In recent years, the landscape of healthcare infrastructure has undergone a significant transformation. With the closure of many hospitals and the relocation of medical professionals, we’re seeing a growing need for enhanced access to healthcare across the United States. A study from Drexel University noted that a substantial portion of the U.S. population residing in the suburbs lacked health insurance and experienced difficulties accessing care. The renewed importance of providing accessible healthcare has prompted a number of innovative solutions to address this growing demand. One such method gaining traction is the adaptive reuse of former retail buildings, offering a sustainable and cost-effective solution to fulfill community needs.

Prior to the pandemic, healthcare systems were already grappling with the challenge of decentralizing services and enhancing accessibility to localized caregivers. Rising lease costs and the need for cost-effective solutions fueled the consolidation of outpatient practices. However, the onset of the pandemic accelerated this trend, intensifying the pressure to expedite these efforts. With a stark downturn in big box real estate due to the lack of in-person traffic, a unique real estate opportunity arose for healthcare systems to repurpose these spaces into medical facilities, providing a ready-made solution to their growing needs. Adaptive reuse of former retail buildings offers a sustainable and cost-effective solution to better fulfill community demands and is continuing to gain traction today.

As more healthcare systems consider outpatient consolidation efforts in former commercial spaces, there are several key considerations to evaluate before committing to an adaptive reuse approach and site.

Construction Benefits of Adaptive Reuse

One of the primary advantages of repurposing former retail spaces for healthcare facilities is the speed to market. A traditional new building project can take years, whereas adaptive reuse may take several months, depending on the project’s scale. Unlike new construction, which can be labor and resource intensive, adaptive reuse projects can leverage existing infrastructure, significantly reducing construction timelines. This transformation is also a sustainable way to repurpose existing buildings while reducing material waste and consumption.

These projects can also offer inherent advantages when it comes to zoning and local permit approvals. Former retail spaces are frequently situated in established commercial zones, streamlining the permitting process and minimizing regulatory hurdles. Without needing to disturb the land by creating added parking or site elements, the land development approval process can be substantially simplified (although local zoning approvals should be researched in advance to avoid any unexpected obstacles). Additionally, these locations are often already recognizable and accessible to local communities, fostering a sense of familiarity and convenience for patients.

Repurposing existing buildings also typically incurs lower long-term rent costs compared to building from the ground up. Landlords recognize the stability of healthcare tenants, and can offer competitive leases for their empty commercial properties—a solution that ultimately benefits both parties. This financial advantage makes adaptive reuse projects a more sustainable option for healthcare systems, allowing them to allocate additional resources toward patient care rather than overhead expenses.

Site Considerations and Potential Pitfalls

While retail-to-healthcare adaptive reuse presents numerous benefits, several considerations must be addressed prior to signing a lease to ensure a successful bottom line. This underscores the importance of involving relevant professionals from the onset. These experts can help conduct the necessary due diligence during the scouting phase and help to determine the scope of the project.

Site selection plays a crucial role in determining the viability of a location. Factors such as entire costs, compatibility with adjacent practices, and lengthy lease terms must be carefully evaluated to mitigate financial risks. Attractive rent with lower cost-per-square-foot and a larger tenant improvement subsidy is just one metric. In actuality, we have observed that these costs have a disproportionate impact when selecting real estate, as other unanticipated expenses and hurdles may appear during renovation. Therefore, design professionals should be involved in the site selection process in order to determine the structural benefits and pitfalls associated with a building, especially when it comes to specialty practices. Professionals can further consult on location planning with key elements such as patient experience in arrival, parking, wayfinding and use of the building, the ability of the loading dock to support updated needs, or space for adjacent expansion and long-term flexibility.

As an example, we recently worked on several multi-floor projects that require careful consideration to accommodate large, heavy equipment. Before committing to a lease, it is important to ensure the floor structure can handle the vibration and weight of specialized equipment, such as advanced imaging. In contrast, for the Hackensack Meridian Health and Wellness Center at Eatontown, we transformed a former Toys “R” Us retail building into a multi-practice ambulatory care facility. This layout provided the ideal structure for the outpatient facility, with an expansive footprint and tall ceilings, all built on a sturdy first floor.

