgical centers (ASCs) moved into vacated retail locations – including former department stores, shopping centers, strip malls and even grocery stores.
Empty offices and industrial assets have also proven to be viable candidates for a healthcare makeover. Sovereign Medical Group announced plans to launch a “transformed, state-of-the-art ambulatory surgery center” in Manhattan this fall by converting a five-story warehouse. Obviously, making use of an existing structure eliminates the significant investment of a ground-up development. But beyond the cost-savings a conversion can offer, these buildings are often situated in prime, central locations. Empty retail hubs or office complexes are typically in high-traffic areas, and are visible, accessible and convenient for visitors.
These vacant properties provide the versatility to become a variety of outpatient healthcare facilities, including ASCs, laboratories, medical office buildings (MOB), orthopedic centers, freestanding clinics and more.
Structural Considerations
Providing a safe, convenient and comfortable patient experience is crucial for a healthcare space conversion. Even if an orthopedic center was a Sear’s in its former life, patients don’t want to feel they’ve entered a department store for their procedure.
Practically, medical facilities flow quite differently from an office layout. Doing away with conference rooms and determining the layout for waiting areas, exam rooms and operating rooms are just some aspects of a conversion. Everything behind the walls must be brought up to healthcare standards as well: plumbing, HVAC, fire protection, energy capacity, vibration isolation and more.
Architecture firm The Lunz Group explains ceilings in retail are much higher than in healthcare, and medical equipment like CT scanners are much heavier than store merchandising, and the existing floor may not be levied to handle the weight.
Overall, each structural element of a potential conversion site must be thoroughly assessed and considered before moving ahead to ensure it meets the project’s timeline for completion, local zoning laws, CMS healthcare codes, and more.
Avoiding Setbacks
Adapting vacant buildings into outpatient healthcare facilities can be a strategic and advantageous decision, however, it’s crucial the execution is carefully planned, and the right pre-existing assets are selected for conversion.
When evaluating a space, Healthcare Facilities Management magazine suggests that buyers create a comprehensive checklist of structural elements, and conduct “important due diligence and testing activities” including a Phase 1 environmental site assessment, a site survey and title search, and gathering geotechnical information about the soils.
This vast array of elements that must be considered can be overwhelming and difficult to navigate, which is why it’s crucial to partner with trusted advisors. The right team can help identify properties with extensive adaptive potential and that possess the attributes for a successful conversion.