By Ryan Menges and M. Ethan Gould
Already a strong trend pre-COVID-19, building owners are actively converting vacant retail spaces into a variety of health services clinics. Wellness, therapy, medical and veterinary services tenants must advocate for their unique space and MEP requirements before signing a lease.
Retailers have been downsizing their brick-and-mortar locations and beefing up their online presence in recent years. This movement has accelerated in the wake of COVID-19. Property owners are scrambling to lease vacant spaces and health service providers are emerging in the struggling marketplace seeking good locations and a deal.
Retail leases for health services clinics have risen by almost 60% since 2017, a trend that’s going to continue as Americans shy away from hospitals during the ongoing coronavirus pandemic and increasingly seek local access to healthcare.
While this seems to be a win-win for both retail developers and health service businesses, the problem is, retail spaces weren’t designed to house health service providers and their unique HVAC, power and plumbing infrastructure needs. Without health-specific critical infrastructure, health service businesses could be faced with costly infrastructure improvements, or be required to make modifications to their program due to building limitations.
For health service providers, it’s critical to ensure the retail space can meet their unique back-end infrastructure needs. Before signing a lease, health services tenants must conduct a thorough analysis of the space to determine if it’s possible to build out their necessary infrastructure needs including mechanical requirements, electric loads and plumbing infrastructure.
Health service facilities require higher rates of exhaust air, resulting in the need for more outside air. These increased air rates result in higher HVAC loads to cool and heat the outside air, and the need for an additional louver area to convey this increased air quantity in and out of the building. This may require HVAC upgrades, including modifications to existing louvers or the addition of new louvers.
Not only is the area of louver space critical, but the location of existing louvers must also be reviewed to ensure code-required separations can be met between lot lines, exhaust, intake and building openings, such as windows and doors. If the space has unique exhaust requirements, such as those from a scavenger unit, these design requirements must be taken into consideration as well at design — not after move-in. Since a scavenger system has maximum distance requirements to the outdoors, careful consideration with project design layout is required as well.
Questions to ask:
- What is the building-allotted HVAC capability in regard to outside air quantity, heating and cooling capacity?
- How much louver space is available for exhaust and intake air?
- Can new louvers be installed?
- Are there any operable windows or building openings that will restrict exhaust locations?
Health service facilities have a greater electrical demand, necessary to support the myriad of medical equipment, i.e., x-rays, surgical lights, emergency equipment, MRIs, etc, as well as to support the HVAC and plumbing infrastructure. The required watts per square foot are considerably higher than a typical retail space. In addition to the increased electrical load, proper space allocation for equipment including vacuum pumps, oxygen manifolds/cylinders, scavenger systems and air compressors, for example, should be considered when evaluating the square footage needed.
The voltage required by some diagnostic and treatment equipment varies between 480Y/277V, 3phase and 208Y/120V and 3phase. Therefore, it is important to understand the electrical requirements available in the retail shell.
Questions to ask:
- What is the allocated electrical load?
- How is electrical service provided to the tenant?
Health service facilities have greater plumbing infrastructure requirements than a typical retail space. In addition to dedicated handwashing sinks in every exam and procedure room, there are separate toilets for staff and visitors, autoclaves, glasswashers and emergency showers/eyewash stations. Consequently, this may have ramifications on the infrastructure, as increased water use and potentially larger metered connections are needed to support facility water requirements.
Because of all the additional fixtures, a typical single capped connection from a retail landlord is not sufficient. It is also critical to understand any limitations of waste routing as the spaces below the facility could contain rooms not conducive to running waste piping through them, for example; electrical rooms, fire pump rooms, etc. This may inform floor plan development and space considerations.
Questions to ask:
- Are there any coring limitations?
- What is below the proposed space?
- What is the pressure and size of the water connection to the space?
Negotiating the Lease
Retail spaces can be a great real estate choice for health services providers, however, it’s important that the space can meet their unique MEP infrastructure needs.
Consequently, end users must be empowered to ask the right questions about the current state of infrastructure and what the retail space owner plans to do to upgrade the space to meet clinical needs. These issues are more costly and challenging to address after move-in, so be sure to prepare a clear checklist and make your unique requirement needs known.
CASE STUDY: Bond Vet Veterinary Clinics, New York City
Bond Vet, a New York-based chain of veterinary clinics, is aggressively taking over retail spaces across the city and turning them into wellness and urgent care clinics for pets featuring exam rooms, surgery, radiology and dental spaces, medical staff and customer restrooms and a reception lobby.
During design and construction of its first two retail spaces, Bond Vet discovered that the 200 Amps typically provided to a retail tenant were not sufficient for its needs. To meet its power needs, Bond Vet had to make revisions to its facility to accommodate the electrical load provided by the landlord. As a result, Bond Vet reached out to ESD to begin investing in pre-lease activity, and achieve both cost and time savings with each project.
As the fast-growing start-up continues its rapid expansion across New York City, ESD helps it conduct lease reviews and site assessments with each potential retail landlord prior to signing a lease. ESD evaluates the lease and site with Bond Vet’s unique mechanical, electrical and plumbing needs in mind with the goal of identifying potential infrastructure shortcomings upfront, setting Bond Vet up for a successful build-out and relationship with the landlord. Today, Bond Vet is able to facilitate speedy – and most importantly – effective lease executions.
This article was subsequently posted in CoreNet Global’s Pulse Blog.
Are you turning a retail space into a health services clinic? Reach out to Ryann to ensure that the unique space and infrastructure needs for day-to-day operations will be met.