Due to the fact that each structure comes with its own set of benefits and challenges, from utilities to structural constraints, the most successful retail-to-ambulatory conversion projects are ones with a strong understanding of the limitations from the start in order to avoid unexpected costs during the renovation process. Moreover, it’s essential to consider the unique needs of healthcare providers and caregivers. While standardization offers efficiency, customization may be necessary to accommodate specific workflows and patient preferences. Balancing these requirements while optimizing space utilization requires careful planning and stakeholder engagement. Bringing on design professionals early in the planning phase is critical to identify challenges in advance and proactively develop solutions.

Involving the Proper Expertise

To get ahead of the potential pitfalls of adaptive reuse and set the renovation project up for success, you must engage experts with the requisite knowledge for successful execution. Design, project management, and construction teams with experience in healthcare facility conversions can navigate the complexities of such projects effectively. While cost considerations are important, prioritizing expertise over budgetary constraints is crucial to achieving desirable outcomes. Expectations of costs associated with design and construction must be influenced by real-world knowledge, factoring in challenges with lead times, accounting for inflation, labor supply and subcontractor availability, in addition to experience, ongoing fluctuations in material availability, and labor pricing. Too often, budgets are set based on previous project knowledge, not factoring in the changes in construction and design costs, market conditions or industry trends.

Multi-practice outpatient suites require immense planning, especially considering the number of walls needed to create an abundance of exam rooms compared to an in-patient suite. With the increased amount of architectural and planning time needed, costs also rise. By aligning expectations and embracing innovation, stakeholders can collaborate effectively to maximize the potential of adaptive reuse projects.

It’s clear that the adaptive reuse of former retail facilities will remain prevalent in the coming years, and presents a compelling opportunity to enhance healthcare accessibility for communities across the United States. This solution affords property owners, healthcare systems, and design professionals with the ability to leverage existing infrastructure while minimizing construction timelines and regulatory hurdles. This strategy serves not only to increase the accessibility of health services in the areas in which they operate, but also provides a model and means of accommodating the growing demand for accessible healthcare environments nationwide, ultimately yielding spaces that are more holistically ingrained in the lives of the people they serve.

Aran McCarthy, AIA, NCARB, is President of FCA.

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ROCHESTER, N.Y.—With an increase in vacant former retail space in the U.S., more health providers are looking at repurposing these spaces for outpatient procedures and other medical services. LeChase Construction is making the most of the “Malls to Medicine” benefits while overcoming its challenges for the University of Rochester Medical Center’s $227 million Center for Orthopaedics and Physical Performance.

When completed, it will be one of the most comprehensive orthopedic surgery and outpatient care centers in the country. Located on 19.1 acres at Marketplace Mall in Rochester, N.Y., phase one entails the opening of the new Surgery Center in the old Sears store later this month. Over the next few months, the rest of the project will be realized, highlighted by the Center for Human Athleticism, Musculoskeletal Performance & Prevention (CHAMPP)—a state-of-the-art center for Fitness Science—a patient clinic tower, labs, therapy spaces, and much more.

Project Approach

Process to refit the space to meet medical standards involves:

• BIM (Building Information Modeling)
• VD&C (Virtual Design & Construction)
• Off-site modular manufacturing/prefabrication were used to combat labor and cost constraints; with modularization a concept embraced by the construction industry
• Unitized curtainwall system on the clinic tower
• Prefabricated mechanical piping racks and equipment skids
• Prefabricated MEP utility racks
• Synergy Med’s Clean Cube Operating Room “kit” is modular and pre-designed. Its elements are manufactured off-site, saving 1,000 on-site work hours per room – speeding assembly and serving patients sooner.
• The kit is adaptable to site specs without retrofitting necessity.
• The Clean Cube will be the world’s first fully-functioning, technologically complete smart-cube room of its kind in an academic institution.

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Adaptive reuse, the trend of turning vacant commercial and residential spaces into new property types, is hitting the healthcare industry and driven by a number of factors. First, the pandemic brought retail to a grinding halt and many commercial properties are being sold off or are up for new leases; leaving plenty of space available for healthcare uses. Secondly, patients prefer receiving medical care in outpatient settings when they can. It’s easier then navigating through sprawling hospital campuses. Additionally, vacant retail space offers an advantage for healthcare systems creating new facilities as these buildings usually offer open floor plans and require less demolition. These spaces can be more cost effective for reuse than renovating another building type.

