Medical Office space has been the only market that has not seen a severe downturn in the market. Though CAP rates have increased over that past 8 months, Medical Office still is a viable market and the only market were I have investors still interested in doing. In fact, I have had more doctors begin to connect with me and want to invest in my projects than I have in the past 5 years.

Our current Corona Medical Office project is about to get underway within the next month and we have already established contracts with industry leaders in the area. There is a strong viable market available to doctors and dentists.

Natalie Dolce, the West Coast Bureau Chief and Co-Managing Editor of GlobeSt.com, writes in her article Inland Empire Well Positioned for Comeback:

On the office side, “with medical office development on the rise in Orange County, but a lack of available land in the county to accommodate growth, many developers will readjust their focus to the Inland Empire,” Leventakis says.

I’m not sure what other developers are doing, but we choose Corona because Medical Office space is still in demand. We are still finding plenty of land in Orange County, but it’s not for the weak at heart or the uncreative. In fact, we are finding many projects becoming available from land owners who thought they would be able to build medical office and they had no idea what they are doing.

It has been a while since I’ve posted. With the Medical Office Book now availabe, I’m starting to get my head above water.  What we see when we look around isn’t great but it isn’t bad either.  The market is certainly correcting and we have seen price drops of around 20% in both the lease and condo markets.  This is probably about as low as you are going to see.

Why do I say this?  I have seen a sharp increase in activity in the past month.  While hospitals  who were heavily invested in bonds are getting their heads handed to them, the medium to large groups that are well positioned in their market are looking to capitalize on their weakened competitors.

It will be interesting to see how everything plays out.

We have had a rough time streamlining this process of allowing people to place orders.  As we continue to workout the kinks, please visit the book’s main site at www.tbcos.com/book and click on the “Buy Now” button you’ll find half-way down the page. This will take you to PayPal’s website. You do not have to have a paypal account to buy the book, there is a link that will allow you to enter your credit card information.

Thanks for your understanding.

Well, I’m told my book Mistake Free Medical Office Space will be shipping out next week.  It’s been great hearing from those of you who are as excited as I am for it’s release.  You should expect your copy to arrive the first week of March.

I am in the final stages of releasing my book Mistake Free Medical Office Design and Construction.  The scheduled release is February 27, though I’m told it may be released sooner.

I’ll let everyone know as everything get nailed down.

I’m not going to talk about the economy today because we all know it is hurting and no one knows what it is going to do.  I’m not one to make many predictions.  What we can look at is what is happening right now in order to get a better understanding of what we can expect in Medical Real Estate.

The Labor department released the unemployment numbers today and they weren’t good. 6.5% unemployment is a 14 year high, just like every newspaper is talking about, and while that could cause us to stop and think, “the world is ending!”  I can assure you it isn’t.  At least not for us.

While the rest of the economy is taking a hit there are a few sectors that are not being affected as greatly by the downturn.  As one might expect, government jobs are still increasing and given that President-Elect Obama will be taking over soon, we can only expect this trend to continue.  Education is also increasing, because when people lose, or think they are going to lose their jobs, they begin educating themselves in new ways in order to break into a new sector, or make themselves more marketable.  Healthcare is the other sector that has also increased.

Since I am based in Orange County, California, the Southern California market is of great interest to me.  Looking at the numbers released today we can see that over the past 3 months 5,000 jobs have been added to the healthcare sector in the Long Beach-Santa Ana area and employment has remained stable in both the Inland Empire area as well as in San Diego County.

This should tell us that while 1.2 million jobs have been lost so far this year, nation wide, the healthcare sector in Southern California is going strong and growing.  As the Boomers get closer to the golden age of 65, demand for healthcare services will only increase.

So let’s keep the bus rolling.  It is clearly not time to get off.  There are still lenders who have available funds for viable doctors who have good credit and while the real estate market has definitely slowed down, for areas that didn’t out price themselves to begin with, I have not seen the rent or prices come down for Doctor’s offices.

1. Will I work with you or with someone else in your office?
2. Will you act as the point person on the project?
3. Will you coordinate all the drawings from the structural, electrical, mechanical, plumbing engineers?
4. Will you submit all drawings to the city?
5. Will you commit to a 1 week turnaround for all plan check corrections?
6. Will you handle the bidding process?
7. What contractors do you like to work with?
8. Will you visit the site weekly to review progress and approve the monthly billing from the contractor?

Find a Location Close to Where You Live

Medical Office Space is a fast growing market in the real estate industry.  Here is a good guideline for selecting medical office space:

If you are planning on practicing in your new location for several years, and most doctors stay in a location for often more than three to five years, then do yourself a favor and pick a location near where you live.  If you choose a place that requires you to drive long distances, you will slowly and surely get wearisome of the drive and ultimately will lose enthusiasm for your practice.  This will affect your dedication to your patients and more importantly your ability to connect with your community.

If you are interested in developing a relationship with people in the community where your practice resides, and you should, then you can expect to spend time in the community outside of your office hours.  Why should you want to spend time in the community?  Because every business and person that effects a community in powerful way is interested in bringing value to that community.

When you sponsor softball teams, or even better: sponsor the team and visit the games, you have a great opportunity to meet the parents and their kids.  You can introduce yourself and talk with them about your practice, as it naturally comes up in the conversation.

Excellent marketing.

 

 

Who do you work for?  At first blush, you might think, “My patients.”  If you have contracts with insurance companies then your first blush is wrong.  You are working for the insurance companies.  In return they give you their members.

The easiest way to always figure out who you work for and who are your customers is by following the money trail. The money comes from the insurance company so long as you take good care of their patients, “good” by their definition.

The insurance company’s definition of “good care” is that you provide medically sound advice or service to their customers.  The insurance companies do not care how long you make their customers wait or whether you are considerate toward their customer’s condition.

But the people who see you care.  They don’t want to wait and they don’t want to feel like they are interrupting you.

So if you stop working for the insurance companies, then who do you work for?  The patients.

Start looking at your practice as a service business.  Instead of a doctor’s office, how about a dry cleaners.  Can you imagine how long a dry cleaning business would stay operating if they made their patients wait 45 minutes before they helped them?  What if they were rude?  What if they were cold?

There are too many other dry cleaning services for people to tolerate that kind of service.  People would go elsewhere.

What’s the alternative?

Patient Paid Health care

Financing can be one of the most frustrating elements of moving into a new medical office space.  While there are several moving parts to putting together a loan, there is a simple way to save yourself at least two weeks of loan processing.  Please indulge me and allow me to assume you are a small business, meaning:

1. You have under $2.5 million in net income
2. You have under $7.5 million net worth
3. Your liquid assets are less than the loan request.

So long as you meet these restrictions, you should apply for a Small Business Administration (SBA) loan.

There are three types of programs in the SBA loan system:

1. PLP – Preferred Lender Program
2. CLP – Certified Lender Program
3. GP – General Lender Program

The PLP allows the members of this program to perform all the underwriting in-house.  The CLP allows the members of this program do perform most of the underwriting in-house which is then submitted to the SBA for review and approval.  The GP requires the SBA to perform all of the underwriting and approval of the underwriting.

You want to use a PLP lender.  A PLP lender will save you at least two weeks, which is important if you are trying to fund the loan in 30 days or less.

You can find a list of PLP lenders at the bottom of the page found here.