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

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New Projects Postured for Today’s Medical Office Market

Despite the effects other segments of the commercial real estate market are feeling as result of the weakened economy, some medical office condos and rental buildings are still healthy. Demand is still vibrant in many locations. But as always in real estate, location is the key to success. Those projects that are well planned in strategic locations continue to be successful. But in this economic storm there are many other factors involved.

One difficulty currently facing potential owners of medical office condos is getting them appraised appropriately. Office condos that are not medical are being sold at much lower figures. We sometimes have to go directly to banks and appraisers to make them aware of the difference between medical projects and straight office condos. We have sold millions of square feet of medical space in the last couple of years. Virtually every physician who has purchased has closed, while many buyers of non-medical office condos have walked away from their deposits.

Also, unlike many other would-be purchasers today, physicians are generally able to get loans. We have many banks that are jumping at the opportunity to finance medical users with 90-100% financing, inclusive of interior improvements. We also have lenders who will provide construction financing for medical office buildings with adequate pre-leasing. While the rental market locally is generally strong, if rental rates are too high for specific areas or target market, some physicians are forced to look elsewhere. They may look at relocating in a Class B property or sharing a space with another physician. The same is true in the medical office condo market. Some physicians, who considered purchasing office space in high end projects like Plaza San Remo, looked for more affordable options.

In response, a new property was brought to the market. Sunset International Center is a 62,000 square foot Class B medical building which has been completely renovated. It has been targeted to primary care physicians and other medically related businesses that are interested in locating in the East Kendall area at affordable pricing. A new tenant mix was created to provide plenty of parking for physicians and their patients. Since the offices are already completed, occupancy is available immediately. In this project, the offices are available for lease, purchase and lease with an option to purchase.

The frequent amounts of visits shopping centers attract are a driving trend for healthcare professionals to locate in these types of high exposure locations. One example is One Seventeen Professional Arts Center at Town and Country, now completed and ready for delivery. Located in the Town & Country shopping center at Kendall Drive and SW 117th Avenue the project is comprised of the East Building, which is 69,000 square feet and the West Building, which is 64,000 square feet. The East Building is almost sold out, while the West Building is being considered by two groups interested in purchasing the entire building. The shopping center is presently undergoing a one hundred million dollar renovation.

Another example is Offices at London Square, which is located at the intersection of SW 137th Avenue and SW 120th Street in the London Square Shopping Center. The building, which is near completion, is located near the Tamiami Executive Airport and in close proximity to the new West Kendall Baptist Hospital, currently under construction. Miami Children’s Hospital recently leased 35,000 square feet in the building and TotalBank has leased 4,000 square feet in the building. The balance of the 20,000 square feet is being targeted to ancillary medical users who provide services that would benefit from the location. Pedodontists, orthodontists and other dental specialties have expressed interest in the location. In addition, ambulatory surgical centers, ophthalmologists, allergists and dermatologists are among the specialties inquiring about the building.

Kenneth Weston is President of Kenneth Weston & Associates, Inc., a commercial real estate and consulting firm specializing in medical real estate and office condos. He can be reached at (305) 279-2700 or visit www.KennethWestonAssoc.com.
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