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Medical Retail for an Aging Society

Written by Wes Koontz, Net Lease Investment Sales Director

As most people in the United States know, medical care in this country is one of the most important social and financial issues of our time. We’ve seen historic change, for better or worse, with the passing of Obamacare in March of 2010, mandating health insurance for all Americans. The stimulus for change was partially rooted in the fact that we have an aging society with the Baby Boomers moving into their late 50s and 60s and an unsustainable burden of Medicare and Medicaid on the US health system. Still, even before that, there seemed to have been a large boom in hospital network expansions in most regions of the country. 

This expansion has now begun to proliferate our retail real estate business on a number of levels. From a tenant representation perspective, health and physical therapy users are in their own category now, calling for specialists to assist them in their expansions into prime retail locations throughout the areas they serve. On the leasing front, it is imperative to consider these groups as potential prospects to fill shopping center space, whether it be inline space or, more frequently, outlot buildings or freestanding locations.

In the net lease sector of the business, we’ve seen approximately double the amount of market offerings from 2014 to 2015 with many more entrants into the marketplace. These include freestanding hospitals, emergency rooms, dental care and physical therapy. Two leaders in Davita Dialysis and Fresenius Healthcare have produced an increase of 150% and 115%, respectively, just in properties that have come up for sale.

These new properties are very attractive to the investment community, as they are typically very stable businesses with heavy tenant investments in infrastructure, long term lease commitments and, in some cases, excellent credit entities on the lease.

All of this is welcome news in the retail real estate world, given the recent history of store closures and bankruptcies, category consolidations and online retailing causing some to wonder if there is enough demand for the retail space that has been historically provided. It is nice to have the growing and thriving segment of medical retail, which is perfectly suited to the changing demographics and needs of our country.

Wesley C. Koontz, CCIM | Net Lease Investment Sales Director
Mid-America Real Estate Corporation
One Parkview Plaza, 9th Floor | Oakbrook Terrace, IL 60181
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