As Medical Office Space Emerges From Pandemic Supply Will Be A Problem

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While medical office buildings sales volume declined in 2020, it was much less of a drop than the other commercial real estate sectors, according to a report from Colliers.

MOB investment decreased 12.2% year-over-year in 2020 to hit $11.1 billion, according to Colliers, while cap rates fell 20 basis points to 6.5%. By comparison, commercial real estate posted a 32% decline in sales volume overall.

Like many sectors, MOB saw an increase in activity in Q4. Sales volume rose from $2.1 billion in Q3 2020 to $3.6 billion. With 67% of total volume in 2020, private equity led the acquisition activity.

On a metro level, Los Angeles led in sales in 2020 at $812 million. It was followed by New York City at $644 million, the D.C. metro at $422 million and Chicago at $401 million.

The west paces in the country in MOB pricing at $374 per square foot. The Midwest and Northeast followed at $331 per square foot and $326 per square foot, respectively. For the Mid-Atlantic, Southwest, and Southeast, pricing ranged between $260 and $300 per square foot.

In Q4, cap rates were lowest in the Southeast at 5.9%. Next was the Southwest at 6.4%. The Northeast posted the highest MOB cap rates at 7.8%. On the best assets, Colliers says sub-6% cap rates were reported for multiple transactions. For instance, a MOB sold in Palm Beach last September 2020 at a quoted cap rate of only 3.9%.

“Cap rate stability reflects the continued desirability of healthcare as it became one of the most essential sectors in 2020,” Colliers said in the report. Investors view it as a relatively safe and durable investment even in times of economic uncertainty. Healthcare real estate continues to be firmly established as a separate asset class within the real estate sector.

As investors look to the asset class this year, they will find that supply is an issue in the medical office sector.

“Apart from new construction, the US MOB market has a relatively limited supply of investable inventory,” according to Colliers. “Healthcare systems and providers hold nearly two-thirds of all healthcare real estate.”

While 30 million new square feet of new medical office space will create upward pressure on vacancy rates in 2021, demand is still projected to outpace supply.

While there might be some conversion of other uses into medical office buildings to increase supply, these transitions are difficult.

“It’s really not that easy,” Pete Bulgarelli, president and CEO of Lillibridge Healthcare Services and executive vice president, office, Ventas, said on CBRE’s ‘The Weekly Take’ podcast.

Medical users have different demands.

“The ways that physicians deliver care and utilize their space is much different than traditional office,” says Christopher Bodnar, vice chairman and co-head of healthcare and life sciences capital markets, CBRE.

 

Source: GlobeSt.

Southern Dallas’ Redbird Mall Revitalization Brings Access, Talent, And Purchasing Power To The Area – Including A 150,000-SF Medical Center

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Five years after launching the redevelopment of Redbird Mall in Southern Dallas, owner and developer Peter Brodsky has proven his thesis—the demand for a vibrant mixed-use development south of Interstate 30 in Dallas is a sustainable investment that generates a profit.

Rendering: Reimagine Redbird

Reimagine Redbird, the revitalization project of a historic 1975 mall in Southern Dallas, is now home to the only Starbucks in the 208 square miles of Southern Dallas and the location is the No. 3 top performing Starbucks in the city. The development has created 1,000 living wage call center jobs with Chime Solutions, Class A apartments at the Palladium Redbird, the DEC—a thriving incubator space for entrepreneurs, and more.

“I am excited that a short five years later, we’ve really got momentum here,” said Brodsky, at a Wednesday, March 31 Tomorrow Fund Investors virtual meeting. “I think people are really understanding that this is a market to be addressed and it has to be addressed thoughtfully because there is a history there that has to be grappled with. But fundamentally, if you provide people the opportunity and the access, they’re going to rise to the occasion.”

Mike Rosa, DRC Senior Vice President of Economic Development, moderated the virtual discussion with Brodsky, which highlighted Chime Solutions CEO Mark Wilson’s expansion at Redbird and Brodsky’s update on the growing development.

Here are three key takeaways from Brodsky’s Reimagine Redbird development:

Room to Grow

Southern Dallas’ 208 square miles make up 54 percent of the City of Dallas’ land mass and 40 percent of the city’s population, yet it is only 15 percent of the tax base.

While past policies have left Southern Dallas underinvested and underdeveloped, Brodsky said the demand for services in the market creates a great opportunity for investors to build value in the community and generate an investment.

“There’s just been a lot of highways going through communities and there’s been a lot of landlords who don’t invest in their properties or put in amenities that are viewed as exploitive, such as payday lending,” Brodsky said. “So, we’ve invested a huge amount of time and effort to make sure that there’s trust with the community.”

