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Maximizing ROI in Medical Real Estate: Essential Strategies

This guide provides valuable insights into maximizing medical real estate return on investment (ROI). We’ll explore the healthcare real estate market, key investment strategies, risk mitigation techniques, and effective property management practices.

Key Insights Into Medical Real Estate Investment Strategies

The significance of medical real estate cannot be overstated. Hospitals, medical offices, and healthcare facilities constitute a significant chunk of real estate assets. As medical providers seek to provide better services and extend their reach, the demand for healthcare real estate continues to grow. It is crucial for real estate investors, healthcare providers, and stakeholders to understand this market in depth.

Trends can be captured through heat mapping, real estate cycle analysis, and careful monitoring of cap rates for different asset classes. Trends like the shift from traditional offices to medical offices and from waiting rooms to retail spaces give valuable market knowledge, helping stakeholders make more informed decisions.

Sound Investment Strategies in Medical Real Estate

Given the industry’s resilience and demand, investing in medical real estate can be rewarding. However, successful investment requires understanding the market, forecasting changes, and adopting sound strategies.

Selecting a Strategic Location

Location is often king in investments, and medical real estate is no different. Given the shift towards retail healthcare trends, locations with high footfall, visibility, and accessibility—like retail real estate locations—become appealing choices. A strategic location maximizes returns and ensures the viability of healthcare delivery.

Achieving a Diversified Portfolio in Medical Real Estate

Like any other investment, diversification is critical to mitigating risks in medical real estate. This can be achieved by investing in different product types—hospitals, medical office buildings, or newly constructed facilities—across geographically dispersed areas. A diversified portfolio provides a safety net during fluctuations in one part of the sector.

Leveraging Real Estate Investment Trusts (REITs) in Healthcare

Due to high investment cost and profitability, medical real estate often attracts real estate investment trusts (REITs). These trusts provide a low entry barrier for investing in medical real estate. REITs expose the investor to various healthcare properties, contributing to portfolio diversity.

REITs in healthcare allow investors to take advantage of the growing demand for healthcare services. The aging population and advances in medical technology have increased demand for hospitals, clinics, and medical offices. Investors interested in healthcare REITs can capitalize on this demand and benefit from stable, long-term rental income. Healthcare properties typically have long-term leases with reputable providers, supporting a steady revenue stream.

With innovative solutions and a collaborative attitude, we’ve fostered fruitful relationships with customers, vendors, and employees. Many of our partners have trusted us for over 35 years. Experience the Hokanson difference and enhance the value of your properties.

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Mitigating Risks in Medical Real Estate Investment

Like any other commercial real estate, investing in medical real estate involves significant risk factors. Navigating these risks can significantly enhance your investment potential. This requires a deep understanding of market knowledge, regulatory insights, and healthcare industry opportunities.

  • Risk Management Strategies for Medical Real Estate Investments

    Risks in medical real estate can range from macroeconomic factors to issues specific to healthcare facilities or individual health systems. Developing an effective risk management strategy involves understanding these diverse factors and finding ways to respond proactively.

    For instance, healthcare providers must be familiar with the real estate cycle and prepare to ride out periods of downturn. Diversifying the portfolio of medical offices spreads risk and offsets losses in certain asset classes.

  • Exploring the Regulatory Landscape of Healthcare Properties

    Regulatory compliance is a critical aspect of medical office management. Medical office spaces must adhere to specific building codes, and healthcare tenant expectations frequently exceed traditional office building requirements. Scheduling regular compliance reviews with relevant building and safety codes is crucial.

Optimizing ROI in Medical Real Estate Through Effective Property Management

The ROI on medical office space investments can significantly increase through effective property management. A well-managed property attracts healthcare providers, ensures regulatory compliance, and enhances overall property value.

The Importance of Facility Management in Boosting ROI

Quality facility management is essential for medical providers. From ensuring the cleanliness of waiting rooms to managing the heat mapping of retail spaces in the building, facility management plays a pivotal role in maintaining the property, enhancing its appeal, and increasing its value.

