With video stores and retailers closing their doors, retail real estate has had a tough half-decade. The cure? Urgent care clinics.
The clinics, storefronts staffed with doctors to treat common ailments or minor injuries, are filling vacancies left by struggling retailers like RadioShack and Best Buy as they close locations. They're moving into those street and shopping center fronts at their fastest pace ever, according to Scott Mason, managing director of Cushman & Wakefield's health care group.
In 2014 there was "an increase in retail medicine in all of its different dimensions," Mason said in a phone interview. "You look for retail outlets with high visibility, high traffic patterns, and signage capabilities." That approach, Mason said, is referred to as "the Blockbuster strategy."
The number of walk-in retail clinics in the U.S. has risen 20 percent since 2009, to 9,400 last year, according to the Urgent Care Association of America. Operators also see new demand for convenient health care services as more than 10 million people are insured under the Patient Protection and Affordable Care Act.
Medical tenants pay higher rents, come with good credit, and tend to sign longer leases, said Dave Henry, chief executive of Kimco Realty in New Hyde Park, New York. So far this year his company has signed 40 medical leases, an increase from the 34 in 2013 and 27 in 2012. "For us as a large landlord of lots of shopping centers, it's nice," he said.
For customers, the clinics fill a gap. Patients who can't get a last-minute appointment with their doctor or don't have one can turn to urgent care instead of overcrowded hospital emergency rooms.
When Kelly Davis's son woke up days before Christmas with a fever and vomiting, the pediatrician's office was closed and the child didn't seem sick enough for the emergency room. Instead, Davis went to a clinic.
"It seemed more effective than going to an ER," Davis, 33, of Baton Rouge, Louisiana, said in a phone interview. "We just needed to make sure it wasn't going to get worse before Christmas. Instead of heading to the ER on Christmas we decided to go to an urgent care real quick."
In fact, research suggests the growth in walk-in clinics still hasn't outpaced demand. Reliance on the ER has increased under Patient Protection and Affordable Care Act, in part because people in remote or urban areas don't have access to enough primary-care doctors, a Wayne State University study found this month.
The real estate market, meanwhile, is still recovering from the 2007 recession and consumers buying more goods online, which has left prime locations up for grabs for companies like City Practice Group of New York, whose 39 clinics include a former Blockbuster location in Nanuet, New York.
"We see those as opportunities to fill a void," said Nedal Shami, City Practice's chief operating officer. "We see it very much, almost like a bank, and want to be on Main and Main on the corner."
Vacancy rates at malls hovered at 7.9 percent this year after peaking at 9.4 percent in the third quarter of 2011, according to REIS Inc. That's still significantly above the 5.6 percent rate in 2007. Neighborhood and community shopping centers are slowly climbing back as well, with a vacancy rate of 10 percent this year.
The rise of clinics has also influenced the job market, with employment in outpatient centers like urgent care growing by 20 percent since 2010, according to the Federal Reserve Bank of St. Louis. That compares with a 7.2 percent increase for general health care jobs and 6.9 percent for all nonfarm jobs.
Private equity firms and venture capitalists have poured more than $3 billion into urgent care clinics since 2010, according to Pitchbook, a research firm.
Some Affordable Health Care plans offer cheaper monthly premiums in exchange for high deductibles, which may steer more patients to urgent-care clinics. While it cost about $94 to treat a sore throat at a local urgent care center in 2013, treating the same symptoms would total more than $590 at an emergency room, according to CareFirst Inc., a Maryland health insurer. Flu treatment at a retail clinic cost around $128; the same procedures would total $804 in an ER.
Some hospitals have begun opening their own urgent-care clinics to relieve emergency rooms and draw more patients into their systems.
Vanderbilt University Medical Center in Nashville is building clinics in retail settings like the second floor of a bank. The expansion was partly inspired by the hospital's first major push off its main campus in 2009, when Vanderbilt took over a large portion of Nashville's first enclosed mall, One Hundred Oaks, to house dozens of specialty clinics.
"We are a level-one trauma center and our emergency room is packed all the time," said Janice Smith, chief administrative officer of the hospital's off-campus system, in a telephone interview. "We're trying to decamp those patients that truly don't need the emergency room care to facilities that can give them the quality of care that they need."
While urgent care has a part to play, primary physicians should still remain central to medicine, according to Manish Ozu, an emergency room doctor and medical director at Anthem.
"We always stress the primary-care relationship first," Ozu said in a phone interview.