Commercial Real Estate Finance

Posts Tagged ‘medical office building’

At the end of last year, Colliers released a detailed report on the state of America’s retail real estate (click for PDF), including market-by-market data and predictions for the growth and evolution of the sector. Naturally, a great deal of the study looks at the relationship between brick-and-mortar and online retail, and how the latter will influence the market for traditional retail properties. Colliers includes a list of estimated store openings, organized by company, for retailers with the highest number of openings in 2013.

Here are a few of the stores–all restaurants of one kind or another–expected to open new locations this year:

• Buffalo Wild Wings (105)
• Chipotle (165-180)
• Dunkin’ Donuts (330-360)
• McDonald’s (220)
• Qdoba (70-85)
• Panera (115-125)
• Starbucks (300)
• Pizza Hut (150)

All of these numbers are Colliers’ estimates. And yes, Yum! brands’ (NYSE: YUM) Pizza Hut does indeed have 150 potential openings for the year. These brands, along with dollar stores and drug stores, are among North America’s fastest-growing retailers. This, I suspect, tells us a lot about where the retail real estate sector is headed. Read the rest of this entry »

And when I say MOB, I’m talking about Medical Office Buildings. It’s an acronym.

This blog has no affiliation with the mob.

Let me start over. The idea for this post came from a great CoStar Group article published last month. In it, Randyl Drummer points out the uptick in medical office deals that’s resulted from changes in medical care, technology, demographics, and healthcare regulation (i.e., the Affordable Care Act).

Mr. Drummer explains,

Continued health-care employment growth, combined with the expected increase in demand for medical crae [sic] services from the aging population is expected to continue to drive development of medical ambulatory care facilities, including MOBs, surgery centers, urgent care clinics and diagnostic lab facilities.

The healthcare industry is the largest job creator in the country, and one of the largest drivers of economic activity in cities big and small. Healthcare, of course, is also extremely complicated, affected by large private interests, government agencies, and ever-changing rules. The fact that investors and developers are pursuing opportunities in the highly regulated healthcare sector–despite the layers of bureaucracy that often make medical establishments onerous for business interests–shows a great deal of confidence in the sector’s overall growth.

There’s no denying the demand for healthcare real estate. This is a product of both an aging population and increased availability of medical coverage (courtesy of Obamacare). But the additional capital demands this will create (for insurance companies, the government, employers, and individuals) will also result in greater demand for less expensive medical options. This is why the MOB–Goodfellas connotations aside–seems an especially promising niche in the healthcare real estate sector. Read the rest of this entry »

A follow-up to yesterday’s post on healthcare property investment, here’s a list of the 10 Largest Hospitals in the U.S.:

10. Methodist University Hospital, Memphis, TN

9. Orlando Regional Medical Center, Orlando, FL

8. Baptist Medical Center, San Antonio, TX

7. Methodist Hospital, San Antonio, TX

6. Montefiore Medical Center/Moses Division Hospital, Bronx, NY Read the rest of this entry »

In recent years, few issues in the U.S. have been more of a political lightning rod than healthcare reform (i.e., “Obamacare”). Even though the full effect of this legislation is yet to be felt, public reactions have been quite–to put it nicely–passionate. Healthcare has become something of a moral controversy, with all the fiery rhetoric that entails.

Regardless of the debate, healthcare is a booming industry. No amount of regulation will change that, because the demand is so great.

For commercial real estate investors and operators, the medical real estate sector has become something much greater than a “niche,” for several reasons:

Read the rest of this entry »

Say you want to buy a medical office building.  Its fully leased with staggered lease expiration over a ten year period, and the NOI is $1M. How much would you pay for it?  Depending on the creditworthiness of the rent roll, you’d probably apply some CAP rate you felt comfortable with, and make your offer.  Now let’s throw in a little wrinkle.  Let’s also say that this medical office building sits on  a hospital campus, and thus is under a very long term ground lease….a lease in which there is only 15 years remaining.  How much would you pay for that same medical office building now? Read the rest of this entry »