Tag Archive for: medical office

South Florida Medical Office Market Set For Growth

doctors office

Even with a potential national recession, South Florida’s office market is set for continued growth, a Colliers broker told the Business Journal.

Kim Kretowicz, senior managing director of healthcare investment sales in South Florida for Colliers International said Florida’s continued population growth has made medical office buildings an attractive sector to invest in throughout the Sunshine State, but particularly in Southeast Florida.

“The medical office sector remains attractive from both a fundamentals and performance standpoint, despite the crumbling debt market and shaky economy. Demand outweighs supply,” she said.

Overall, South Florida’s office market is among the strongest in the nation as companies inside and outside of the region hunt for quality office space that suits their needs. As a result, as of the third quarter, asking office rents have generally risen above pre-pandemic rates here though not always as fast as the rate of inflation. There’s also been a slow down in office deals due to rising interest rates and fears of a recession.

Still, medical office buildings are an asset class of their own.

“The cost to build out for medical space is easily three times more expensive than [regular] office,” Kretowicz said, adding that medical office tenants need larger elevators, and specially-designed office space and plumbing.

Yet with greater expense comes stable cash flow. Kretowicz said medical office tenants tend to stay longer than regular office tenants. They’re also a source of stable cash flow. Medical office tenants are typically charged triple net, meaning that inflationary costs like utilities, maintenance, and assessments are passed on to office tenants. In the third quarter, rents for medical office ranged from $17.30 to $37.80 a square foot, triple net, according to figures from RevistaMed, a Maryland-based medical property research company.

Available medical office space is hard to find, too, even though at 22.21 million square feet, South Florida has the 10th largest amount of inventory among 125 major metro areas, Kretowicz said. In the third quarter of 2022, the region’s medical office vacancy was 6.9%. In contrast, overall office vacancies was 8.8% in Palm Beach County, 10.3% in Miami-Dade, and 11.2% in Broward, according to recent Colliers reports.

Regional, national, and international players are also pouring more money into medical office properties.

In the third quarter, transactions involving South Florida medical office buildings climbed 155.3% from the previous year to $916.17 million – the seventh highest volume among top 125 metro U.S. markets, according to RevistaMe. Developers, meanwhile, are in the process of building another 1.87 million square feet of medical office in the tri-county region, Kretowicz said.

“Healthcare’s strong fundamentals offer reliable and consistent occupancy,” she said. “…[And] sales volume is off the charts in South Florida due to the increase in population causing never before demand for medical office buildings.”

 

Source:  SFBJ

 

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Terra, HCA Healthcare Buy Pembroke Pines Development Sites

terra-pines-city-center-aerial 760x320

Miami-based Terra and Nashville-based hospital giant HCA Healthcare acquired development sites in the Pines City Center mixed-use project in Pembroke Pines.

This was the final piece of a 66-acre property the city purchased and facilitated development on over nearly a decade. With this deal, the last piece of land under contract to private developers at Pines City Center has been sold, while the city retains land for its municipal uses.

The city sold 9.15 acres at the southwest corner of Pines Boulevard and Palm Avenue for $13 million to Pines and Palm Ave 2022 LLC, an affiliate of Terra. The site previously housed Pembroke Pines’ former City Hall, which was demolished.

The Terra affiliate then flipped 6.5 acres of that site to Davie Medical Center LLC, an affiliate of HCA, for $6.1 million. Davie Medical Center is the official name of HCA Florida University Hospital, which opened on the Davie campus of Nova Southeastern University in 2021.

Officials with HCA couldn’t be reached for comment regarding their plans for the Pembroke Pines site. The company does not have a hospital in the city.

Pembroke Pines granted plat approval for 120,000 square feet of medical office space on the property that was subsequently acquired by the HCA affiliate. A site plan has yet to be submitted.

For the 3.15-acre site retained by Terra, the city granted approval for 120 to 150 units of senior housing. Terra said it is in the planning stages for that parcel and has no renderings to share yet.

 

Source:  SFBJ

 

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BridgeInvest Lends $64M for South Florida Assisted-Living Development

RIEBER-DEVELOPMENTS-PLANNED-1212-AVENTURA-PROJECT-PHOTO-COLLIERS-INTERNATIONAL

Rieber Developments has landed an $83.8 million debt package to build an assisted-living mixed-use development in metropolitan Miami.

Miami-based BridgeInvest supplied a $63.5 million senior construction loan for Rieber’s 400,000-square-foot project called 1212 Aventura in Aventura. It will feature 163 luxury senior residences, 29,684 square feet of retail and 25,796 square feet of medical offices. An additional $20.3 million mezzanine loan was provided by an undisclosed international lender for the development.

“We are thrilled to finance an innovative project that will not only transform Aventura’s landscape for generations to come but also caters to the local underserved senior-living market,” Alex Horn, BridgeInvest’s founder and managing partner, said in a statement.

A Colliers International structured finance team led by Jeffrey Donnelly and Dmitry Levkov arranged the transaction.

