Healthcare Real Estate Development: Sweat the Small Stuff

It’s easy to focus on the big healthcare real estate projects.  After all, they tend to receive the most press coverage.  And, as Phil Runkel earlier blogged, Size Matters.  That being said, I encourage you not forget about the not-so-large projects.  As pointed out in Medical Office Upswing, a great deal of healthcare real estate construction (both in development and in upfit) is in the arena of small and mid-sized projects. 

Of course we enjoy the large deals and developments, but there’s much to be said for the not-so-big projects as well.  For example, there’s much satisfaction to be had in helping a group of Doctors purchase and develop their own medical office building.  Often such projects not only help a practice group’s long term success, but also help increase patient access to healthcare.  Such projects can even help decrease healthcare costs, by moving certain services to lower cost square footage.

If you’re in healthcare real estate for the long haul, consider keeping in mind the small and mid-sized projects as well.  Many believe that we will see more and more of these developments (even for the large healthcare providers), as providers develop more off-campus and secondary and tertiary markets in their efforts lower costs and increase patient convenience.

Thank You, NC Law Blog....

Many thanks to NC Law Blog for sharing our article “Telehealth:A Different (but not to be Ignored) Area of Healthcare Real Estate” (first published on our blog, Healthcare RealEstate).

NC Law Blog is an online legal magazine by and for North Carolina lawyers that is sponsored by the North Carolina Bar Association Center for Practice Management.  They do a great job.  Check them out by clicking here, or subscribe to NC Law Blog by clicking here. 

A New Wave in Real Estate Investment, or a Beta Test Destined to Flop?

“Not your granddad’s investment model” is a fitting name for Lauren K. Ohnesorge’s article regarding one company’s drive to “shake up” the usual MO for real estate investment.  As our own NellieShipley points out in the article, this model is far from typical.  And, as we know, far from typical tends to bring with it unique (and often unknown) risks.  But, if we all did only what is typical, we’d never progress.  This begs the question, is the potential risk worth the reward?  I believe that we must also ask if this particular MO attract quality developers, such that quality developments are put in the ground?  Read more by clicking here, and decide for yourself.

Telehealth: A Different (but not to be Ignored) Area of Healthcare Real Estate

Healthcare providers are looking to move what they can off-site, getting what they can into lower cost real estate. Traditionally healthcare real estate (e.g., MOBs and ASCs) can be high cost, both in the initial development and in the maintenance.  The healthcare industry is information intense, service-based in many respects, and pressed to reduce costs. 

Telehealth centers can help address all of these issues, by moving certain client services to lower cost real estate.  Thus, it makes sense that we would see growth in telehealth. 

It may not be what we traditionally think of when we contemplate healthcare real estate, but healthcare real estate is not an area in which we can afford to only think of in traditional terms.  In order to help our healthcare clients succeed, we need to think outside of the same-old-same-old, and be in the know with respect to such real world solutions and opportunities.

Read more about telehealth by clicking here, here, and here.

Healthcare Real Estate – a Boom, a Slow Down, and More….

Owen Covington’s article “Triad may never see another health care building frenzy like it hasrecently” in The Business Journal focuses on healthcare real estate development in the Triad area, but it’s takeaways apply well beyond that specific geographic region.

Owen focuses on the healthcare real estate boom in the Triad, but thankfully he does not stop there.  He looks to certificate of need applications filed with North Carolina as a possible indicator of healthcare real estate development in the near future.  The total project costs reflected by the CON applications for the first five months of 2013 are significantly lower than in the recent past, suggesting a large slowdown in such development.  Of course, not all healthcare real estate developments require a CON.  Just the same, we need to pay attention to such indicators.

One person quoted in this article expressed the belief that healthcare systems do not have the high levels of capital that they have had in the past.  As we’ve discussed here before, with healthcare reform and other pressures, healthcare providers will be focusing on reducing costs.  Obviously, such factors can slow healthcare real estate development.

But, all is not lost for those of us in healthcare real estate.  In this article, Jim Rogers anticipates more off-campus medical clusters.  We’ve certainly seen a lot of that in our practice, and such projects are quite often full real estate developments, not just small expansions, upfits and the like.

In healthcare real estate, it seems that the one constant is change.  How are you preparing for the next development?