BOULDER, COLORADO
1035 Pearl Street Suite 333
Boulder Colorado 80302
303-588-7560
Colorado Real Estate Advisory Services
Healthcare Property Redevelopment
"Project Profile:
Medical Office Redeveloppment
in Cheery Creek
....with the THRIVE! Healthcare project, our goal right from the start was to recreate the physical environment in which practitioners work, and patients receive care. Since many properties were designed long ago for an obsolete healthcare system, the building, grounds and each space needed very targeted physical and financial improvements to first heal the property...."
19,000 squ ft Medical Office Redevelopment
Completed in January 2013
1. Organization
CREA helped create 2 new entities, strategic communications and marketing materials, then recruited synergistic and strategic partners to the opportunity.
2. Acquisition
Using strategic relationships within the industry, CREA secured the purchase of the vacant 18,900 squ ft medical office building at a price significantly below the outstanding balance on the prior owners loan.
3. Finance
CREA drew upon its relationships within Wells Fargo, and within 100 days, closed funding with a Small Business Administration Loan..
4. Redevelopment
Next the CREA team redesigned and repurposed the usage of the property, then put together a very specialized design-built team. Healthcare properties typically require much more attention to detail, and this property needed special attention.
4. Stabilization
Combining sophisticated marketing and communications tools such as the CoStar information platform, board associations with the Denver Metro Commercial Association of Realtors and our membership in the Certified Commercial Investment Member organizations, we wound up attracting a large number of interested doctors, healthcare practitioners, wellness care providers, then signed new leases.
5. Disposition
We took the property from a market comparable lease rate of $8 psf NNN to signed new lease at $19 psf, and upon project completion, and as per plan, CREA sold its ownership in the building to a Tenant upon completion, doubling the properties value in under 10 months.from acquisition.
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Healthcare, or "Medical" real estate describes buildings, offices, and campuses leased to members or organizations within the healthcare community.
There is a rising trend among hospitals, health care systems, and medical practitioners to embrace third party ownership and management of real estate. By using third party developers they can preserve their capital resources for acute care needs and focus their attention on helping people, while passing on responsibility of building regulation and maintenance minutiae.
Healthcare facilities have detailed technological and regulatory requirements. Even such building maintenance tasks as cleaning, heating, and cooling are done differently in health care, with demanding sterilization and filtration needs. In addition to outsourcing building and management tasks, it's becoming increasingly attractive for hospitals to leave building ownership itself to someone else. The concept fits well with the current development trend pairing not-for-profit hospitals with for-profit physician groups as partners in new specialty facilities, though the practice of third party ownership is also rising among all metropolitan areas where space is at a premium.
From an investor viewpoint, healthcareinvestments as a group generally trade at a premium yield to other investment categories. It is also considered one of the more stable sectors, along with higher education and government. During times of economic decline, health care real estate continues to grow.
Today, there are many influential factors that drive the value and effectiveness of healthcare properties, such as;
An aging population that requires ever more medical services.
As of 2004, there were 36.3 million people in America 65 and older, accounting for 12% of total population.
US Census projects there will be 86.7 million people 65 and older by 2050, comprising 21% of the total population.
Advances in technology that allow increasing numbers of medical procedures to be done in offices outside of a hospital setting
Tight medical office markets in many areas as little new construction came on line for several years
Rapid population growth in some areas that has outstripped the supply of medical offices
Increasing interest from investors looking to take advantage of high lease rates and a generally stable physician tenant base.
Times are changing though as the 2010 Healthcare Reform Act intended to provide healthcare for 30-32 million people. However, after adjusting for socio-economic variables and population trends, experts say 9 million new patients in the American healthcare system is a more realistic projection. At the same time, the Association of American Medical Colleges now projects the attrition rate of licensed physicians to be greater than 10,000 doctors every year. The problem is that there are more physician retirees leaving the system than new graduates entering. Thus making it even more advantageous to partner with an independent developer.
For a confidential discussion about your healthcare, specialty, or medical property please contact us at:
303-588-7560
Michael D. Ackerman, Managing Broker
