Medical Office Needs Post-COVID

After COVID-19, US markets are seeing drastic changes in medical office space needs, and many new strategies are developing to fulfill demand.

Due to the high number of vacancies in malls, many retail landlords are looking to lease space to healthcare providers. The medical retail movement, or medtail as it is often called, has existed since before COVID, but because of the major changes caused by the pandemic, is becoming far more widespread. While some providers are simply taking over old retail space, there are some more ambitious projects in the works as well. The University of Rochester has taken over the entire Marketplace Mall in Rochester, NY, and intends to convert it into a massive orthopedic healthcare campus. Some retail stores are also planning to expand into more available healthcare. CVS and Walgreens both have plans to partner with primary-care companies to offer in-house medical services to their consumers.

With the vacancy left in many office buildings by companies moving to an online work strategy, medical offices have started to move into those empty spaces. The U.S office vacancy rose to 15% in Q1 of this year, giving healthcare providers a unique opportunity. The cost of converting office space into medical office buildings (MOBs) is far below the cost of construction for a new building. Especially in areas with high land costs and supply shortages, these empty spaces are perfect for providers looking to move into high-population areas. Additionally, because the population is aging, demand for medical offices of all kinds is expected to increase dramatically in the coming years, and this strategy of conversion is a perfect way to keep up.

Submitted by KJ Worley