www.marejournal.com
2C — June 23 - July 13, 2017 — Mid-Year Review — M id A tlantic
Real Estate Journal
A ppraisal
he medical office sec- tor is strong. It contin- ues to consolidate and By Carlo L. Batts, MAI, Rittenhouse Appraisals As the Retail Sector Struggles, Investors Move into the Medical Office Market T
called the Roberts Collab- orative for Genetics and In- dividualized Medicine at CHOP, as the Roberts family (known for their ownership of Comcast) will be contributing a $25 million gift. Last month, Kennedy Health Systems unveiled a new $80 million facility in Cherry Hill, New Jer- sey. This is only Phase I of a $200 million overhaul. The next part of construc- tion will commence this fall, and will include a new acute-care hospital with all
private patient rooms. Ken- nedy plans to merge with Thomas Jefferson Univer- sity Hospital this summer. Lankenau Medical Center, while not in Philadelphia proper, but rather part of Main Line Health, recently received approval to move forward with an Emergen- cy Department Expansion Project. Originally built to handle 35,000 visits per year, they now get about 54,000 patients each year. That number is projected to reach 73,000 by 2025. The project
is expected to be completed in early 2019 at a cost $52.8 million. It will result in an additional 32,200 square feet of space. It is important to keep in mind that times are changing. Health care is in flux. Urgent care centers, retail clinics (walk-in centers often housed in pharmacies and supermar- kets) and stand-alone emer- gency departments are replac- ing primary care physicians and hospital emergency rooms. This can largely be attributed to the upcoming millennial
generation, which is clamor- ing for more convenience and affordable healthcare options. Some forward-thinking hos- pitals are aligning with these urgent care centers. They rec- ognize that people appreciate the convenience they provide patients (co-pays are lower and wait times are shorter). This partnership could al- leviate the burden on a lot of hospital emergency rooms. If people have a non-life threat- ening condition, they may go to an urgent care facility. Clinics typically charge 40-50% less than the costs of ER visits. Many hospitals aren’t seeing them as competition any more. As a result of this shift, urgent care facilities are becoming more and more prevalent. If people can’t get a doctor’s appointment that fits their schedule, they’ll go to an urgent care center for relief. Typical patients present with upper respira- tory illnesses, ear infections, wounds that require stitches, strains, sprains and some- times broken bones. Centers are even open on weekends and holidays, when doctors’ offices are typically closed. Within the Philadelphia Metropolitan area, vacancy rates in the medical office sector are down to 8.1 percent this year, while they were above nine percent last year. Gross Rent per Square Foot is $20.93. Annual absorption square footage this year is 294,040. The sales price per square foot is up to $212 while the five year average is $164. Sales volume has more than doubled. Medical Offices are on the market roughly 14.8 months, compared with a five- year average of 18.4 months. A little over two years ago the median number of months on the market was as high as 22, so it has dropped precipi- tously. The U.S. population is ag- ing. The political environment has been altered. The millen- nial generation has surpassed the baby boomers in size. With all these changes taking place, the medical office sector should remain strong. But it is important to keep an eye on the trends. Carlo Batts is principal and owner of Rittenhouse Appraisals in Philadelphia, PA. Rittenhouse serves the States of PA-NJ-DE. n
seek new or e x p a n d e d f a c i l i t i e s . The follow- ing are a few examples. Children’s H o s p i t a l o f Ph i l a - d e l p h i a
Carlo L. Batts
(CHOP) last year announced a major $50 million Pediat- rics Research and Patient Care Initiative. It will be
Commercial • Multifamily • Retail • Industrial 267–314–8635 www.rhappraisals.com PA-NJ-DE
Made with FlippingBook Online newsletter