The Atlanta Commercial Board of REALTORS® seminar, "The Pulse of Atlanta's Healthcare Real Estate," focused on changes in development patterns, rental growth, and tenant expectations in the healthcare real estate market. Panel members included: Greg Baxendale, Executive Vice President at JLL; Christine Gorham, CCIM, CEO & Partner at Eastwood Real Estate Properties; and Brandon Wallace, Senior Director at Cushman & Wakefield. The panel was moderated by Michael Ulin, Vice President of the Tenant Advisory Group at JLL.
Michael Ulin asked the panel generally about changes in the marketplace. Christine noted that it is important for professionals to be aware of changes in healthcare, not just health care real estate. For example, it is important to know who is in charge of local medical providers, whether local or national. Greg Baxendale added that there is weekly news about changes in the industry, including acquisitions and exchange participation, but the ongoing messaging from the sector is one of stability despite the subtext of change.
Michael picked up this theme and asked what might be on the horizon for consolidation. Greg offered that streamlining operations is a significant driver of the consolidation, but also the expansion/acquisition of new services, such as urgent care and specialty services. Greg and Brandon noted that Peachtree City, Stockbridge, and the area between Atlanta and Athens are examples of areas with growing populations and land that could be dedicated to healthcare use. Brandon and Christine noted that WellStar, Piedmont Healthcare, and Northside Gwinnett have grown rapidly and have energized the market, often through the use of acquisitions.
Michael noted that in addition to 16.8 M sf of healthcare real estate inventory currently in the market, there is 600 sf of new construction currently underway, and asked the panel about new and emerging locations for real estate in this sector. Brandon responded that Buckhead is developing in exciting ways, since it is an attractive area because of the local presence of heavily insured individuals and families. The new medical center at 371 E. Paces Ferry is 50% pre-leased prior to opening later this year or early 2018. A part of this excitement is that there has not been an entirely new medical project inside the perimeter in some time. The building will offer valet parking, a parking deck with direct accessibility to each floor of the MOB, and tenants include Peachtree Dermatology (full Floor), Piedmont Hospital (full floor), a plastic surgeon and a pharmacy. Christine observed that new buildout is increasingly expensive and second generation spaces are great opportunities for real estate and medical professionals. TI in medical is much more complex than in the corporate marketplace. Construction costs and lease rates have risen by 20-30%. During the recession, developers offered free rent rather than TI, but there is now a return to TI, possibly in the area of $50/sf.
Michael asked the panel about recent changes they have seen in medical spaces and medical building. Greg was quick to note that parking, a perennial constraint at medical facilities, has gotten even tighter. However, parking (usually decks) has developed to include more access points to the medical facilities, often using multi-floor bridges. Other recent developments include the medical spaces themselves, which have gotten brighter to improve the patient experience, and surgery centers have gotten more space-efficient. Christine had observed that many medical practices have increasingly been sharing spaces to be additionally space-efficient.
Michael asked the panel how technology changes have impacted medical spaces. Brandon added that in terms of space, medical spaces have been most significantly affected by the elimination of paper records as offices have gone increasingly digital in their records retention, opening up admin spaces. Christine noted that medical providers depend on their broker partners (with their technology platforms and information services) in a way that is increasingly similar to an internal team role. For these REALTORS®, an increasing amount of time is required by these clients. Greg observed that medical is increasingly retail, and these locations want to use those specific technologies that are appropriate for that situation. He also noted that medical providers want to be able to benchmark themselves against competitors regarding customers and other data points, so data services are often utilized for this purpose.
Michael asked the panel how the expansion of medical services into retail spaces has affected the medical real estate conversation. Christine suggested that these operations were “medical-lite,” and that they were often marquis spaces for the larger medical practice. The commission structure is different from other retail deals, and is closer to traditional medical office building rates. These spaces are an additional way to offer new solutions to an aging population, as this population drives changes in other ways, including service delivery and space design.
On the topic of retail expansion, Greg offered that he was familiar with a study for a large portfolio specific to medical practices back filling big box retail spaces. Christine agreed that the opportunity posed by the closure of big box stores was an interesting development. These spaces present an opportunity for new medical tenants, since they offer excellent signage, ample parking, and convenience for patients.
