the-commercial-investor.com

Globe Street today reported their expert’s opinions that Medical Office is another bright spot in the 2009 Commercial Real Estate Markets. I have been touting Multifamily as the lone market bright spot for 2009 … let’s take a look at why Globe Street would have you add Medical Office to this very short list of 2009 promising niches.

NOTE: once again we are talking about Apartments and Medical Office properties in very select markets – read … NOT Detroit. You are looking for markets with continued job and population growth … and in the case of Medical Office – strong growth in the older age groups.

Here are the 4 big reasons why Globe Street is hot on Selected Medical Office

1. The Demographics: The aging of the baby boomer population is a given and with 70% of medicare expenses coming in the last 90 days of life … the older the population, the more medical services they will use. Think of the last time you were in the doctors office … what was the average age of the people in the waiting room? At my cardiologist it is about 75 … and those folks are there weekly! As the baby boomers move into their 70’s, this trend will drive healthcare consumption for the next 20 years … especially in areas favored by retirees.
2. Higher Quality Tenants: Your tenants are mostly doctors and other professionals (dentists, chiropracters, naturopaths) or medical support businesses such as X-ray, medical supply and pharmacies. No matter what the condition of the larger economy … these are some of the strongest credit tenants around. Just like people always need a place to live (Multifamily), they also always run into health problems and need a doctor.
3. Easier Funding: Your Commercial Lender is MUCH more likely to lend to a building full of physicians than a strip mall full of nail salons. I know this is a bit of an extreme example and you get my point.
4. Tenant Improvements: TI’s on Medical Office properties are usually very specialized which leads to a high cost for a tenant to move to a new office. You get a more stable tenant base … this makes your lender even more enthusiastic to fund your deal.

Last … here’s one from me since I am an MD myself … most doctors don’t know much about business and are happy to remain tenants in a Medical Office rather than buy and develop their own property. HOT TIP: You can also occasionally find vacant Medical Office Condos on the cheap which you can buy and lease to a Medical Tenant at a nice monthly cash flow.

Think about widening your lead generator criteria to include Medical Office and see what lands on your plate.

You can read the whole article here …

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.