3 Real Estate Insights Every Healthcare Vendor Should Discuss With Their Clients

Whether it’s over lunch or during an annual review with your healthcare clients, discussing commercial real estate insights about their business and profitability only strengthens your value and expertise quotient with that client. Below are three uncommon real estate insights that you can use to add value to your healthcare client’s business while strengthening your relationship.

1. Healthcare Tenants Should Expect Greater Concessions and Better Terms

A healthcare tenant has tremendous value in the marketplace. A healthcare practice is considered by most Landlords to be a recession-proof, blue-chip tenant offering long-term value to a property owner. This proposition outweighs the appeal of most other types of possible tenants and when properly used as negotiation leverage, it results in much better lease terms. Namely, healthcare tenants should expect six-figure concessions over a ten-year lease in the form of build-out allowances, free rent, and reduced rates.

 

2. The Most Frequently Occurring Transaction & Why It Matters To Them and You

Would you guess that lease renewals are the number one transaction in any commercial real estate market? They occur several times more often than a ground up project, relocation, purchase, or a new lease.

Why does this matter?

By knowing which commercial real estate transaction occurs the most often, you have the most opportunity to have impact and influence in your client’s business.

With proper representation, healthcare tenants realize on average a 20-30% savings on their lease renewal terms. This can easily equate to six-figures over a ten year period, which is only one of the items negotiated during a lease renewal.

In some markets, over half of CARR clients relocate during the lease renewal. This is because our process for competitively procuring new lease terms often results in a better scenario in another location.

With the trigger of just one event (a lease renewal), not only can your client realize six-to-seven figures in savings, but each one of these industries can be potentially impacted in the following ways:

  • Lenders generating a new practice loan or real estate financing
  • Business bankers obtaining new accounts and providing additional services
  • Architects securing a new medical office design project
  • General contractors hired for office renovations and build-out
  • Medical equipment suppliers fulfilling orders for upgraded equipment and additional supplies
  • Technology providers sell more technology
  • Practice consultants hired for a variety of services, such as training, staffing, and more
  • Attorneys performing contract reviews
  • Accountants consulting for tax planning and investment strategies
  • Marketing companies providing new growth initiatives and launching new programs

3. The Cost of Not Having Specialized Healthcare Representation

Occasionally, CARR gets to review deals negotiated in a client’s building that were executed by another broker. The table below is such a scenario. Two healthcare tenants right next door to each other; one tenant represented by CARR, the other was represented by another commercial real estate brokerage. The difference in outcomes was remarkable and resulted in nearly $270,000 of more concessions and savings for the CARR client, IN THE SAME BUILDING.

This example illustrates the reason why it’s so vital to have a healthcare-specific agent who understands your client’s real estate needs and who is an exclusive buyer/tenant agent without any conflict of interest.

In addition to expertise that delivers the best possible terms, below are just a few things a healthcare practice sacrifices when not represented by a healthcare real estate agent.

  • Non-billable hours: Dozens of hours are spent on a typical transaction, hours that would otherwise cost the doctor and staff their valuable time
  • Process and resource efficiency: With experience comes efficiency and nuance. What takes a CARR agent a few hours might take a person representing themselves 3-4 times longer
  • Vendor relationships: Because CARR transacts on thousands of healthcare deals around the country every year, we have vetted national and local vendors who can best support our clients
  • Collective knowledge and expertise: Every deal at CARR is a team effort. Collectively, each client is the beneficiary of tens of thousands of hours of commercial real estate experience from a team of agents well versed in healthcare real estate
  • Free services: Our fees are paid by the landlord or seller in any transaction — our clients never pay us. Sellers and landlords have already factored commissions into their cost of doing business

Any healthcare vendor can use these real estate insights to not only add value to your client’s business but also potentially generate new business for yourself with the identification of lease renewal or relocation opportunities for your client’s practices.

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