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January 14, 2014
Does Size Matter? A Medical Perspective
Yes, but not the way you're thinking. Going small is all the rage in healthcare real estate, and one boutique MOB acquirer is giving REITs a run for their money.
Since its inception in '09, Stage Equity Partners has bought $80M of medical office (400k SF), partner and avid hockey player Russell Brenner (center, no helmet) tells us. Now the market's getting frothy (Silver Tsunami, blah blah), with the usual suspects (REITS, private funds) driving up pricing with their low cost of capital. Stage Equity's mission traditionally was to target assets the biggest players would avoid, due to their small size, geography in a secondary market, or off-campus location. But REITs and funds that wouldn't glance at a $10M deal are now turning to smaller plays because they have nowhere else to go. (It's like when seniors start dating freshmen. Not that we're bitter.) So we asked Russell, is it time to find the next wave?
Not when opportunity's knocking, he tells us. The nimble firm can easily shift from a long-term holder to a seller, giving the 800-pound gorillas the product they're hungry for. (They sold one asset last year and are unloading two more.) And there's still enough out there for the handful of deals the company needs to grow, Russell says, especially in distressed and off-market opportunities. After closing out 2013 by purchasing medical office buildings in the Fort Worth (above) and Atlanta metros (totaling over $11M), the firm's targeting five to six more properties this year with an average deal size of $10M. (They focus on the Chicago area, Mid-Atlantic, Southeast, and Texas markets.)
What You'll See in Future Offices
Individual work spaces are getting smaller as public spaces get bigger in today's flexible/agile workplaces, Rightsize Facility Performance CEO Mason Awtry tells us. (Less room for bobbleheads. More room for bobbing for apples at office parties.) We'll hear more from Mason and other creative office experts at Bisnow'sChicago Creative Office Summit on Jan. 30. Each company takes a very different journey toward the land of foosball and skateboards (we kid, that's a huge generalization), Mason says, especially since “no one specific office format drives this collaboration that everyone seeks.” He's seen some firms make space decisions solely from the top down, where others might poll employees on how they work best (anything from a Starbucks-like atmosphere to quiet rooms for focus).
When Rightsize is helping design a new cool crib, they discuss the company's structure, types of employees, and job functionalities. Creative space tends to work best for techies (naturally, they live in a paperless world) versus industries where people are more tied to their desk (like law and finance). Upgrades range from adding more glass and modern touches to bench seating to more open individual work stations, Mason says. It's the company's direct brand and conveys a specific image to prospective employees. Mason is just back from 10 days in Barcelona, where he enjoyed touring Antoni Gaudi's architectural masterpieces (Sagrada Familia, above).
A Quick Trip
We asked for your holiday pics to help us take a mental vacation, and you answered. Here is Jameson SVP of retail sales and leasing Chris Irwin with his son Cooper at the Buffalo Wild Wings Bowl in Tuscon, Ariz., where Kansas State emerged victorious over Michigan. Chris tells us this has been his most active January ever, with strong investor and developer appetite evidenced by four closings scheduled for this week. We'll see strong retail neighborhoods continue to get better while tenants will continue to discover emerging areas to stake their claim for a growing business, he says.
Here's KTPR principal Patricia True Agos's family holiday pic that has us scouring the Internet to find our very own leggy lamp. When she's not doing PR for commercial real estate companies, she's picking out adorable headwear that may be useful again for her twins' college costume parties.
Cold Weather Playlist
Welcome to Bisnow Chicago's first-ever Spotify playlist, created by you! Click here and take a listen to our curated cold weather jams. Huge thanks to Fidelity National Title Group national commercial pricing associate BenjaminJohnson, who was instrumental in helping us gather this wintry mix. He wins a free ticket to an upcoming Bisnow event. Since we are big believers in a little music to get through the workday, let's make another playlist. The theme: real estate. Send any real estate-related songs that come to mind to firstname.lastname@example.org and we will compile them into a massive playlist for your enjoyment (and potentially award free event tix). Ready, set, go!