8B — November 8 - 1, 013 — Financial Digest — Mid Atlantic Real Estate Journal
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here is a growing popular trend occur- ring involving the By Brenner Green, Real Property Capital, Inc. Don’t like your property? Consider converting it to a “Medical Plaza” T Temple University Hospital in North Philadelphia. A third example involves an recently purchased by BET Investments, and lies directly across from Riddle Memo-
More recently, smaller scale medical properties are cropping up on a standalone basis. When done properly, these projects can be highly profitable for developers with medical office rents and oc- cupancy rates significantly topping the market level that might be attained as a conventional strip retail or small office property. Recently, we refinanced two small medical plazas in standalone locations. One was a former strip center on a divided highway in Delaware County, PA and the other was a renovated railroad sta- tion in Moorestown, NJ. The strip center had a brand new Wal Mart down the street, the main ingredient of the demise of your typical strip center. However, as a medical plaza with an optometrist, a dentist, a family practice doctor’s office, a podiatrist and a physical therapist, (as well as an owner-occupied pizza shop and a PA DMW Office), the center was 100% occupied. Rents were around 20% higher than the market rents for similar type of space occupied with conventional retail users. The second property also enjoyed occupancy in excess of the market rate, and had tenants paying a higher rent than conventional office users were paying in the market (the next best use for the property). Both of these prop- erties had additional tenant fit out beyond what would be required for a standard office or retail user, and to be sure a portion of this expense was borne by the landlord. How- ever the strong occupancy of the medical spaces and the additional rent would seem to more than make up the difference in fit out cost. Depending on market demand, a wide variety of property types are potential candidates for an alternate use as a medical property. As the healthcare industry continues to expand, look for adaptive reuse into medical plazas to expand as well. R. Brenner Green is a 15 year veteran in commer- cial real estate finance and president of Real Property Capital, Inc., a full ser- vice commercial mortgage banking firm based in the Philadelphia suburbs. n
portune time to consider tak- ing your functionally obsolete or underperforming property and consider turning it into a Medical Plaza. Historically these proj- ects have typically involved large-scale spaces in close proximity to a hospital, such as the rumored medical of- fice conversion/construction as part of the mixed use redevelopment plan at the failed one million square foot Granite Run Mall in Media, PA. The property was
emergence of the “Med- ical Plaza” as an asset type not just locally, but nationally. Wi t h t h e heal thcare i n d u s t r y
“It would seem like an opportune time to consider taking your functionally obsolete or underperforming property and consider turning it into a Medical Plaza.”
rial Hospital on US Route 1. Another example is the significant blocks of medical square footage created out of renovated industrial/manu- facturing space surrounding
actual former hospital; the former Barnett Hospital in Patterson, NJ was renovated in 2010 into the Barnett Medical Arts Complex. It is currently 90% occupied.
Brenner Green
poised for a major expansion under the Affordable Care Act, it would seem like an op-
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