The 1212 Aventura project, at 21290 Biscayne Boulevard, is located adjacent to Rieber’s 100-room Hilton-branded Serena Hotel Aventura. Colliers is also working on closing a $29 million refinance for the hotel which, along with 1212 Aventura, encompass the first two phases of Rieber’s planned master plan development that will incorporate multiple city blocks.

Donnelly said multiple lenders competed for the deal and credited Rieber’s creativity with designs for 1212 Aventura that gives it a “sexy Miami treatment” for an assisted-living development with floor-to-ceiling windows along with a resort-caliber pool and gardens.

“It’s very much a non-assisted living assisted-living project,” Donnelly said. “It has all the amenities in what is normally a very boring, very staid, very uninteresting asset class and I think that also helped with generating excitement with this financing opportunity.”

Construction for 1212 Aventura is slated for completion in early 2023. Pre-leasing and sales of the office and retail space are ongoing with limited inventory available, according to Bernardo Rieber, founder and CEO of Rieber Developments.

“With construction financing in place, we now have the resources to complete the construction of this state-of-art project designed by Arquitectonica and make our vision come true,” Rieber said in a statement.

 

Source:  Commercial Observer

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Medical Offices Are Just What The Doctor Ordered For Landlords

doctor with stethoscope

Medical offices have been a bright spot for real estate investors during the pandemic, despite the fact that telehealth saw a boom during the pandemic.

Doctors and medical professionals have remained on time with their rent payments in the past year, unlike other office tenants, the Wall Street Journal reported. While some tenants have paid less than 85 percent of rent collections, medical professionals have paid 95 percent of rent owed.

And despite in-person visits falling 60 percent early on in the pandemic, telemedicine appointments accounted for just over 8 percent of visits in December, indicating that patients are going back to offices.

Property owners have continued investing in the field. While sales volume for all commercial real estate dropped 32 percent in 2020 compared to the year prior, $11.2 billion worth of medical office buildings were purchased in 2020. That’s only slightly below the $12 billion worth of properties bought in 2019.

Major players are now entering the field. MedCraft Investment Partners launched a $500 million fund in January that will be dedicated to medical office acquisitions. Additionally, Kayne Anderson Real Estate is closing a $2.5 billion fund that will devote half of its fund to medical offices.

 

Source: The Real Deal

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Medical Office Landscape Shifts With Health Care M&As

In its most recent national medical office report, Marcus & Millichap revealed that there’s an increased demand in off-campus medical office and a rise in mergers and acquisitions is changing the landscape of healthcare systems and care delivery. Medical office property sales velocity across the entire U.S. increased 5 percent over the past year.

A key point of the report forecasts that medical office properties will sustain a positive outlook in 2019 as strong employment and aging demographics align with favorable sector trends that will boost performance.

“Demographic trends and mergers and acquisitions are accelerating demand for medical office as firms desire more modern spaces and baby boomers retire at a rate of roughly 10,000 per day,” Al Pontius, Marcus & Millichap’s senior vice president and national director of specialty divisions, told Commercial Property Executive. “Cheap financing via low-interest rates makes cutting costs a quick way to grow profits and revenues,” he added.

Acquisitions and mergers are on the rise, Pontius explained, due to regulation and cost control among insurers and providers as well as innovation at the biotech, biopharma, medical device and pharmaceutical firms.

Naturally, baby boomers are a key driver of overall demand and, as this segment continues to increase year after year, Pontius noted it will create the need for more medical office space and the services they provide. Another factor in the need for space is an increase in enrollment in medical school over the past 10 years, which means the requirement for services will grow and the need for medical office space will grow nationwide.

DEVELOPMENT STATUS

Construction activity for 2019 has experienced somewhat of a broad slowdown, with concentrations in sunny, retirement-oriented states such as Texas, Florida, Arizona and California. “Building facilities remain extremely modern, with locations on and off campus as service areas expand to more suburban settings,” Pontius said. “While development had been increasing over the past few years, the completions remain well below the peak of the last cycle and we will see deliveries that is much lower in the year ahead.”

The report revealed that vacancy remains broadly higher in markets seeing the most construction as developer excitement has slightly exceeded the considerable demand that currently exists, particularly in the Southwest U.S. Marcus & Millichap also highlighted that institutional investors and REITs are focused on high-quality medical office buildings that are fully occupied near major hospitals or in medical corridors.

“Other locations where development is more expensive—NorCal, NYC—or the markets are less ‘sexy,’ such as Midwestern cities, remain much tighter than the overall market. Demand is highest in the Southwest and Southern United States, where retirees are rapidly moving to,” according to Pontius.

There’s been a lot going on around the healthcare industry. Earlier this month, Healthcare Realty Trust expanded its portfolio with the acquisition of two medical office properties totaling 158,338 square feet in the Washington, D.C. suburb of Fairfax, Va., for $46 million. Also this month, Catalyst Capital acquired a medical office building that serves as a U.S. Department of Veterans Affairs outpatient clinic in Lowell, Mass., for $11.4 million.

 

Source: CPE

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