The lack of real estate is visible in office space comparisons where about 95 percent of office space in Dallas is north of Interstate 30 and only five percent of office space is south of Interstate 30.

“That means 40 percent of the of population in Dallas can’t work where they live,” Brodsky said.

In a forgotten part of the city that lacks almost every amenity from restaurants to medical care facilities, Brodsky has been building bridges and creating partnerships throughout Dallas to attract every quality of life vertical to the site. Historically only served by one hospital, Methodist Health System, Redbird is now leasing 150,000 square feet of space to UT Southwestern Medical Center and is working with Parkland and Children’s Hospital on new space at the site. Development plans also include a Courtyard by Marriott, the area’s first branded hotel.

Access to Talent

In two years, Chime Solutions’ call center at Redbird has grown by 30,000 square feet with 1,000 living wage jobs, said Chime Solutions CEO Mark Wilson.

“Our run in Dallas as a company has been one that has been really gratifying and fulfilling,” Wilson said. “It has lived up to all of the promise that was put before us in my initial conversations with Peter Brodsky and those who introduced Redbird to us.”

Chime Solutions focuses on providing access to living wage jobs in underserved communities like Southern Dallas. The company partnered with Paul Quinn College to provide 25 students in a leadership program the opportunity to work with its client Kaiser Permanente on a project and it hopes to expand the partnership to surrounding universities.

“In a lot of these communities where, we as a company, have a focus today, there’s a lot of talent that’s really pent-up and hasn’t had a chance to see the light of day,” Wilson said. “Our company is really focused on trying to change that dynamic and doing whatever we can to cultivate, identify, and develop the talent that is there but just needs that investment.”

The company sees low employee turnover due to social programming investments it makes in its team, such as financial, homeownership and real estate classes and plans to provide a daycare on site.

“We’re looking forward to the day when a major international Fortune 500 company wants to be in the area because they see the workforce demographics at Redbird are the same at 75 and LBJ,” Brodsky said.

Dallas is also a hotspot for the company’s business development, Wilson said. In the last 90 days, Chime Solutions has signed commitments with Toyota, Cigna, Google, Humana, Dallas County, and more.

“Dallas has presented very nicely an opportunity for our company to exercise on our mission, but also do what we need to for our clients,” Wilson said.

Southern Dallas Is A ‘Great Location’

Located at Interstate 20 and State Highway 67, Redbird is closer to Downtown Dallas than the Galleria Mall.The site sits across the street from City of Dallas’s District 3, which is the largest middle-class district in Dallas.

“It’s well located and it’s a great place for a development,” Brodsky said. “It has a solidly middle-class audience. There are a lot of assets in the community that draw people from all over the city.”

In addition to the No. 3 performing Starbucks in the city, the area is home to many African American mega churches and education institutions, including Paul Quinn College, UNT Dallas, Dallas Baptist University, Mountain View College, and Cedar Valley College.

Recent data shows the average income of Redbird Starbucks patrons is between $75,000 and $100,000 a year in an area with no other amenities to frequent, Brodsky said.

The surrounding purchasing power is one of the reasons Redbird never closed despite years of neglect. As the only covered mall in Southern Dallas, it has become a symbol of quality over time.

“Let’s bring people to Southern Dallas and provide opportunities for the people who live there, and we’ll all grow together because a higher tax base is going to benefit everyone,” Brodsky said.

 

Source: Dallas Innovates

Blending Healthcare And Hospitality To Thrive In The Post-COVID-19 Medical Landscape

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A new project in Flushing, New York, is slated for delivery in late 2021 and set to become a landmark for top-quality healthcare in the area.

The Eastern Mirage Medical Center, connected to the five-star Eastern Mirage Hotel, will help satisfy increased patient demand for state-of-the-art medical facilities, propelling the associated practices and medical institutions to enhance business growth.

This medical center represents the outcome of more than ten years of design and planning and incorporates the most advanced technology available to hospitals today — critical selling points considering the pressure physicians face in attracting and retaining high-income patients after a tumultuous year.

According to the developer, Fleet Financial Group’s Richard Xia, the concept of the Eastern Mirage Medical Center reveals the symbiotic relationship potential for medical offices and hospitality, creating a steady flow of travelers for the hotel as well as a more welcoming, hospitality-inspired setting for the medical office itself.

“Patients have raised the bar for their medical experiences,” said Xia. “Physicians and healthcare institutions that attune themselves to those needs and successfully blend hospitality and healthcare will remove barriers to growing their practice and find themselves in great demand.”

Here are three factors guiding the development of the Eastern Mirage Medical Center that every healthcare operation must take into account in order to remain competitive:

High-Tech Features That Support Patient Comfort And Connection 

A modern and futuristic medical environment reassures patients they’re in good hands and inspires confidence they’ve secured the top physicians in the field. However, few legacy buildings in the healthcare space can support truly high-tech renovations, and those that do cannot do so seamlessly.

