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The Success of Urgent Care Clinics Mostly Depends on Real Estate

Posted on August 1, 2017 by Mike Kushner in Blog, Healthcare, Local Market No Comments

When it comes to healthcare, there is no shortage of demand for convenient and cost-effective providers. As a result, the American Healthcare System has shifted its focus toward creating outpatient urgent care clinics as a low-cost alternative to hospital emergency rooms.

The Urgent Care Centers industry now represents one of the fastest growing segments of the American Healthcare System. There are 340 walk-in clinics and 209 urgent care centers located in Pennsylvania alone. Depending upon where you live, it may feel like there is an urgent care clinic on just about every street corner, but the strategy behind choosing the right real estate space for an outpatient clinic is well researched and carefully considered.

Real Estate Strategy for Urgent Care Locations

Urgent care clinics are commonly located in retail settings that offer high visibility and foot traffic. Shopping centers and free-standing buildings that are located near big box stores, restaurants and food/drug retailers are among the most attractive spots. It’s vital to the success of the clinic that its location be easy to find, have free and convenient parking, and appear clean and attractive.

Aside from the physical aspects of the real estate space, urgent care clinics must also consider the demographics of the market they will serve. A highly viable market will demonstrate substantial health needs that are not currently being met by hospitals’ emergency rooms, due to limited access and long wait times. Next, the market should also have a favorable payer mix of patients who are either covered by insurance or have the ability to pay out-of-pocket.

In addition to these industry-specific considerations, traditional real estate data should also be taken into consideration. The number of residential homes, income levels and location of competitors will also have an impact on determining the best location for an urgent care clinic. As a business that relies hugely on walk-in traffic, the look and location of a clinic is as important as the care it provides.

PinnacleHealth Enters Urgent Care Industry

In Central Pennsylvania we have seen the success of a growing urgent care group that was founded in Silver Spring Township in 2010. AllBetterCare Urgent Care Center opened its first location on the Carlisle Pike and now has two more locations in South Middleton Township (Cumberland County) and Susquehanna Township (Dauphin County). The company says it has seen almost 100,000 new patients since its founding, which makes sense as to why PinnacleHealth announced its affiliation with AllBetterCare that will be completed this fall. The two healthcare businesses share the same desire to reduce unnecessary emergency room visits and decrease emergency room wait times for patients.

Pinnacle’s move into a new sector of the healthcare system aligns with its overall growth strategy to diversify its healthcare services and enter new markets across Pennsylvania. The company recently acquired four mid-state hospitals including Carlisle Regional Medical Center (Cumberland County), not far from two AllBetterCare locations. Pinnacle has also committed to construction of a new campus in York County which will replace the existing Memorial Hospital and continues to work on an affiliation with the University of Pittsburgh Medical Center.

Diversifying Pinnacle’s healthcare services and facilities also means diversifying its real estate portfolio. Affiliating itself with AllBetterCare will serve to help Pinnacle reduce the burden on its hospitals, alleviating the need to expand emergency rooms or construct new facilities that would come at a much larger cost, and risk, than simply making outpatient urgent care clinics more readily available. The partnership between AllBetterCare and Pinnacle is a step in the right direction, not just for the businesses’ bottom-line, but for access to quality healthcare for hundreds of thousands of patients across Pennsylvania.

Have you used an outpatient urgent care clinic? What about the facility and its location made you choose it over another option? Share your insight and experience by leaving a comment!

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Hundreds of Thousands of Square-Feet of New Office Space Coming to Central PA in 2016

Posted on August 1, 2016 by Mike Kushner in Blog, Local Market, Trends No Comments

Two new construction projects, located at the intersection of Carlisle Pike and Hogestown Road in Mechanicsburg, will deliver 258,000 square-feet of office space to Central Pennsylvania this year. Silver Spring Township is calling this construction “Class A Office Space Project” and are confident that, by attracting new businesses to the area, this space will benefit the entire community and its existing businesses.

Here’s a look at how the market has responded to this new space, as well as our analysis of the long-term trends that are yet to come.

Select Year-to-Date Deliveries/Top Under-Construction Properties:

In Q2 2016, Central Pennsylvania had just one building delivered, but it was substantial. Ranked number one on the Greater Philadelphia list of Year-to-Date Deliveries is the office space located at 974 Hogestown Road, Building 200, Mechanicsburg. It is Class A office space that is 100% occupied. Another 129,000 square-feet building, also located on Hogestown Road is under construction and projected to be completed in Q3 2016.

Absorption and Demand:

In Q2 2016, the net absorption has almost doubled since Q1 2016 and is nearly six times larger than it was in Q4 2015. In Q4 2015 it was 50,949 square-feet, increasing to 162,531 square-feet and further increasing this quarter to 301,337 square-feet. This is the largest net absorption we have seen in over a year, compounded by the fact that Central Pennsylvania’s last four years of net absorption has been varied and volatile. One new building delivered this quarter contributed 129,000 square-feet of pre-leased space to the market. There are 2 more buildings currently under construction and they are expected to deliver 136,590 square-feet of space to the market later this year.

