Without a doubt, the number of older Americans increases every year. In fact, the number of Americans over 65 will double by 2055. Not only that, but 10,000 baby boomers reach the age of 65 every single day. It should come as no surprise that these aging boomers need more medical services. Consequently, our aging population it one of the major factors helping to grow the medical office building sector.
On top of that, in the last few years, many more Americans have access to healthcare than before. An estimated 20 million previously Americans uninsured are now insured thanks to the Affordable Care Act. So an increase in the number of insured people has increased the demand for healthcare.
In response to this growing need, micro-hospitals, urgent care clinics, and other medical facilities are springing up all over the country. And unlike many other commercial real estate sectors, medical office buildings seem to be immune to economic factors which hurt retail businesses and restaurants.
Moreover, many commercial real estate experts considered medical office buildings to be ‘no-lose’ investments. As a result, seasoned commercial brokers encourage real estate investors to take advantage of medical market while it’s hot.
4 Things to Know About Medical Office Buildings
If you have considered investing in medical real estate, below are 4 things you need to know before buying a medical office building.
1. The #1 Axiom of Real Estate
Choosing a location is a ‘make or break’ decision. Businesses on or near main roads with higher traffic counts and better visibility typically perform better than businesses in other locations. The medical office building must also be close to a sufficient number of people. Lacking a large enough population and an adequate density of people, a medical business may not succeed.
Also, a medical building should offer ease of access and convenience for patients. If another medical facility offers the same level of care but is more conveniently located near more people, the average person goes to the closer option.
In addition, some locations in the country are better than others for buying a medical office building. “Sunbelt” states, like Florida, California, and Arizona, which all have mild year-round climates, attract retiring boomers as well as families seeking an active lifestyle. Investing in a medical office building in one of these locations is a smart choice. In order to learn as much as you can about the location, a market analysis will provide you with the data you need.
2. Questions About Size
When seeking to purchase an existing medical office building, the size of the facility is another key factor. Some key questions to ask regarding size are:
- How many care providers could the building hold?
- Is there adequate space for imaging technologies?
- Are there lab facilities or the capacity to add them?
- How many patients does the waiting area hold comfortably?
- How many parking spaces are on site?
Another issue related to size is the capacity to expand the facility. An existing medical office building that isn’t quite big enough could be expanded. Plans for future expansion of services may create the need for additions to the existing structure or even the construction of an additional structure. Buying a property which has room for expansion provides options for the future.
3. Updated or Outdated?
A couple of decades ago, it might have been worthwhile to buy a property for cheap and convert it into a medical office building. However, changes in technology have created a unique type of commercial property.
Modern medical office buildings are more specialized and more digital than ever before. Along with advances in and increased reliance upon technology, medical facilities need ways to save on costs like power. This has produced ‘greener’ medical facilities with features like super-efficient HVAC systems and LEED certification.
An outdated structure that is not fitted for the latest medical, communications and other technologies requires a significant investment to bring it into the 21st century. Although new isn’t always better, when it comes to medical facilities, the physical environment needs to be concurrent with contemporary medical technology.
4. The Strength of Flexibility
Since technologies do change so quickly, a successful medical office building needs to be flexible. As a result, the future of modern healthcare will be more flexible. Here are a few types of flexibility:
- Universal exam and procedure room sizes which can accommodate different purposes.
- Modular design based on traditional planning but which may use prefabricated construction methods.
- Replicable planning methods which can used at different scales.
Overall, mixing traditional planning and modular construction with prefabricated spaces, can reduce both the time to completion as well as the total cost. Also, using standard room sizes allows flexibility in multiple spaces to adapt to changing needs and evolving technologies. Be sure to keep flexibility in mind when purchasing a medical office building.
Making Smart Decisions When Buying a Medical Office Building
Retail stores are increasingly affected by e-commerce. Most restaurants don’t last more than a single year in business. But people will always need healthcare facilities. Because of this, many commercial investors see medical office buildings as ‘no-lose’ investments.
When choosing to purchase a medical office building, consider the location including the population density and proximity to residential areas. Also, examine the size of the property, not only the building itself but the land it sits on as well.