Healthcare Archives - Lee & Associates

Rising Interest Rates, Inflation Lead Investors to Reassess Which CRE Assets to Pursue

pmurphy — Tue, 28 Jun 2022 18:31:19 +0000

WealthManagement.com Features Lee & Associates New York City's Ben Tapper

Rising interest rates, inflation and fears of a recession are starting to change the calculations of how to get the best returns for commercial real estate investors. Should they continue to favor multifamily and industrial assets, which have served them well through the pandemic disruption? Or switch to higher risk, but higher yield investments? It looks like the best approach might be combining the two strategies.

Ben Tapper, a senior managing director and director of the national investment services group with Lee & Associates, says any outlook needs to be broken down by region. In some parts of the country, rent regulations make multifamily assets less desirable. The area’s job and population growth trends also make a difference, Tapper adds.

There are other asset types that are attractive in a rising interest rate and inflationary environment, according to Tapper, but a lot of that has to do “with your acquisition basis.”

In addition, properties that require greater supporting infrastructure and carry higher replacement costs make for more desirable investments in today’s environment, he notes. One example is the medical office sector, where it’s expensive to build out the necessary infrastructure such as HVAC, X-ray-proof walls and MRI machines.

“Things like that are more cost-intensive to put into a building, creating a greater stickiness in the tenant, greater predictability and greater stability,” Tapper says. “I think in a rising interest rate and inflationary environment that’s what a lot of investors are seeking.”

ABOUT LEE & ASSOCIATES
Lee & Associates offers an array of real estate services tailored to meet the needs of the company’s clients, including commercial real estate brokerage, integrated services, and construction services. Established in 1979, Lee & Associates is now an international firm with offices throughout the United States and Canada. Our professionals regularly collaborate to make sure they are providing their clients with the most advanced, up-to-date market technology and information. For the latest news from Lee & Associates, visit lee-associates.com or follow us on Facebook, LinkedIn, Twitter, and Link, our company blog.

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The Medical Office Sector Continues to Hold Steady

pmurphy — Mon, 06 Jun 2022 16:45:20 +0000

WealthManagement.com Features Lee & Associates Twin Cities's Susan Wilson and Chris Jacobson

The medical office sector couldn’t be in better shape despite fears of the impact from telemedicine and given the demand for health care, the industry should be robust over the next 12 months, according to analysts.

A segment known for its stability and resistance to recessions set record highs for asking rents in 2021 as vacancies decreased–a trend expected through the next year and beyond. Development of new medical office buildings continues after a slowdown at the start of the COVID-19 pandemic, and for quality properties on the market, investors are gobbling them up quicker than ever. That’s coming off record highs in sales volume and pricing in 2021.

None of that demand is a surprise given an aging population along with migrations and relocations that have picked up since the start of the pandemic in 2020.

“I think you’re seeing vacancy in older medical buildings that are now picking up office tenants, while class-A and class-B (medical offices) have lower vacancy. And if they are strictly medical they do much better,” said Susan Wilson, a healthcare real estate advisor for Lee & Associates and vice president of Lee & Associates Healthcare group.

Medical office rents historically grow at a steady rate of 2 percent to 3 percent year–over-year, but that pattern is being challenged by current conditions.

There are limits, however, to how much medical office rents can grow, according to Chris Jacobson, a healthcare real estate advisor for Lee & Associates and vice president of Lee Healthcare.

“It’s never going to go through the roof,” Jacobson said. “They can only afford what they can afford with reimbursement from insurance. They can only see so many patients and do so many procedures a day. It’s not like they can sell more coffee.”

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Lee & Associates Named in GlobeSt 2021 Best Places to Work

pmurphy — Mon, 05 Apr 2021 21:57:53 +0000

GLOBEST 2021 BEST PLACES TO WORK AWARD RELEASE:
Lee & Associates Commercial Real Estate Services stands out with its focus on providing employees with the ability to shape the direction of the company, as well as its local offices. The international firm, which offers brokerage, integrated services and construction services, makes a point of encouraging its brokers to become partners, shareholders, owners and leaders. The firm’s reverse-pyramid corporate structure allows for free-flowing communication and collaboration throughout.

“Though we may have over 60 offices, it still feels like a small company where everyone knows
each other and cares about one another’s success and wellbeing,” states one employee.

In effort to ensure that clients receive high levels of expertise and service, Lee & Associates prioritizes continued education through on-going training programs and conferences. The company has built a master library of training videos, templates and other resources for each position. The company hosts its annual Lee Summit conference, two Spring training events, various online and small group training sessions throughout the year, as well as monthly webinars with guest speakers. With a corporate leadership made up of 75% females, the company further solidified its commitment to diversity in 2020 by developing an advisory board to specifically drive change and ensure an inclusive culture through conversations, education and best practices. As one of the company’s largest initiatives, it founded the 501C-3 charitable organization, CompassionateLEE, in 2019, which supports a number of causes each year through financial assistance and volunteer days.

Click Here to View the Award Release on GlobeSt

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Lee & Associates’ Healthcare Team Named GlobeSt 2020 Influencers in Healthcare

pmurphy — Wed, 09 Dec 2020 18:17:46 +0000

Lee & Associates' has been selected as an honoree in the GlobeSt.com/Real Estate Forum Magazine 2020 edition of Influencers in Healthcare.

