South Florida Hospital News
Sunday September 22, 2019
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December 2008 - Volume 5 - Issue 6

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Medical Practices Expand at the Right Time, in the Right Place with Help of Adams Property Consultants

Every day, there is more news about the troubling state of the economy. In an uncertain climate such as this, many companies, including physicians’ offices and hospitals, are cautious when it comes to making real estate related decisions. But the news is not all bad—given time, health care companies are still choosing to invest in the South Florida market.

"Overall, I think we’ll see in the first quarter of 2009 what we saw in the latter half of 2008," explained Tom Adams, president and owner of Adams Property Consultants. "Right now, health care providers have a wait-and-see attitude; they are waiting to see what will happen with the economy and what changes will come with the health care policies of the new administration.

"We will see more consolidations and joint ventures in the coming year, provided capital starts to flow more freely and medical groups seek to increase operating efficiencies and leverage their capital through partnerships with third-party health care providers and equity sources ," he added. "As reimbursement rates fluctuate and continue to pressure the providers’ bottom lines, they will seek to diversify and expand their revenue streams by bringing procedures in-house that were formerly conducted in third-party outpatient facilities."

Adams Property Consultants, which is headquartered in Coral Springs but consults throughout Florida, works with physician groups and other health care providers to evaluate and recommend real estate solutions that enhance and protect their clients’ long-term goals. They also implement marketing, leasing and sales programs on behalf of medical building owners and investors.

As with other sectors of the real estate market, shifts in demographics and the strength of community hospitals impact the health of local medical office markets. According to Adams, while certain sub-markets currently experience average vacancies of 15 percent or more, other south Florida submarkets have seen record sales prices. "From Miami to Palm Beach, we’ve seen buyers competing for well situated medical office properties, which has driven rents to new highs in those submarkets," he said. "Those who can’t afford the increased rents either move to Class B office space or purchase their next office in an attempt to control their own destinies."

While rental rates vary widely, Class B rents average $27 to $30 per square foot on a full-service, gross basis. Rents in Class A office projects range from $32 in suburban locations to as much as $40 per square foot in densely populated or affluent areas such as Kendall and Aventura.

Even with the challenges facing the health care industry, several construction and development projects are in the pipeline throughout South Florida. The University of Miami has ambitious plans for its two-million square foot Life Sciences Park located on land near Jackson Memorial Hospital in Miami; Baptist Hospital is in the midst of a large-scale expansion; a new Class A office project in Margate is being developed by The Greenfield Group with significant pre-leasing in place; and a new 115,000-square foot medical office project that will feature a 45,000-square foot regional Pediatric Center of Excellence is under development in western Boynton Beach.

While many business sectors have seen a decrease in revenues due to market conditions, most physicians have not yet experienced a significant drop-off in business revenues, according to Adams. "Those practices that typically see a spike during the high season will be impacted as fewer people visit south Florida this winter," he said.

"Medical and dental practices that have a high percentage of self-pay patients are experiencing a noticeable decline in revenues by as much as 25 percent or more," he added.

While no one can predict exactly what the economy will do in the coming year, it is important that health care providers look beyond the current environment to the sunny South Florida days ahead. Those who position themselves properly today will be able to capitalize on attractive real estate opportunities in the coming year.

In addition to representing health care providers, Adams provides leasing and management services, acquisition and disposition services and development of medical facilities from the ground up through its affiliated company, Medical Development Partners, LLC.

For more information on Adams Property Consultants, visit www.adamspci.com or call (954) 346-8200.
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