San Antonio Commercial Development – Medical Office Development –

Medical Office Development San Antonio –

In the world of commercial real estate development, there are countless product types. Each product type has its own variables to manage and almost every municipality has their own specific rules governing the development process. No two commercial properties are identical, so please understand that each property also has its own variables to manage. To improve the likelihood of success in your next commercial real estate development project, I highly recommend working with professional advisers experienced in the product type and area that your project is located in. Two weeks ago, we started a new series discussing the commercial real estate development product types we are regularly involved in. Today’s article, Medical Office Development, will be followed next by Commercial Land Development.

San Antonio Medical Office Development

San Antonio’s growing population and the success of its health care industry has inspired an increased need for medical office development in close proximity to its major medical centers (see below for San Antonio’s major medical centers and potential sites well suited for medical office development). One of the recent changes we have experienced has been a growing mindset change amongst medical practices to migrate from having one large centrally located site, to opening multiple smaller satellite locations in close proximity to the major medical centers and demographically apealing areas of San Antonio. This change has largely been implemented to increase ease of patient access in more areas of town, while still allowing patients close proximity to neighboring hospitals for procedures/referrals. There are several types of prominent commercial product types within the medical office development sector in San Antonio.

1) Medical Lease Space – Multi-tenant medical office building developments aimed at providing lease space for smaller multi-site practices are typically located on Campus (Hospital MOB) or in close proximity to hospital campuses. These types of projects are usually best suited for small square footage requirements (under 2500 SF) that don’t typically justify the practice owning their real estate or for larger square footage requirements where the practice doesn’t want the risk or management headaches associated with commercial real estate ownership. I encourage developers to do their homework when considering this type of project. Make sure that the area demand justifies the project and do as much as you can to learn what other projects (especially now that the hospitals have become aggressive with developing their own MOB’s to lease to physician groups) are set to begin in your desired area. With the growing desire of practices to open smaller satelite offices, we have also seen a trend for medical office users leasing space in retail centers located within dense population areas. Retail centers typically offer medical practices strong parking ratios, ease of patient dropoff/access, and more visibility to the general public. With medical groups focusing more on specific goals associated with their practice’s needs instead of following the crowd, medical lease space development has become a more difficult product type to speculatively build.

2) Medical Office Condos Projects (practice can usually lease or own), located in close proximity to major medical centers, involve a developer using economies of scale to purchase a larger land tract where he/she fully develops multiple smaller shell (tenant or new buyer pays to finish the interior based on their business needs) buildings at a wholesale price with intentions or leasing or selling the shell buildings (usually with a condo association in place to manage the common areas) at a retail price. This type of project is usually best suited for smaller square footage requirements that do not anticipate expansion in the near future or for physican groups that want to own but are adverse to the risks associated with development.

3) The third and arguably fastest growing area of San Antonio’s Medical Office Development industry is the owner occupant medical office development segment. Typically, the owner occupant segment involves medical practices employing advisers to help them to acquire existing buildings or land in close proximity to their desired areas to develop (or redevelop) for their practice to occupy. My opinion is that the increased availability of aggressive bank financing for this type of project is the biggest reason why we see growth in owner occupied medical office development projects. The owner occupied medical office development projects typically present medical practices the most upside and the largest risk. Click here to read an article covering the commercial real estate buyer’s checklist, aimed at discussing some of the tasks that groups should consider when purchasing Commercial Real Estate. We encourage physician groups to hire seasoned advisors to help them through the development process. Part of this advisement includes learning “why” the practice should own. Click here for an article discussing the Lease vs. Purchase debate. There are countless different ways to structure these types of deals depending on the ownerships goals (short or long term).

Our group has experienced success in representing medical office developers and medical practices to acquire sites (on and off market), run proformas, assist with bank financing, review entitlements/easements, negotiate the lease terms with the tenants, manage the development, and sell the properties (publicly or privately) to our national network of long term net leased buyers (if the owner’s desire to do so once the projects are fully leased for more immediate returns).

Stay tuned for our next Commercial Real Estate Blog Article! –

NEXT WEEK’s Topic – Commercial Real Estate Development – Week 4 – Commercial Land Development

Contact a San Antonio Commercial Real Estate Expert today:

Link LeGrand, CCIM 210-789-5465

San Antonio Medical Office Development