Medical Real Estate
Hey all,
For my next project I'm thinking about doing something in the field of medical real estate, probably doctor's offices. This could be either developing a new building, or doing a conversion of an existing building. I'm thinking maybe turning it into condo medical offices, but leasing is also a possibility.
So, the question is, has anyone on the list got any experience in this area of medical real estate? And if so, what are your suggestions/comments?
Thanks,
CT
CT,
No specific ideas (I've looked at several of these but always passed). It strikes me as a bit of a specialty market and I think there are guys that do quite well in it.
It also looks pretty volitile. Most of the ones I see have big vacancies because somebody has opened a new one down the street, or the hospital a mile away got closed or any of a dozen other causes.
Could just be me, though. since I'm kinda a bottom fisher in such things.
What happened to the industrial condos?
Mark
CK,,
To answer your last question first, it's full speed ahead on the industrial condos. We drilled 15 soil borings, and only found clay in two, which was better than we expected. There is some shallow rock, but not too much. So it looks like we're going hard on the land this coming Friday. We have signed a rep agreement with a very experienced broker, and are starting to negotiate with banks. We have the title comitment, and it looks good. We have the first draft of the site plan back from the civil engineer, and it looks like we can meet our objectives. Anything else you want to know?
Despite having all that going on, I am starting to think about our next project, and that's where the medical real estate idea came in. We met with a doctor who is chairman of his department at a hospital this morning, and he is interested in joining with my partner and me, so we're starting to explore alternatives. If we could build a building on the campus of a hospital, (and it has to be a new or growing hospital), I think we would do it. A lot of hospitals are capital-starved now, and are willing to lease land long term for you to put a medical office building up. The occupancy is relatively stable. Doctors (and patients) don't like to move, and occupancy remains stable through the crests and troughs of business cycles. With the aging population, there will be more and more demand for medical care.
Some downsides: you need a lot more parking, the buildout is more complex and expensive, and the facilities need more upkeep because of all the constant traffic, both in people and cars. And the tenants tend to be a bit like prima donnas. One option to solve the last two things I mentioned is to sell the offices as condos, which we are considering.
So, what do you (or anyone else) think?
CT