1. What is the value of my property? The answers depends on many factors, including the age, condition and location of the building. Another important consideration is the quality and credit-worthiness of the medical office tenant. How established is the physician practice? Is it a surgery center that is well-funded and known throughout the medical industry with years of repeat referrals from physicians? The length of time left on the terms of each tenant’s lease will also affect the value of the building. For example, if the property owner has recently renewed the majority of his rentable space and now has another 8, 10 or 12 years left on these leases, then the value of the building is generally going to be much higher than a building that has tenants with only 2-5 years or less left on the life of their leases. Utilizing a broker that understands the medical real estate market is vital when identifying the right property to acquire for you or your investment group’s needs, and also when attempting to maximize the potential stream of revenue during the time the property is leased. A knowledgeable medical real estate advisor can also help you achieve the highest value possible for your property when it is time to sell the asset.
2. What is the market like in my area? It is very important for medical office or other commercial real estate owners to have a good idea of the market in which their building(s) are located. Is the building situated in an area where real estate assets are generally increasing in value? Is the medical office property near other healthcare related buildings of high value? Is the property more convenient and easily accessible to residential areas and retail destinations? Is the municipality or local government taking steps to ensure growth and stability in the market where the building is located? These are all questions to consider when determining whether to purchase medical office real estate, or alternatively, whether to sell your property.
3. How much have other properties that are similar to my property sold for recently? This is crucial in trying to determine the value of your property. The value of your building ultimately boils down to what a buyer is willing to pay you for your commercial real estate. It is important to have a commercial real estate broker that knows not only the medical/healthcare real estate market, but understands the specific factors that comprise the value of your medical office building. Working with a real estate advisor that has the knowledge and tools to quickly provide you with information on recent sales of properties that are similar in condition and tenant base type allows you, the real estate owner, to manage your property more efficiently and effectively. For example, knowing that a certain property, similar in size and condition sold for a specific dollar amount gives you the ability to make certain improvements to your property or tenant base if you expect your property to be valued at a similar level.
4. How can I best keep my medical office property fully occupied? When using a commercial real estate broker to lease your medical office space, it is important to make sure that your property is not limited to the following strategy: input the property’s information and price in the commercial real estate listing service for your region, stick a sign in the front of the property, cross your fingers and hope for the best. Ensure that your broker has a working knowledge of the medical office real estate market and has a database of medical end-users (family practice physicians, surgeon groups, surgery centers, imaging centers, etc.) since this is a crucial component of attracting good credit, long-term tenants. A trusted advisor with knowledge of the healthcare real estate industry that has an extensive database of, and relationships with, medical end-user tenants is a top priority when trying to ensure that your stream of lease revenue continues uninterrupted.
5. When is it time to sell my medical office properties or healthcare real estate? There are lots of reasons why people sell their medical office buildings, surgery centers or other healthcare-related properties. If it’s a physician group that also owns the building where their practice is located, their reason may be related to physicians retiring, moving into a larger space to allow for growth of the practice, or simply to cash in on the equity of their building via a sale-leaseback transaction (our team is happy to provide information regarding the potential benefits of this type of transaction). For an investment group or investor that wants to grow the portfolio in order to generate more long-term revenue, the focus might need to be on maximizing the value of the building through increasing occupancy of high credit, long-term tenants or through physical improvements to the building such as paint, carpet or other aesthetic enhancements.Whether your properties are part of a REIT-owned portfolio of properties throughout the United States, a bundle of properties in one region of the country, a physician-owned medical office property, or a single building owned by individual investor, we hope that you consider allowing our team to be a trusted resource for you during your acquisition, ownership phase, and disposition of your properties. We have valuable tools and insights that we utilize and share with our clients which enables them to maximize the value of their medical office properties with each phase of ownership. Feel free to reach out to us at 615-564-4133 or email us at [email protected] to allow us to become a trusted resource for all of your medical office and commercial real estate needs.
