SageTrust believes that brick and mortar retail services and medical offices providing non-critical health care services have not kept pace with regional household growth, particularly in 15-minute neighborhoods proximate to residential, office and institutional uses.

Institutional capital has shied away from one-off purchases of such assets given minimum investment thresholds and concern regarding the retail and medical office asset classes.

Significant value can be added through attention to leasing, marketing and operational management, as well as attention to deferred maintenance. Packaging stabilized assets in a portfolio will be more attractive to institutional investors.

NEIGHBORHOOD SHOPPING CENTERS

Neighborhood Shopping Centers performed better than other retail product categories before and after the pandemic. Customers living or working nearby generally favor convenient options and support businesses that provide them with essential goods and services with repeat visits per week. Repeat visits and purchases encourage personal relationships with employees and customer loyalty. Such centers also are less susceptible to cannibalization from on-line shopping.

MEDICAL OFFICE BUILDINGS 

Medical Office Buildings tenanted with doctors’ practices and outpatient clinics also serve neighborhood customers. Tenant credit quality has improved with hospital system and private equity acquisitions of physicians’ practices.