Texas Real Estate Business

OCT 2017

Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.

Issue link: http://texasrealestatebusiness.epubxp.com/i/885420

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Page 47 of 58

www.REBusinessOnline.com Texas Real Estate Business • October 2017 • 45 stems from a market shift toward de- centralized delivery of services. "Much of providers' contact with patients is moving toward a distrib- uted system that is community-based and accessible," said Sanders. "So we have medical office buildings (MOBs) on campus for our specialists, as well as a network of leased storefront spac- es that offer primary care and doctor rotations." Sanders added that his firm re- cently acquired a big box retail asset near Houston's Galleria area to house an orthopedics and sports medicine practice. The property made sense for the practice, which needed a building with high ceilings to accommodate the imaging equipment and large open spaces for patients' physical therapy exercises. Moderator Jim Hayden, executive managing director of CBRE's health- care real estate services division, echoed Sanders' analysis. Hayden pointed out that retail properties work for this new model of healthcare de- livery because proximity and accessi- bility to consumers is the essence of a successful retail location. "Healthcare providers around the country are focused on getting closer to and making services more conve- nient for patients," said Hayden. "So we're seeing hospitals and provid- ers look at retail spaces for their de- mographics and size, as well as their closeness to patients." Panelist Jon Sullivan, vice presi- dent of real estate operations for Texas Health Resources, addressed the growing role that developers of mixed-use properties are beginning to play in healthcare real estate as they seek to provide tenants with more un- usual and innovative amenity pack- ages. "A lot of these developers are reach- ing out to healthcare systems and say- ing, 'hey, we want a wellness compo- nent for our project,'" said Sullivan. "They don't want a hospital or a freestanding emergency department (ED), but they want something well- ness-related so the business commu- nity can get basic services convenient- ly," he added. Though he acknowledged that overall these trends are gathering mo- mentum throughout major markets, Sullivan was also quick to point out that the new delivery platform does have its drawbacks, particularly for healthcare providers who require larger spaces. "Typically, large family practices are parking-intensive, which can be prob- lematic in a retail center," said Sulli- van. "Tenants are also likely to get less in capital improvement allowances from retail developers, which drives up occupancy costs." Demographic Factors Panelist Ross Caulum, senior direc- tor of corporate real estate for San Di- ego-based Scripps Health, concurred with his colleagues on that retail and mixed-use properties offer tremen- dous appeal healthcare providers in terms of demographics and patient volume, but added that the merging of the two is also likely to lead to co- tenancy issues. "The repurposing of retail makes sense because medical real estate has always been retail-like, as it's driven by the information power of paper records," said Caulum. "But there's a psychology issue, because at the end of the day, other tenants don't want to be around sick people." However, the relationship works both ways, as noted by panelist Dana White, vice president of real estate and construction for Washington- based Providence St. Joseph Health. While patients don't necessarily want to receive treatment in crowded centers, they are generally drawn to a retail center's ability to house a drug- store, thereby providing one-stop shopping for both their medical and pharmaceutical needs. In addition, White said, technologi- cal advancements are also playing a crucial part in new and emerging healthcare real estate practices. "We're seeing more and more of what we call 'express care,'" said White, whose firm recently bought and repurposed a strip mall to use as operating space. "These are small clinics, maybe 1,000 square feet, that do a lot of electronic interfacing. So if I have an eye infection, I can get on my phone and FaceTime my provider, who can examine me and call in my prescription. These kinds of techno- logical trends are also impacting our space needs." n ANY SPACE ANY PLACE Be part of a new breed of C21 Commercial ® mavens. It takes a special breed of Sales Professional to work with a local CENTURY 21 Commercial ® brokerage. It takes someone with the tenacity and drive to always expand their commercial prospect base beyond their local market to anywhere in the world. If this sounds like you, we can provide the perfect learning platform, and the technology and resources you'll need to be the next C21 Commercial maven. ©2017 Century 21 Real Estate LLC. All Rights Reserved. CENTURY 21 Commercial ® and the CENTURY 21 Commercial Logo are registered service marks owned by Century 21 Real Estate LLC. Join us at Texas Conference and Deal Making Kay Bailey Hutchison Convention Center Booth 349 November 9-10, 2017 Dallas, TX Visit commercial.century21.com or call 844.308.0064 to get started.

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