Big-box retail space: Doctor is in; retail is out

  • Article by: JACKIE CROSBY , Star Tribune
  • Updated: August 8, 2012 - 9:37 PM

The recession left a glut of empty big-box retail space, and medical clinics are moving in.

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Patricia Sifferle of St. Paul and her son Brendan Tickle waited for an appointment in the waiting area of the HealthEast Midway Clinic, which opened in a former Borders bookstore in the Midway area of St. Paul this year

Photo: Jeff Wheeler, Star Tribune

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Power tools echoed through a cavernous former Gander Mountain store in Maplewood recently as workers transformed the gutted showroom into a high-tech spine center for HealthEast Care System.

When the clinic opens later this month, it'll be the third retail rehab project in recent years by the St. Paul-based hospital system, putting it at the forefront of a trend spawned by the recession but stoked by a new competitive landscape.

"Landlords are looking for tenants and are more willing to be flexible," said Len Kaiser, director of development for HealthEast clinics and outpatient services. "What we get is visibility, easy access, convenient parking and a lot of other amenities."

The glut of empty strip malls and big-box stores in the wake of the go-go years has made leases so affordable that nearly every major hospital system in the state and many private health care organizations have jumped in.

The Mayo Clinic has its sights set on the Mall of America. Allina Health has opened clinics in an Old Country Buffet and a former Wickes Furniture store.

Park Nicollet and HealthPartners have built in vacant strip malls. Hennepin County Medical Center moved clinics into two Wal-Mart stores and an old Snyders Drug.

"It's the hub-and-spoke concept," said Steve Brown, who leads the health care advisory group at the real estate firm Cushman & Wakefield/NorthMarq. "If the hospital is the hub, you can't deploy that in the community. You need to look at different ways to draw people back into the system."

Aside from being close to bus lines and major roadways, retail locations allow the kind of high-profile signage providers want as they try to create distinctive brands to compete for patients.

The open layout of a big-box store gives architects a clean palette to work with, as well. Many clinics are working in the latest technology and adding consumer-friendly amenities to create a spa-like atmosphere.

Roomier retail sites also offer opportunities to add complementary medical services, such as audiology, podiatry, pediatrics and mammography. Allina's $7 million project at St. Paul's Bandana Square will include an Aspen primary care clinic plus dermatology and urology services as part of a medical hub that includes an existing Sister Kenny Rehabilitation site.

Infrastructure costs for ventilation, electrical and plumbing can be expensive, however, with laboratory space, imaging machines and multiple exam rooms that need cabinets and sinks.

The cost can be worth it, said Brett Long, Park Nicollet's vice president of strategy and growth.

"Two advantages of leased space over building new are time and money," he said. "Depending on the size, it can take half the time to build out an existing space. So you can get into a new market quicker, and generally you can get in less expensively."

The St. Louis Park-based health care system has used retail spaces to expand into new suburban markets. Last year, it converted a Hollywood Video in Lakeville into an outpatient clinic, using a modern modular wall system. In the next six months it will push into the northwest metro, opening a clinic in Rogers and a vacant strip mall in Champlin, where weeds were sprouting from the dirt floor.

Early success

HealthEast first took the leap into retail in December 2010 when it turned a former EQ Life store on the busy Grand Avenue strip in St. Paul into a clinic. Because of its location, the clinic offers weekend hours and has an urgent care center to draw in shoppers. The clinic already has hit its five-year projected patient goals and is hiring more physicians, according HealthEast's Kaiser.

Two months ago, HealthEast moved its Midway Clinic into a space once occupied by a Borders bookstore on University Avenue. The interior is filled with nature photographs and outdoor scenes taken at nearby Como Park, Cathedral Hill and other St. Paul neighborhoods. The walls are a soothing array of blue, gray, green and beige, and the check-in desk is wrapped in mosaic tile.

First-time patient Phachee Mou noticed right away.

"The feng shui is different," said Mou, 25, of Cottage Grove, sitting across from a bank of tall windows on the sunny second-floor waiting area. "The furniture is comfortable, and the way it is set up and designed is really nice. It's not like a lot of other clinics where you're just closed in, with no windows or anything."

HealthEast added skylights in the patient walkway areas at both the former Borders and Gander site. Both locations also have workout rooms for physical therapy and rehab.

Efficient layout

As a two-story location, the former Borders space provided opportunities to work with an industrial designer to experiment with the latest research in patient flow, said Dennis Vonasek, of HGA Architects and Engineers, who has worked on all three of the HealthEat projects.

Patients check in on the ground floor, can move to the second level or into another downstairs area, depending on their treatment needs. There are "intake rooms" and "exam rooms" and on the way out, patients stop in a small private office to check out.

"People usually aren't in a clinic because they want to be," Vonasek said. "They're under stress, or something's wrong, or they're having a life changing event, like having a baby. You want to create positive distractions to help people feel calm and more in control."

HealthEast's Kaiser said they tried to think outside the big-box in other ways, such as adding heated sidewalks and ergonomic chairs at the $1 million spine center. The organization produced in-house videos about the treatments that patients can view on iPads, and each room has a touch-screen to project X-rays and MRI images.

In addition to nearby shopping and restaurants, the spine clinic also is a block away from HealthEast's John's Hospital, with full surgical capabilities. And there's room to grow, with HealthEast leasing just three-quarters of the former Gander store.

"We're in the health care business, not the real estate business," Kaiser said. "We've invested a lot in that infrastructure, but we're looking to identify opportunities wherever it makes sense."

Jackie Crosby • 612-673-7335

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