M id A tlantic Real Estate Journal — Owners, Developers & Managers — March 2024 — 13A
www.marej.com
O wners , D evelopers & M anagers
By Cory Atkins, Atkins Companies Turning Challenges into Opportunities in the Northern New Jersey Medical Office Market
S o far in 2024, northern New Jersey’s medical office market has large -
care real estate market is loosening. The promise of achieving what appears to be a soft landing and several pend - ing interest rate cuts in 2024 are signaling the possibility of a less restrictive lending envi - ronment to come as the year progresses. In addition, sig - nificant dry powder remains on the sidelines waiting to be deployed into both real estate and healthcare investments. The northern New Jersey medical office market’s under - lying fundamentals also pres - ent reasons for optimism and position it to rebound more
quickly than other markets in the nation. As we near the end of Q1, now is a great time for health - care real estate investors to take stock of their current positions and prepare for to- morrow’s market conditions. For instance, capital and op - erational improvements made today will position buildings for long-term success ahead of the expected bounceback of the market. As healthcare systems look to accelerate their plans of consolidation and expan - sion, newly renovated medical office spaces, surgical centers
and outpatient facilities will become exceedingly valuable and present opportunities to yield high returns. Real estate inventors can also look to leverage the rela - tionships they’ve established with healthcare systems to negotiate sale-leaseback deals. These arrangements can help systems free up capital to rede - ploy within other areas of their businesses to improve their delivery of care and power continued growth. The current market condi - tions present opportunities for creative investors to grow
their portfolios. The increase in remote work has reduced demand for office space and created many underperform- ing professional office build - ings, and some of these spaces are ideally suited for reposi - tioning and conversion into healthcare destinations. With costs of development as high as they are and the long lead time needed for ground-up development, adaptive reuse is becoming an increasingly sen - sible strategy for healthcare real estate investors. Cory Atkins is a principal at the Atkins Cos. MAREJ
ly reflected the trends seen across the nation’s commercial real estate industry. Elevated i n t e r e s t rates, mac- roeconomic
Cory Atkins
pressures and general market uncertainty have slowed deal flow. For investors, penciling deals in virtually any asset class, including healthcare, can be a tough task in what remains a difficult market. Beyond the overall chal - lenges facing the commercial real estate market, health - care systems have reevalu - ated their plans for strategic expansion and consolidation due to elevated interest rates, increased labor costs, staff - ing shortages, and downward pressure on public and private insurance reimbursements. However, we do see encour - aging signs that the health - Matan Companies delivers Northlake II fully leased
REDEFINING HEALTHCARE REAL ESTATE
Northlake II
ASHLAND, VA — Matan Companies has delivered and fully leased the first three buildings at Northlake II in Ashland, totaling 345,000 s/f of industrial space. Tenants in Phase One include Ferguson, Chadwell Supply, Envoy Solu - tions, and Haskell Hardware. Construction of Phase Two will commence in the Summer of 2024 with expected comple - tion at the end of 2025 for the final approximately 200,000 s/f industrial building. “We could not be more pleased with the success of Northlake II,” said JP Matan, director of leasing, Matan Com - panies. “The Richmond market continues to exceed our expec - tations and we are excited to break ground on the final phase of the development.” MAREJ
Over six decades of commercial real estate development, ownership, and management experience
ATKINS C OM P A N I E S
atkinscompanies.com 973-325-7900 West Orange, NJ
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