Vacancy:

The vacant square footage decreased from 3,705,257 square-feet (Q1) to 3,532,920 (Q2). The vacancy rate also decreased to 6.5% (down 0.3% from last quarter). This is the lowest vacancy rate we have seen since prior to Q3 2012 and is only the second time it’s dipped into the 6.0% range, with last quarter being the first time. Though the vacancy rates have bounced slightly between increasing and decreasing each quarter since 2012, the overall trend has been a decrease.

Rental Rate:

This quarter, the quoted rental rate decreased from $17.32 (Q1) to $17.25. This is the first decrease that we have seen since Q3 2013. However, the fact that the price per square foot still remains above $17.00 makes it a higher price point than the market has experienced between the years of 2012-2015.

Employment:

Pennsylvania’s unemployment rate rose to 5.6% in June. The local labor force declined by 4,000 from May’s record high level of 6.54 million. The Pennsylvania Department of Labor reported that nine of the 11 sectors actually posted job increases in June; however, the two sectors that posted a loss, mining and logging and trade, transportation and utilities, were enough to cause the unemployment rate to rise. They each posted job losses of 600.

Our Summary/Analysis:

Silver Spring Township’s “Class A Office Space Project” is drawing new business into Central Pennsylvania. With 129,000 square-feet of 100% occupied space delivered to the market this quarter and another building of the same size to be delivered next quarter, there is a proven demand for this space. Furthermore, this spur of activity has the potential to draw even more businesses into the area who want to be part of the growing business community. This would come at an opportune time as the local market is experiencing a rise in unemployment.

What trend this quarter do you think will have the greatest impact on the Office Real Estate market moving forward? Share your insight by commenting below!

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6 Lessons Learned from a Tenant Rep

Posted on July 18, 2016 by Mike Kushner in About Us, Blog, Tenant Representative/Buyer Agent No Comments

As the owner of Omni Realty Group, Mike Kushner has been exclusively practicing Tenant Rep/Buyer Agency since 1998, when he first established the company. Now, with almost 20 years of experience under his belt, Mike shares his top six most valuable lessons learned from his career as a tenant representative/buyer agent.

Everyone Deserves to be Treated with Respect

This lesson is so simple, yet so often overlooked. Any successful business owner, regardless of industry or size, should treat everyone they encounter with respect. The bottom line is that you never know how they may impact your business in the future. Employees, vendors, customers and anyone else can all serve as walking testimonials for your business – and you. Give them every reason to talk about how great you are to work with. Don’t risk having someone out there badmouthing their experience with you because of something that could have been prevented by treating them with a little more respect.

Never Take Your Reputation for Granted

Businesses balance on their reputation of service and the ethics and integrity of how they provide that service. I have always operated my business with an important rule in mind: We are the reputation we create. There’s really no way around it; you are the only one who can make or break your own reputation. Make every effort to protect it!

Do What You Say You Are Going to Do

Few things can destroy the integrity of the relationship that exists between service provider and customer as quickly as non-performance. Fail to deliver, and the customer will lose trust and become justifiably skeptical of future commitments. Furthermore, they will quickly move on to someone who will deliver

We Are Always Learning

Every day brings new experiences that broaden my understanding of this wonderful industry that is my livelihood. Keep your eyes and mind open to opportunities to learn. These can come in unconventional ways and at unexpected moments – don’t overlook them!

It’s Often Difficult for Tenants and Buyers to Spot “Double Dipping”

This lesson is very frustrating for an exclusive tenant representative and that is that tenants and buyers don’t easily see that a broker is taking advantage of them with a “double end” deal (i.e. collecting commission checks on both sides of their transactions). Also known as “double dipping” in commercial real estate circles, this practice is far more common that it should be.

Not only is it greedy and unfair, it’s insulting to the tenant or buyer to think that they aren’t smart enough to eventually realize what’s going on. The bottom line is that listing or selling brokers are salesmen. They get paid more if you lease in their listed building and are therefore incentivized to get you to do so. If you work with anyone who is not an exclusive tenant rep, you are not likely to see all the options truly available to you.

Business Should Review Their Lease Far More Often Than They Do

Most businesses only look at their leases every five years (or right before renewal). The truth of the matter is that real estate occupancy cost is a major expense for any business and should be reviewed on a regular basis, at least annually. Furthermore, the terms of your lease should provide for a lease audit to allow you to ensure that expenses being passed through to you, the tenant, are fair and accurate.

In short, working with a commercial real estate broker should be a pleasant and stress-free experience. If it’s not, you’re likely working with the wrong broker who isn’t putting your interests first. If nearly 20 years of experience has taught me anything, it’s that the people – not the property – are the priority.

Which of these lessons do you feel is the most important for running a successful and respected business? Share your opinion by commenting below!

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