Dive Brief:

• Malls are struggling and baby boomers are aging, so many American malls are inviting healthcare facilities into their mix of businesses, Bloomberg reports.

• While the presence of urgent care clinics in strip malls isn’t new, more traditional malls are now also realizing the benefit of adding medical facilities to diversify their tenant base, said Chris Isola, vice president in the healthcare service group for commercial real estate services firm CBRE.

• The Cedars-Sinai Health System in Los Angeles, Prime Healthcare in Philadelphia, UCLA Health in Woodland Hills, CA and Vanderbilt University Medical Group in Nashville have all recently become tenants in major malls, Bloomberg notes.

Dive Insight:

Retailers like drugstores, general merchandise stores and grocery stores have all begun to offer actual medical services in addition to traditional health and beauty products. Now mall retail is also seeing more lab coats in the mix. 

Having medical offices in malls remains something of a tough sell for retail tenants and the medical offices themselves, according to Sarah Bader, chief of health and wellness practice at the architecture firm Gensler. Bader told Bloomberg that some landlords are still wary of the idea, nervous that the notion of offering colonoscopies and other procedures under the same roof could scare away customers. She also said that the medical companies need to get up to speed when it comes to leveraging malls’ ability to connect with customers.

But there are benefits. Medical offices are getting favorable lease terms from struggling malls, and landlords are finding them to be financially sound enterprises, according to Bloomberg.

And consumers appear to be ready. Some 79% of respondents in a 2013 survey by Oliver Wyman, for example, said they were interested in receiving care for minor healthcare episodes in an alternative setting, with 61% saying they’d go to a walk-in clinic or urgent care center. But 36% said they’d go to a pharmacy-based clinic, 24% said they’d go to a discount retailer-based clinic, and 20% said they’d go to a grocery store-based clinic.  

The healthcare clinic trend is still more evidence that the American mall landscape is experiencing a dramatic transformation. Mall owners are increasingly turning away from the department stores that once anchored their properties in favor of a mix of experience-based commerce and specialty retail and fast fashion, the Wall Street Journal reported earlier this month.

For example, Simon Property Group has replaced 50 department stores over the past 15 years, or about 11% of all the department stores at its centers, with tenants that include Primark, Target and Forever 21, while General Growth Properties has taken back space from 65 department stores (about 15% of its anchors), replacing them with H&M, 24 Hour Fitness, Wegmans grocery stores and restaurants.