- November 15, 2012
Commercial real estate broker Ken Hughes doesn’t claim clairvoyance, but he sure was onto something when he quit his job last summer.
With 15 years in the business, Hughes, who had most recently worked for a health care-focused real estate investment trust, founded CNK Realty. It’s one of the few, if not the only, commercial real estate firms in the Sarasota-Bradenton market to focus solely on health care and medical space.
That market is now one of the hottest things going in commercial real estate, both on the Gulf Coast and nationwide. One obvious reason is the federal health care overhaul: Despite the controversy about the reach of the bill, more people with health insurance creates a need for more medical services. That, in turn, facilitates a need for more space.
“There has been a lot of pent-up energy and demand,” says Hughes. “Soon there will be less and less space available.”
On a national scale, sales of buildings leased by doctors totaled $6.67 billion last year, according to a report from New York real estate data firm Real Capital Analytics. That’s the second highest total since 2000. And the average price per square foot for medical and health care properties is up, from $262 in 2012 to $270 last year, the highest rate ever, Real Capital says.
The Gulf Coast health care commercial real estate market is on a similar surge.
In the Tampa market, Roxanne Kemph, a first vice president in brokerage services with CBRE, pegs a long-term trend building. Kemph, who has worked in Tampa and the surrounding area for more than 20 years, sees the growth in both doctors offices and large medical organizations. Leases she recently worked on in the region include a 50,000-square-foot expansion for laboratory services firm Quest Diagnostics and a 90,000-square-foot addition for a health insurance firm.
“The health care industry is one of our primary growth industries,” Kemph says. “We are betting that this will continue to grow.”
Commercial real estate brokers for Sperry Van Ness in Sarasota, Bradenton and Fort Myers see the same growth Kemph sees. The Sarasota-Bradenton office, for instance, closed five health care-related leases in the last few months of 2013. The leases surpassed more than 13,000 square feet. And Mark Alexander, managing director of Sperry Van Ness’ Fort Myers office, says 2013 was a breakout year for medical office values in Lee County.
Industry data services don’t normally track the niche market of medical space, to the dismay of some brokers.
Still, both Kemph and Bonita Springs broker Jay Crandall notice another trend in the works: The decline in medical reimbursements for doctors requires more patient visits, which fuels a need for greater visibility. So now some physicians seek retail space for their practice, and they will pay a little more for the strategy.
Crandall, with Crandall Commercial Group, recently helped place a dermatology practice in a retail center, for example. And a Manatee County optometry practice, In Focus Family Eye Care, signed a lease in January for an office on Main Street Lakewood Ranch. The office, in between a Scottish restaurant and a Raymond James branch, is on a popular retail and dining hub just east of Interstate 75.
Hughes, meanwhile, only wants a piece of the growing health care real estate pie. He plans to hire his first employee later this year, someone to help with administrative tasks.
“I think this year we will see some more movement from people who were waiting to see what happens,” says Hughes. “Once we get past the panic of health care reform and all the uncertainty, there is going to be some real expansion and growth.”