LEE & ASSOCIATES’ HEALTHCARE REAL ESTATE TEAM
Working beyond traditional brokerage and site selection to solve a practice’s real estate needs, VPs of healthcare, Susan Wilson and Chris Jacobson have immensely impacted their office, the Minnesota/St. Paul market, and Lee & Associates nationally, within five months of joining the company. Forming Lee & Associates’ Healthcare division, Wilson and Jacobson offer a depth of understanding regarding the market’s unique issues, for healthcare providers to draw upon. In addition to exhibiting respect and kindness within the workplace, the experts successfully spearheaded and created content for a brand new national healthcare webpage in effort to bring awareness to the sector and offer all options to healthcare professionals. The two experts also launched a national company-wide group for healthcare real estate professionals to meet virtually and discuss ideas monthly. Within the past three years, the team increased its service line to sell more than $100 million of investment medical office buildings, while maintaining more than 30 active medical clients each year.

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Healthcare Investments Muscle Through COVID-Driven Downturn

pmurphy — Thu, 08 Oct 2020 17:51:58 +0000

The good news is that the healthcare market remains healthy, despite the ravages of COVID-19. But, as JL Johnson explains, that’s healthy with an asterisk.

The senior director of Lee & Associates’ Columbus office reports that the American Hospitals Association puts revenue losses for the year at upward of $320 billion, owing in large part to the COVID-related cancellation or postponement of both elective and required surgeries.

And yet, the fundamentals of the real estate market that supports the sector remain solid. “I represent mostly institutional investors,” he tells GlobeSt.com, “REITs and large private equity groups. They haven’t been influenced in a meaningful way.” Although, he adds, activity has slowed and “some landlords are suffering from concessions, which likely will continue until revenue returns to pre-COVID status.” Given the yin and yang of investor interest in the face of revenue losses, “the market has remained steady, but not overly aggressive in terms of acquisitions.”

Cap rates too have remained steady, which is somewhat of a surprise, he admits, since the expectation was for rates to follow the 10-year Treasury and decrease. “But we haven’t seen it, although sometimes it acts as a lagging dynamic.” As the economy continues its slow rebound, his expectation is that, as credit becomes stronger and smaller practices continue to be gobbled up by larger healthcare systems, cap rates for the sector will drop.

It should be noted as well that development hasn’t hit too much of a slowdown either. He cites The Ohio State University Wexner Medical Center’s planned $2 billion inpatient hospital expansion as one example.

In many sectors, the dynamic of institutions pulling back opens the door for more private players. Not so much in healthcare, says Johnson. Rather than a shift, he sees it as more of an addition. Read More >

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Healthcare is a Slow but Steady Sector

pmurphy — Tue, 29 Sep 2020 18:40:41 +0000

Healthcare has very different drivers when it comes to growth and demand. While highs and lows in the economy influence healthcare in many of the same ways other industries experience, it’s also governed by trends that are unique to how people seek — and pay for — their medical treatments. Chris Jacobson and Susan Wilson, both vice presidents and healthcare advisors for Lee & Associates Commercial Real Estate Services, took some time recently to talk to REBusinessOnline about today’s healthcare real estate trends.

Taking a broad look across the sector, some healthcare systems have lost revenue due to suspending elective procedures during the early months of the COVID-19 pandemic. “It’s going to take them a while to recoup that revenue,” Wilson says. “Additionally, now that they have reopened, they are spacing people out in waiting rooms, so they’re seeing fewer patients. There are currently opportunities for subleases with some major health systems. This could be an opportunity for some of the larger, more successful health systems to take over some of that space.”

Jacobson has observed that there are three types of investments occurring right now. The first of those are large healthcare systems presently focused on COVID-19-related care. The second is a category of providers waiting to see what happens once the pandemic has subsided. The third group are more entrepreneurial practices that are trying to take advantage of a slowdown and use real estate to their advantage.

Those wishful buyers, however, may not get the prices they’re hoping for. The uncertainty of where the economy is headed has resulted in rising property costs. But that doesn’t necessarily mean that healthcare real estate instantly reflects economic trends.

“Healthcare tends to look at trends in decades, as opposed to retail or office, which tend to look in years,” says Jacobson. “So, it’s a much longer-term approach. Even in 2009, when the Affordable Care Act was being initiated, healthcare didn’t go through many bumps as providers waited to see how they were going to get paid. It really didn’t change that much.” Jacobson also explains that, unlike other sectors that look at location demographics, healthcare follows insurance trends, and is thus more related to where people work than where people live and shop.

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Healthcare Archives - Lee & Associates

Rising Interest Rates, Inflation Lead Investors to Reassess Which CRE Assets to Pursue

WealthManagement.com Features Lee & Associates New York City's Ben Tapper

RECENT MEDIA COVERAGE

The Medical Office Sector Continues to Hold Steady

WealthManagement.com Features Lee & Associates Twin Cities's Susan Wilson and Chris Jacobson

RECENT MEDIA COVERAGE

Lee & Associates Named in GlobeSt 2021 Best Places to Work

“Though we may have over 60 offices, it still feels like a small company where everyone knows each other and cares about one another’s success and wellbeing,” states one employee.

RECENT MEDIA COVERAGE

Lee & Associates’ Healthcare Team Named GlobeSt 2020 Influencers in Healthcare

RECENT MEDIA COVERAGE

Healthcare Investments Muscle Through COVID-Driven Downturn

Healthcare is a Slow but Steady Sector

“Though we may have over 60 offices, it still feels like a small company where everyone knows
each other and cares about one another’s success and wellbeing,” states one employee.