ZeroIn™
Healthcare Insights

Vacant Retail to Vital Care

November 17, 2025
Greg Markvluwer, MBA Avatar
Greg Markvluwer, MBA
Vice President, Real Estate Development
Mike McKay, AIA, ACHE, EDAC, LEED AP, NCARB
Healthcare Market Sector Leader

Converting Empty Stores into Healthcare Opportunities

The decline in demand for brick & mortar retail brings new opportunities for healthcare needs.

E-commerce retail sales continue to rise even after the pandemic; this increase is forcing retailers to decrease the amount of brick-and-mortar square footage to stay competitive.

Conversely, Centers for Medicare & Medicaid Services (CMS) continues to approve an increased number of procedures to be performed outside of a traditional hospital causing Health Care Organizations (HCOs) to move these cases out of the hospital and into Ambulatory Surgery Centers (ASCs) and clinics that are more conveniently located near their patients and at a lower cost.

The Rise of Online Shopping & Digital Competition

The rise in e-commerce shopping was accelerated by the pandemic. “By late 2024, online sales accounted for roughly 16% of all U.S. retail sales, up from about 11% in 2019.” This increase has negatively impacted traditional brick and mortar retailers. “In 2024 alone, U.S. retailers closed over 7,300 stores, the highest annual total since the pandemic, marking a 69% jump in closures from the previous year.” This trend is continuing to accelerate, with industry analysts projecting store closures to double in 2025.

This surge is due to multiple factors including the increase in e-commerce retail purchases, high inflation costs which negatively impact discretionary purchases, increased interest rates which adversely effects retailer’s profit margins forcing retailers to decrease their footprint and/or close stores. It is anticipated that the wave of closures in 2024 – 2025 will free up 140 million square feet of retail space nationwide.

Healthcare Opportunity

The increase in vacant retail spaces creates new opportunities for healthcare.

Most retail is in high traffic corridors with great visibility (fostering brand awareness) and plenty of parking. This allows HCO’s the ability to offer convenient access to healthcare services while avoiding the permitting and approval process (for the site infrastructure and building shell) and accelerating the development schedule with the existing site infrastructure and building shell construction.

Unlike office buildings, most retail structures are designed with wide column spacing, minimal demising walls, and tall ceilings allowing maximum flexibility for clinical layouts, specialty care, diagnostic and treatment services, including MRI and OR. The tall structures offer the ability to run utilities and equipment overhead, add shielding or other specialty equipment. The typical single-level structures allow convenient access to the floor slabs to add plumbing or the roof to add HVAC, exhaust vents, and other specialty equipment without disrupting other building occupants.

Cost for Building Shell

The cost to lease or purchase an existing retail building shell is significantly less than HCO’s typically pay to purchase land, install site infrastructure, parking and construct a building shell. One example is a vacated Rite Aid pharmacy located in SW Michigan which is 11,286 sf and is currently listed for sale at $300,000 ($26.58 sf). In this market, a similar site with this visibility, accessibility and commercial zoning would sell for $250,000 – $450,000 alone without a building.

The health system would likely spend an additional $75 – $100 per sf to develop the site’s infrastructure, parking and building shell. While this building will likely require water, sewer, electrical and HVAC upgrades, the acquisition of the existing structure provides significant savings. Since the building already exists, the renovated project can be delivered much faster than starting from scratch.

To mitigate costs of added infrastructure and expedite the schedule, alternative solutions should be considered, including the utilization of movable walls and a vacuum plumbing system that will fit neatly and completely within the existing space and infrastructure, minimizing the amount of demolition and new construction work.

The movable (or demountable) wall systems are designed and installed to fit within the large and open space, providing the necessary subdivision of the space to support the required clinical, medical, diagnostic, and treatment program.

Converting a former retail space into medical space will also require the addition of plumbing fixtures such as handwash sinks, patient and staff toilet rooms, and other plumbing fixtures to support diagnostic and treatment modalities.

These additional fixtures could overburden the capacity of the existing sewer lines, which can lead to a complete replacement of those lines – sometimes including the main line to the street. However, a new vacuum plumbing system can be substituted, and is able to process and release the waste into the existing sewer line meeting the current capacity, thereby eliminating the need and cost to trench cut the floors and replace the existing sewer infrastructure.

Considerations With This Approach Include

Moveable wall systems will perform exceptionally well acoustically — it is very quiet once installed and provides a solid sense of enclosure. Assembly is straightforward, with clean interfaces and minimal disruption, if installed adjacent to occupied space. The ease of installation is maximized with detailed pre-planning.

Pre-planning is critical to minimize, if not eliminate, modifications as the panels enter fabrication. Early engagement between the project stakeholders and the manufacturer ensures all design decisions, power/data locations, and finish selections are finalized before production begins, and coordinating with the installers in the field during installation will facilitate an easy and complete installation.

Conducting a full-scale mockup is instrumental in achieving stakeholder buy-in. It allows end users to visualize the layout, understand the product’s modular limitations, and approve details that cannot be changed post-manufacturing.

The magnetic attachment method for wall-mounted accessories is a major advantage, allowing for flexible placement and reduced wall penetrations, supporting future adaptability and maintaining the clean aesthetic expected of demountable systems.

Achieving a cohesive look between the demountable walls and traditional hard-wall construction is one of the challenging aspects. Aligning casework of wood finishes, door veneers, and hardware with the surrounding construction requires coordination meetings, which our interiors team will facilitate. Options exist to standardize casework by the manufacturer/installer.

Door and hardware installation is simplified through the movable wall systems but must be coordinated to ensure compliance with the HCO’s requirements, patient privacy, and security for all concerned.

Depending on the system, the movable walls will either clip to the ceiling grid or come with their own ceiling. These details must be determined and detailed early in the planning process to achieve alignment between architecture, structure, and the mechanical, electrical and plumbing engineering disciplines.

Coordinating with the HCO’s facility staff to ensure expertise for maintenance and ongoing operations is essential, while also making sure the planning allows for placement (and sound insulation) of the equipment that operates the system.

Conclusion

As traditional retail continues to contract, the resulting surplus of well-located, adaptable real estate offers healthcare organizations an unprecedented opportunity to expand their reach and improve access to care. By reimagining these spaces as modern, patient-focused environments, health systems can deliver services closer to where people live, shop, and work—meeting patients in their communities while optimizing costs and accelerating development schedules.

With thoughtful planning, early stakeholder engagement, and strategic design solutions such as demountable wall and vacuum plumbing systems, former retail buildings can be efficiently transformed into high-performing clinical spaces that support flexibility, growth, and long-term value for both providers and the populations they serve.

Greg Markvluwer, MBA

Vice President, Real Estate Development

Let’s Talk!

Related Articles

April 21, 2021

Hospital of the Future

Hospitals are the centerpiece of health services in every community. However, the future for most hospitals is uncertain. Declining demand...

SIGN UP FOR

ERDMAN: Purpose, People, & Projects

Stay connected through our quarterly newsletter, featuring industry insights, project highlights, and thoughtful perspectives on what’s shaping the future care.

Subscribe
© 2026 ERDMAN. All rights reserved.
Privacy | Terms & Conditions