Q2 2012 Medical Office Trends - Real Estate Update

Columbus Medical Sales Pick Up The Pace

Medical users are buying buildings for very low prices, owners of full medical buildings selling buildings at near all time high prices.

This has been the story for medical real estate for a while, what’s new is that activity is substantially picking up on both of these fronts.

Great opportunistic purchases sell for a fraction of their replacement costs

• New building for the New CMA: The Columbus Medical Association just purchased 1390 Dublin Road for $2,300,000 or $67 per SF for 34,283 SF.  Read Business First article here.
• Extra Space for Practice: A large medical user just purchased a 12,623 building in Dublin for $690,000 or $54 per SF. The Seller was highly motivated, having reduced the asking price from $1,700,000 to $699,000.

Occupied building sales continue to yield prices near record highs

• 495 East Main Street, occupied by Nationwide Children’s Close To Home, just sold for $3,950,000 or $234 per square foot.
• 3592 Corporate Drive, a building with Nationwide Children’s just sold for $134.55 per SF, with 2/3 of the building vacant (NCH is occupying 10,000 of the 30,000 SF).

How long will these trends last?

I think that the opportunity to purchase distressed buildings at these low prices, while still available, is winding down.  There are a limited number of highly distressed properties, and while I can point to many examples, I am also seeing many selling or about to sell.  For owners looking to sell full buildings at super high pricing, I think the window will last a bit longer. This trend is driven by interest rates and overall demand for healthcare properties among investors.

What do I recommend?

If you have a need for additional space, either for clinical or administrative functions, now is the time to look at what is distressed in the market, even if your timing is a bit out. I would not recommend waiting to see what’s available in 2 or 3 years because I doubt that there will be as many inexpensive options then.

If you think you could get more use of your capital by deploying into your practice (adding providers, upgrading equipment or infrastructure, opening a new location, etc…) then it is worth analyzing the sale of your real estate and staying in the property as a tenant. This includes developing an opinion of value, examining accounting advantages and disadvantages, and considering your practice goals. If you own your building and have no succession plan for your practice, highly recommend selling your building and remaining as a tenant for 10 years. Owning a vacant building once retired is painful and can be averted with good planning.

Thanks for reading the latest on Columbus medical office space!

Davita Buys HealthCare Partners physician network- 4.4 Billion

Our ever changing environment is changing more... First with an insurance company ramping up their acquisition of practices and systems, now with Davita acquiring one of the largest physician networks in the US, with $2.4 Billion in annual revenue. Thanks to Florida attorney Jonathan Fleece for posting on LinkedIn.

Click here to view the article

Q1 2012 Medical Real Estate Trends

The Zangmeister Center and Columbus Oncology and Hematology Associates Announce Merger Centers Join Forces to Maintain High Standard of Community Cancer Care

Big news and congratulations to both groups!

Press release below and additional article available from Carrie Ghose on Business First’s blog at: http://www.bizjournals.com/columbus/blog/2012/05/cancer-specialists-zangmeister.html?ana=e_du_pub&s=article_du&ed=2012-05-01

The Zangmeister Center and Columbus Oncology and Hematology Associates Announce Merger

Centers Join Forces to Maintain High Standard of Community Cancer Care

April 30, 2012 - (Columbus, Ohio) – In a concerted move to maintain the high standard of community oncology in central Ohio, two leading cancer care providers, Columbus Oncology and Hematology Associates and The Mark H. Zangmeister Cancer Center, have reached an agreement to merge their organizations.

The merger will create a unified entity of 21 physician members. Both centers will maintain their current locations, physicians and staff.

As healthcare costs continue to rise nationwide, the two Columbus organizations say joining forces will better position them to compete in a challenging health care environment. The merger will enable them to deliver more coordinated care while maintaining reasonable costs for patients, insurers and employers alike.

The union will allow the organizations to maintain independent offices and continue to work closely with central Ohio hospitals and other groups to offer high quality care and treatment.

“By unifying community cancer care in Columbus, we will benefit our patients by providing a greater breadth and depth of services and expertise,” said Dr. Patrick Elwood, president of the Zangmeister Center. “Both of our organizations are committed to providing the highest standard of service to our patients and this merger will assure that care continues.”

Dr. Peter Kourlas, president of Columbus Oncology and Hematology Associates agrees. “Our organizations were founded with the same mission: to offer a level of attention and patient care that is unique to the community oncology setting. By combining our strengths, it’s a win for our patients, our own practices and cancer care in central Ohio.”  

Guidance for acquiring medical real estate from hospitals

Demand is higher than ever, but what are the key considerations for those who are interested in purchasing these buildings?

I ran across the article below and thought it provided a solid overview of most of the issues involved, hope you find it helpful!

http://www.munsch.com/files/acquiring_medical_real_estate.pdf

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