Moderator and Coordinator
Mr. Baxendale is a Leader in the National Healthcare Practice Group for Jones Lang LaSalle Brokerage and is based in Atlanta, Georgia. As a top producer and Leader in the Healthcare Practice
Group, Mr. Baxendale provides real estate solutions integrated with business drivers and patient analytics that create maximum value for his healthcare clients. Mr. Baxendale specializes in site
selection and portfolio optimization for hospitals and multisite medical practices.
Christine Gorham, CCIM, has been CEO and Partner of Eastwood Real
Estate Services, LLC since 2010. Christine has over 28 years of medical operations experience,
with over 18 of those years focused in the real estate sector of healthcare, 10 of those years
with the Northside Hospital System in Atlanta, making her a uniquely qualified professional.
She gained valuable insight into the inner-workings of primary care, ambulatory surgery
centers, long term VA care facilities, home health, and hospital systems. In the medical real
estate arena she has asset managed, leased from both the Landlord and Tenant positions,
construction and project managed, site selected, and property managed. She directed a
national portfolio, heavily concentrated in healthcare, for SRS Investments, LLC, a private
investment company. She was responsible for all asset management details which included
oversight of leasing, property management, budgeting, marketing, taxes, capital improvements,
as well as assisting with due diligence for acquisitions, investor relationships, and lender
activities. Christine has leased or sold over 4,200,000 square feet of medical, dental, veterinary,
office, and retail real estate.
Christine currently serves as a Director for the Atlanta Commercial Board of Realtors as well as
Co-Chair for the Diversity Committee’s Mentor Program. In 2015 & 2016 she was a Director on
the CREW Network Board (an organization of nearly 11,000 members in the U.S., Canada and
United Kingdom) and was President of CREW Atlanta in 2014 (an organization of appx 400
members). She was honored with the 2015 Shining Light Award by CREW Atlanta, an annual
selection which is presented to Georgians who have inspired the lives of others through their
service. She was named one of Atlanta’s Top 40 Most Powerful Women in Commercial Real
Estate by BISNOW and Who’s Who in the Top 100 Influential Leaders in Commercial Real
Estate by Atlanta Business Chronicle, both in 2014. She has spoken at many real estate
conferences and events, and has written articles for real estate publications, many related to the
healthcare aspect of real estate.
Mr. Ulin serves as a Vice President in the Tenant Advisory Group of JLL. He advises clients
regarding healthcare real estate strategy, leasing and acquisitions. He brings valuable insight
to clients on driving efficiency, financial analysis and leverage in negotiations.
Michael has over 10 years in commercial real estate experience and a proven track record of
providing solutions and creating maximum value for his clients. Michael brings a broad depth of
knowledge including tenant representation, landlord representation and investment sales.
Additionally, Michael brings a solid financial background with accounting and advisory
experience from PwC.
Wallace will bring his proven strategic relationships and healthcare real estate expertise to this growing practice.
The newly expanded team will continue to offer real estate services to healthcare systems, providers and
investors through a platform bolstered by a combined more than 35 year track-record.
“Brandon’s extensive knowledge of commercial real estate, especially the healthcare sector, makes him
incredibly valuable, and we are delighted to have him as a member of our team,” said John O’Neill, Managing
Principal of Cushman & Wakefield’s Atlanta office. “Securing top talent like Brandon is instrumental as we
continue to grow and strengthen the breadth and depth of our firm’s presence in Atlanta.”
Prior to joining Cushman & Wakefield, Wallace was a First Vice President with CBRE’s Healthcare Services
Group, where he oversaw all phases of exclusive property listings for investors and owners of medical facilities,
as well as acquisition and disposition strategies and market analysis. He also worked with providers to assist
their evaluation and execution of strategic sight selections and portfolio optimization. Previously, Wallace held
positions with Meadows & Ohly, Inc. and Wallace Property Group, Inc. and has successfully negotiated and
executed more than $300 million in real estate transactions.