High-tech features refer to much more than the latest computers and software. With truly integrated healthcare and hospitality, the building itself becomes a conductor of convenience, applying technology to the patient experience to make sure it is seamless, efficient, and comfortable.

The first example that came to mind for Xia was the Eastern Mirage Medical Center’s direct fiber optic connection, which enables lightning-fast data transmission between practitioners in the medical center and patients in the hotel as well as between practitioners themselves.

“With so many physicians shifting their patient data to the cloud, Internet speed and security has become a fundamental component of success,” explained Xia. “Faster and higher-quality connection and imaging means doctors can make a better assessment of their patient and deliver a more responsive, connected patient experience.”

At the Eastern Mirage Medical Center, integrated high-tech features include:

•5G Fiber optics directly wired into each office and connected to the hotel, offering physicians a high-speed, non-interrupted network connection from medical office to suite

• Facial and voice recognition security features for offices and elevators to create an almost completely touchless patient experience

• Full-capacity BMS system which offers unparalleled oversight and control over HVAC system, indoor air quality, and pressure

Human-Centric Amenities And Aesthetically Pleasing Design

Many physicians are surprised to learn that amenities can be a larger factor in driving traffic to hospitals than clinical quality. In fact, the design of a hospital and recovery environment can have a significant impact on everything related to patient recovery, including patient satisfaction, costs, infection, and outcomes —which is why there’s so much demand among patients for human-centric and aesthetically-pleasing hospital design.

The design of the Eastern Mirage Medical Center takes this research into account, ensuring doctors can provide their patients with a beautiful, modern, and relaxing building that inspires patient confidence. Modern medical centers like this take the work out of providing a flawless patient experience, with every detail thought-out in advance: stunning views, quiet solitude in the midst of a bustling city, and thoughtful, healthful food and dining experiences all in one space.

“We see beautiful architecture, design, and amenities directly contribute to the quality of medical services,” said Xia. “This gives patients the best possible experience while allowing doctors to justify the premium charges associated with their high-quality services and grow the prestige of their practices.”

A few of the architectural and design traits of the Eastern Mirage Medical Center include the following:

• Five-layer panoramic glass curtain wall with heat insulation, sound absorption (-51db) and light transmission to provide a gorgeous view of the city and very little noise pollution despite its convenient location near the LaGuardia Airport (LGA)

• Architecturally the tallest building in downtown Flushing, further distinguished by its striking glass curtain wall and high ceiling height ranging from 11ft to 14ft

• Safe and nontoxic recycling of environmentally friendly building materials, including Turkish marble whole-stone floor and Portugal limestone sinks

World-Class Hospitality, Comfort, And Privacy For High-Income Patients 

For physicians that serve high-income patients, the quality of the appointment, procedure, recovery, and visiting experiences is of utmost importance. But it’s almost impossible to meet those standards as a stand-alone or individual practice in a legacy or refurbished building — your discerning patients will never feel quite at home.

A luxury medical and recovery experience like the one at the Eastern Mirage Medical Center removes all of those barriers. Physicians plug-and-play their practices into an ecosystem of world-class hospitality, comfort, and privacy, without having to plan or develop it themselves.

“It’s very difficult to replicate a high-income patient’s high-end lifestyle away from home, but we’ve done it here,” said Xia. “The Eastern Mirage Medical Center allows medical professionals to offer their patients a private, restful place to recover from their appointments and procedures, with all the comforts of home and convenience of a world-class hotel.”

At the Eastern Mirage Medical Center, world-class hospitality and privacy features include:

• More than 300 private underground parking spaces and 4 barrier-free elevators to enhance the door-to-door service experience

•  Medical offices integrated with a self-operated, high-end hotel and Michelin-starred restaurant

• Unbeatable dining, entertainment, and leisure components including an above-ground fish tank pool and hotel-affiliated medical spa

• Over 34,000 SF of well-designed multifunction green outdoor space with privacy protection throughout the entire building

Secure A Place In The Future Of Healthcare

A new generation of technology is available to medical care providers, and a new generation of patients wants access to it. Physicians and medical practices that want a place in the future of healthcare must secure a facility like the Eastern Mirage Medical Center that meets patients’ high standards for visual aesthetics, hospitality, technology, and medical care.

Learn About the Eastern Mirage Medical Center 

Are you interested in elevating the quality and luxury of your patient experience? Call Compass Commercial at 844-896-9210 (toll-free), or click here to learn more about the Eastern Mirage Medical Center.

 

Source: Fierce Healthcare