Advocate Aurora Health (AAH) is seizing on this opportunity. Its newest healthcare facility in Racine, Wisc., located in a former Pier 1 Imports store is a great example of this adaptive reuse. Zimmerman Architectural Studios designed the 9,600 square foot clinic to provide primary care, urgent care, imaging, and on-site laboratory services and CG Schmidt was the general contractor. Construction began on the $7.25 million health clinic in May 2020 and finished in December 2020 to convert the former retail store into an outpatient clinic. The facility began seeing patients in February 2021.

Dramatic Changes and Challenges

Along with the interior renovation, the exterior of the building was upgraded. The vestibule was expanded to enhance patient circulation. New windows were cut in along the front facade and along the back where the staff offices and break room are located to bring more natural light inside. New air handling units were installed along with a new emergency generator and electrical transformer added to the site to support the utility needs of the clinic.

Identifying any existing utility gaps and developing solutions is key to successfully redeveloping vacant retail space into a healthcare use. On this project, the design team and client identified the need for an emergency generator. The existing site was very constricted so the location of the generator was reviewed and evaluated by the team to find the best solution. The final location was selected because of the close proximity to the electrical room, which reduced wire lengths and costs. In addition, the building needed its own electrical transformer installed. The existing building shared a transformer with the neighboring building. This installation required close coordination with the electrical company and the neighbor to install it during off hours to eliminate down time. The cut over went well and was done in a shorter period than originally anticipated.

CG Schmidt reinforced the roof deck for new air handing units, and openings [in the roof] for ductwork and roof access. The team also added structural steel lintels over the storefront windows in the front and back of the building to support the roof joists. Structural footings and foundation work was done for the vestibule addition.

Sustainability

While AAH did not go through the USGBC LEED certification, the organization has a Healthy Spaces Roadmap that all construction must follow and meets or exceeds LEED. The project recycled 85 percent of materials; uses PVC-free flooring and PVC-wall coverings; incorporates water reduction standards and systems commissioning on the mechanical systems; and used prefab walls, plumbing, electrical and all ductwork, over 25 percent, which is quite high for a buildout.

By adaptively reusing vacant retail spaces, healthcare systems like AAH can add new clinics in locations that are currently underserved and provide better access to services for their patients. In fact, this newest AAH clinic is near major roads and on bus routes, allowing for easy access for patients.

Patient Model

This facility uses a patient self-rooming model for the 11 exam rooms. When patients arrive and check in, they are directed to the exam room where they will be seen. This model reduces the wait times and the need for waiting area space. The clinic features a collaborative staff work area surrounded by exam rooms, which reduces footsteps for clinical staff and improves communication. The clinical work area also provides a line of sight to all exam rooms for better flow management.

Diversity and Inclusion

Economically strong, vibrant communities are beneficial in the construction industry because they help build and develop the construction workforce for the future. Increased participation of under-utilized businesses provides better work opportunities for under-represented groups. Engaging diverse and local businesses benefit communities by job creation, mentorship of growing firms, and valuable job training and desirable skills. For the AAH adaptive reuse project, 32 percent of the construction team was considered diverse and over 20 percent lived within the county boundaries. Additionally, 24 percent of the Trade Management Partners (TMPs) used to equip the facility were operated by or employed by diverse individuals.

The Future

Repurposing commercial space is a viable option for healthcare systems because this often saves both time and money, with the collateral benefit of reinvigorating the community and bringing care closer [to the community]. This new AAH clinic is providing more access to high-quality care for people in one of the fastest-growing residential and commercial areas in the state. The health center is projected to see approximately 16,500 patient visits annually by the end of its fifth year. 

Mark Lillesand, CG Schmidt Vice President, serves as a company leader in the area of Lean Construction and may be reached at Mark.Lillesand@cgschmidt.com or 414- 577-1142. With over twenty years of experience, Mark has extensive expertise in the healthcare market for clients such as Advocate Aurora Healthcare and Ascension Health. Mark is a member of the Lean Construction Institute – Wisconsin Community of Practice and a member of Wisconsin Healthcare Engineering Association. 

CG Schmidt, a family-owned company since 1920, is a leader in construction management, general contracting and design-build services throughout the Midwest. For more information, visit www.cgschmidt.com or follow the firm on Facebook, LinkedIn or Twitter.

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