2018 TRENDS
COMMERCIAL CHANGES
ADVANTAGES OF MED SPAS FOR DOCTORS AND INVESTORS M edical spas represent several advantages for medical doctors and real estate investors. Those advantages hinge largely on the nature of these businesses, which offer non-invasive procedures and represent a means for the operator, the physician, to replace lost income. 1 THE MED SPA BUSINESS IS A LUCRATIVE CASH BUSINESS. Patients pay up front, and doctors do not have to wait on clients’ insurance to pay their bills. Many physicians opt to stop delivering babies or performing surgeries as they age. Adding medical spa services to an existing practice or opening a separate med spa space is an effective way to replace income. 3 MED SPAS ALLOW PHYSICIANS TO INVEST IN REAL ESTATE. In the past, it was rare to see a med spa in a retail center. They were relatively uncommon and only housed in doctors’ offices. Now, they are exploding everywhere. The medical spa industry is one of the fastest-growing industries in the country. 4 MED SPAS ARE IDEAL RETAIL TENANTS. 85 percent of med spa clients are female, making it only common sense to add a med spa next to a Starbucks, clothing store, or grocery store. 2 MED SPA SERVICES INCOME CAN REPLACE LOST SURGICAL INCOME.
THE MED SPA BUSINESS FACTS & FIGURES:
4,200 TOTAL NUMBER OF REGISTERED MEDICAL SPAS IN THE COUNTRY AS OF 2017.
$945,000 AVERAGE MEDICAL SPA REVENUE REPORTED IN 2016.
6.9% PERCENTAGE INCREASE IN MEDICAL SPA REVENUE BETWEEN 2015 AND 2016.
Doctors Could be the Key toYour Next Commercial Investment MEDICAL SPAS' GROWING POPULARITY IS A TREND WORTH WATCHING.
8% PROJECTED GROWTH TRAJECTORY
FOR MED SPA REVENUES BETWEEN 2017 AND 2022.
40% PERCENTAGE OF MED SPAS LOCATED IN THE SOUTHERN PART OF THE U.S.
by Pamela J. Goodwin
octors and medical experts have always tended to be in real estate as well as medicine. They often own the buildings that house their practices and, once they get a taste of the joys of real estate ownership, start expanding their portfolios with both commercial and residential properties. Recently, I’ve seen a sharp uptick in the number of medical practitioners changing their business models to open medical spas. Clearly, banks think that doctors are the ideal borrowers. In fact, a lot of physicians wanting to get into this type of business development can get huge loans with little or nothing down to develop new buildings for D
because they either have built their own building to house a practice in the past or they know someone who has. They’re very comfortable with the idea of opening a practice like a medical spa that will meet the needs of an affluent population for general medical care and medical-grade aesthetic procedures. WHAT LENDERS ARE LOOKING FOR When it comes to lending on these projects, certain medical professionals have a huge “edge” over the competition. Conventional bank lenders love lending money to doctors. They
financing. If you are interested in commercial real estate, it means that targeting properties that afford good opportunities for this type of project could be a good way to get great tenants with lots of financial resources (see sidebar above). That makes your building more valuable in terms of rent collected and the price you could command if you sell. •
tend to be high earners; they almost always pay their bills on time, and they very seldom go out of business. By the way: That makes them great tenants in your commercial properties as well! Lenders may offer a physician start- up financing, acquisition financing, commercial real estate financing, and equipment financing to the tune of millions of dollars, often with very little money down.
this purpose or to open their own independent practice.
are from medical professionals who are doing one of two things: 1 Looking to open their own private practice 2 Investigating their options for opening a “med spa” In a lot of cases, the physicians are successful professionals who have spent a few decades in their chosen field. Often, they are surgeons who are starting to think that they might like to move away from surgical practice. Doctors tend to be very familiar with the concept of commercial real estate
2018’S CHANGING COMMERCIAL REAL ESTATE LANDSCAPE
Just as the residential real estate landscape is changing dramatically right now thanks to housing inventory shortages, issues with affordability, and the rising costs of construction, commercial real estate trends are shifting as well. The retail market, in particular, is evolving. These days, I get more calls for office space and medical space than I ever have before. Often, these calls
Pamela J. Goodwin is the founder and CEO of Goodwin Commercial a commer- cial real estate firm specializing in retail/ restaurant development, brokerage and consulting firm in Dallas, Texas, and a
WHAT DOES THIS MEAN FOR REAL ESTATE INVESTORS? Well, if you happen to have a medical background, it could mean amazing
Think Realty coach. Learn more about her commer- cial real estate courses at ThinkRealty.com/Pamela or reach her at pam@pamgoodwin.com.
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