2A —January 2023 — M id A tlantic Real Estate Journal
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M id A tlantic Real Estate Journal
Mid Atlantic Real Estate Journal
M id A tlantic R eal E state J ournal Publisher, Conference Producer ..............Linda Christman AVP, Conference Producer ...........................Lea Christman Conference Producer .........................................Matt Wolpe Editor/Graphic Artist ......................................Karen Vachon Contributing Columnists ....................Stella Stein. Greystone; .................................................................Professor Ron Shaw Mid Atlantic R eal E state J ournal ~ Published Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal 117 HMS Halsted Dr., Hingham, MA 02043 USPS #22-358 | Vol. 35, Issue 1
2023 UPCOMING CONFERENCES
s we continue to ex- perience the on-going effects of COVID-19, capital expenditure projects have continued to increase as the demand for creating additional value in new and existing facilities has grown. Combined with delays from early in the pandemic, this growth in construction projects has put a strain on one of the most important aspects that keeps the healthcare real estate industry moving smoothly - the supply chain. Responsible for addressing supply chain challenges, such as price escalations and long lead times, while maintaining strong tenant relations and minimizing business operation interruptions, owners and man- agers of healthcare facilities are considering dynamic ways to respond efficiently and ef - fectively. Let’s look into several re- cent industry trends and ways healthcare real estate owners 3 Ways to Successfully Navigate Supply Chain Challenges Stella Stein A
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and managers can proactively plan ahead. Price Escalations Industry standard for health- care real estate used to follow a 5% - 10% contingency line item for a medical office building’s annual budget. Recent best practice shows the new normal as having a much healthier contingency of 20% - 30%. As prices escalate due to decreased availability of certain products and materials, this additional cushion and proactive planning can help keep a capital project moving forward should the price of a fire door or cooling tower, for example, drastically increase.
Another way to plan ahead for potential price escalations is to receive multiple bids from a network of local and regional vendors who source products domestically. When reviewing bids, it is important to carefully read through the proposal and de-scope each line item. Certain vendors are building in addi- tional cushion in anticipation of further price increases on products while others are not. It is also important to ask your vendors how long those bid numbers are locked in - is it 30 days, 90 days, etc.? Lengthy Lead Times With an increased demand continued on page 12A
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