Legal and Business Considerations When Developing Retail Spaces for Elderly Care Facilities
Bradley Arant Boult Cummings LLP
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October 6, 2021 – Reallocation of existing real estate is a common occurrence. Less common, but expanding, innovative solutions are starting to appear to deal with empty real estate – especially shopping malls – as in-store purchases become less common in the age of the internet and Amazon deliveries.
There have been a few notable conversions from large retail spaces to healthcare facilities. One success story is Vanderbilt Medical Center in Nashville, Tenn., An 880,000 square foot mixed-use medical center located in a former indoor mall.
In Irondequoit, NY, a vacant mall is being used to house senior housing, an adult daycare and community center funded by a bond issue approved by the city’s voters, with a focus on multigenerational use.
The reallocation of these vacant spaces is a credible, intelligent and often economical idea, because these structures are generally ideally located near hospitals and shops, have existing car parks and have large spaces for the extension of care. Many health care and senior housing providers can satisfy their growing interest in providing more community services with this type of infrastructure.
However, there are areas of concern when reallocating existing retail space for healthcare purposes. In most indoor malls, windows are limited along the expanse of retail space, as indoor stores often have a solid exterior wall. Health care and senior housing providers would like to renovate to add natural light to the space. In addition, HVAC and ventilation systems may not be suitable for housing and medical purposes. Mall systems are built to accommodate the entire space, with no regard for unique medical needs, so the zoning and regulatory requirements for these systems should be considered during any due diligence phase. .
Several additional renovations may be necessary to bring the building up to standard and to comply with regulatory requirements governing the type of installation. Plumbing, an adequate roof structure to accommodate additional systems, water pressure, and a determination of which systems can be reused are all things that customer suppliers will need to consider in order to be confident in choosing the right one. space.
The regulatory landscape will necessarily determine the requirements for the construction of these spaces. Due to the cost of a complete modernization of updates to meet code or regulatory requirements, it is worth discussing innovative solutions with zoning and regulatory officials early in the process to see if there are less costly workarounds to meet the intent of the requirements.
In addition to physical facility considerations, long-term care or other healthcare providers must take into account if they wish to develop retail spaces for their purposes, it is worth considering whether the property or leasing is appropriate for development. It may be more beneficial for your client to find an owner with an existing development who is looking to innovate in this way and renovate the space needed as a tenant rather than as a landowner.
Some medical facilities, such as the Vanderbilt Medical Center, are renowned inhabitants of these great spaces and have the means to secure the capital required to arrange the space as needed. Other small providers, especially in long-term care and senior housing spaces, may not be located in the same way, but would like to take advantage of the location, space availability and facilities. amenities nearby. In this situation, these smaller providers are better positioned to be tenants under a ground lease with another developer owning and managing the space – which ideally would be geared towards the elderly communities of the future – pedestrian spaces with facilities. care, housing, shopping and entertainment.
Some existing malls choose to add medical facilities and entertainment venues to their existing retail operations in order to create a more organic customer base for retail operations. In Roseville, Minnesota, rather than pulling back over fears retail space is on a downtrend, owner of Rosedale Center mall expands footprint to include offices, medical offices , active adults (55+) living units, a hotel, entertainment venues and other features to make the space a community gathering place rather than just a mall.
As the senior population in the United States continues to increase over the next decade, this demographic will likely continue to demand and prefer housing – whether it’s skilled nursing, assisted living. independent living, independent living or any sort of extended care or living situation – and will be in a space that offers other care equipment and even additional entertainment equipment. Advising your clients on the historical list of issues that have arisen as others have entered this space is essential, as are early and regular conversations with the necessary parties involved in regulatory considerations surrounding construction.
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