Choosing a Medical Real Estate Developer
The doctor’s office is moving. More and more practitioners are transitioning away from large medical campuses into a more accessible style of healthcare referred to as “medtail.” Short for medical retail, medtail is a growing trend among medical practices to offer services in patient-friendly retail locations.
For the consumer, medtail offers convenience. Rather than navigating bloated hospital campuses, a patient can simply add a doctor’s appointment to their list of errands.
For healthcare companies, it’s appealing to offer services closer to communities without the typical hospital-sized overhead.
Another reason practitioners are switching to medtail is that it fosters an outlet for independent, entrepreneurial healthcare professionals to break free from large healthcare companies. Space outside the shadow of the typical medical campus also provides much more visibility – signage is visible from the road and locations become more memorable in heavily-trafficked areas.
According to a report by Fortune Business Insights, the U.S. retail clinics market size is expected to grow at a compound annual growth rate of 3.4% from 2021 to 2028. With impressive projected growth, more business opportunities, and greater freedom it’s not surprising that practitioners are exploring the opportunities of medtail.
One of the first steps of breaking into the world of medical retail is identifying a commercial real estate developer that can turn your vision into a reality. This means partnering with a company that can assist you for the entire journey, from concept all the way to retirement. Like any long-term partnership, there are important characteristics and attributes you should be on the lookout for when choosing a medical real estate developer.
Medical Practice Expertise
Commercial real estate is an industry as wide as it is deep. Each niche of commercial real estate, like healthcare, requires a thorough understanding of its needs, laws, and industry trends.
When it comes to medical practices, there are several pieces of the puzzle that need to be assembled to begin development such as state license requirements, design teams, contractors, lenders, and equipment suppliers. Choosing the right developer means you’ll want assurance that they possess experience navigating those areas. There is no substitute for extensive relationships with partners in the medical practice industry, especially medical retail.
According to Harvard Business Review, the rise in medtail popularity is due to growth in virtual care, the rise of ambulatory day-surgery centers, the proliferation of urgent care, and new technology that allows for the performance of diagnostic procedures outside of hospitals, and “Hospital at Home” program adoption.
Whew. That’s a lot to navigate. Once you’ve planned the type of medical practice you’d like to open, start asking prospective developers about their experience in the space.
Capacity for a Deep Partnership
The real estate development process is an incredibly rewarding business experience but in order for it to be properly executed, it’ll take plenty of time and planning. This means you’ll want to identify stable companies with the capacity for a partnership to last years.
Likely the most paramount characteristic of a stable company is its financial wherewithal to execute your medical practice project. You don’t want to begin the process of developing a medical practice with a company that won’t be in business in 2 – 3 years.
And as our economy enters a rising rate environment, deep lending relationships are needed to close deals and finish projects. Whether it’s a pandemic, historic inflation, or rising interest rates you need a developer that will be able to weather the storm for the long term. During recent unstable economic times, the team at Ashton Gray was committed to finishing projects while other development and construction companies halted projects.
Besides financial strength, there’s the working relationship. During the development process, you’ll want a business that treats you like a partner – because that’s ultimately what this is: a partnership.
Look for developers with dedicated project management teams. A full-service developer should have everything your medical practice needs to begin and finish development. This includes brokerage, development directors, pre-construction teams, project managers, property, and asset managers as well as in-house legal. Your developer should provide a primary point of contact for every stage of the development, so as the project progresses you can stay aware of its status.
The availability of these resources can act as hints as to whether your developer is a “long term hold developer” or a “merchant developer.” Merchant developers are known for developing property and quickly flipping it to make a profit. To truly set up your medical practice for success you need to plan for the long-term. It’s important to secure a developer that aligns with your vision.
Developing medical practice real estate can be a messy and complicated business but at Ashton Gray, our team is committed to providing a streamlined and logical process that is collaborative and communicates with the client from start to finish. The right developer will keep you informed of your project’s status throughout development but ultimately allow you to focus on your profession and business.
Choosing the right developer for your medical practice is kind of like finding the right marriage partner. You want someone dependable, that communicates well, is financially stable, and fully understands you (and your business). To figure all of that out, take your prospective medical real estate partner out on a few dates (but make sure to call them meetings) and see if they meet the requirements we discussed. Opening and developing your own medical practice is a big undertaking, make sure it’s done right.
If you need further information or assistance navigating the development of your medical practice, the team at Ashton Gray are experts in developing successful practices in the exciting and evolving industry of medical retail.