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!