MOBs: SWEETHEART ASSETS
Our headline isn’t referring to Valentine’s Day, unless you’re buying your honey an MOB (aka medical office building, aka the gift that keeps on giving). On Wednesday, Marcus & Millichap’s Roxanne Hughes led a panel discussion on medical real estate for Fort Worth CREW at the Ashton Depot, above. She says the sector is a healthyinvestment locally. To be clear, though: If you gift someone an MOB instead of roses, you may find yourself requiring its services firsthand.
Speaking of Valentine’s, Complex Property Advisors Mark Bedford give us KISS (Keep it Simple Stupid) logic: People don’t stop getting sick just because the economy is bad. We snapped him here with Prevarian Hospital Partners Greg McGaw, Cambridge Healthcare Properties Dennis Barnes, and Adams Management's Jeff Christmann. Mark says big systems like Parkland and Children’s are both building; also, healthcare is getting more competitive as hospital systems battle with each other for market share and physicians. Many are putting in smaller clinics in the suburbs and rural areas to get patients in a feeder system for their hospitals.
Dennis adds, like other sectors, medical tenants are looking to restructure terms only a few years into a 10-year contract. More than 70% are triple net leases with physician groups, he says, which have a lot of pressure to mitigate operating expenses. Physician reimbursement is coming down, so landlords should examine how they can lower those expenses. He predicts '10 will see consumers demanding more convenience, i.e., facilities that include an integrated delivery model: a one-stop-shop for a lab, out-patient facilities, radiology, and a pharmacy.
If the healthcare reform bill passes, it could add an additional 30M people to insurance rolls. In the construction world, Roxanne notes, healthcare usually requires about 1.5 to 1.9 SF of space for every insured patient, meaning there could be a demand of about 60M SF. However, Jeff notes, hospitals would be getting 20- 30% less in reimbursements. Key questions: who will fund new facilities, and will patients have a harder time getting in to see a doctor.
American National Bank of Texas VP Cindy Finch and Kroh & Associates principal Karen Kroh. Cindy says her bank is financing real estate loans for both a doctor and veterinarian to open new buildings. Karen just completed a 9k SF interior design project on an entire floor at Museum Place, 3131 7th St.
Elements of Architecture prez Debbie Fulwiler, Roach Howard Smith & Barton VP Leigh Ann Page, Parson Management’s Cameron Parson, and Powers Interior Construction’s Christianne Kellett. Leigh Ann says stimulus funding for construction has many of her clients re-evaluating their insurance needs. Some government projects require construction companies to get bonded or increase insurance amounts. Additionally, many of the construction firms are hiring for the new projects and adding employees to their policies. Good to see some of that stimulus finally trickling down.