Evaluating Lease Structures and Negotiation Strategies

A well-structured lease agreement provides consistent cash flow and favorable terms that protect the interests of real estate investors. Financial limitations are crucial to consider when evaluating lease structures. Healthcare providers often face budget constraints due to reimbursement models, rising healthcare costs, and other financial challenges.

Here are a few elements to consider when building a lease contract:

Financial Limitations

Investors should carefully assess the financial capabilities of the provider and account for their ability to meet rental obligations. Developing a lease agreement that allows flexibility in rental payments or offers incentives based on performance can mitigate financial risks for both parties.

Physician Alignment

Investors should evaluate the alignment of the physicians with the overall goals and strategy of the facility. Learn about the physician group’s reputation, experience, and ability to attract patients. By matching the lease terms with the physician alignment strategy, investors can create a conducive environment that encourages collaboration and supports the growth of the healthcare practice.

Using Property Upgrades and Renovations to Increase Value

Strategic property upgrades and renovations can considerably increase the value of medical office properties. Whether it’s building new retail healthcare spaces or transforming traditional offices into healthcare facilities, every effort should be focused on meeting the changing needs of healthcare delivery systems and increasing asset value.

Maximize the Value of Your Medical Real Estate With Hokanson

With over 80 years of experience, Hokanson Companies is well-equipped to maximize the short- and long-term value of medical real estate. As property management experts, we understand this sector’s unique needs and challenges. Our extensive knowledge allows us to navigate complex regulations, identify valuable investment opportunities, and mitigate risks effectively.

Whether it’s ensuring tenant satisfaction, lowering costs, or strategizing marketing campaigns, our team has the resources and expertise to drive value for your property.

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Christopher M. Horsley

President and Chief Executive Officer
cmh@hokansoninc.com

“Working hard to make a difference to earn your business.”

Chris Horsley joined Hokanson Companies, Inc. in 1997 while completing his degree in Civil Engineering at Purdue University. Chris began his employment at Hokanson Companies in the construction area and in 2000 added Property Management to his responsibilities. Now as President and Chief Executive Officer, he focuses his efforts on construction, development, and property/facility management. Chris oversees a team of property and construction managers to provide management services to approximately 5M square feet in a 7-state geographical service area. Chris also works closely with multiple financial institutions to meet their bank branch real estate needs which includes a 140-branch system across a 3-state geographical area.

Chris graduated from Purdue University in 1999 with a Bachelor of Science in Civil Engineering. He holds a Professional Indiana State License for an Engineer in Training (EIT) and an Indiana Real Estate Broker and is a Certified Commercial Investment Member (CCIM). Chis is also involved with The Building Owners and Managers Association (BOMA) and is currently serving on the International Executive Committee and is the President for BOMA Indianapolis.

Chris enjoys spending time, working in the business, being outside, riding motorcycles, exercising, playing golf, and being with his family.

Stephen J. Adams

Executive Vice President
sja@hokansoninc.com

Stephen J. Adams joined Hokanson Companies, Inc. in 2000 and now serves as the Executive Vice President for the company.  While leading the leasing and brokerage team over the past 25 + years, Stephen has grown his client list by being accountable, trustworthy and responsive at all times.  He manages his client’s corporate real estate needs from coast to coast through providing site selection, transaction advisory, tenant representation and acquisition/disposition services.

Stephen serves as the outsourced real estate partner to many major corporations and has developed long-term relationships by integrating and learning the business of his clients.  His proactive approach to cost savings has provided an invaluable benefit to his customers.  He continues to have success with both large, multinational companies and regional businesses as he earns his client’s business daily with an eye on strategic planning, both locally and nationally.

As Executive Vice President, he helps manage a team of seasoned professionals who provide expert market research, real estate knowledge, and function as a cohesive team to enhance the decision making of his clients.  Capabilities include strategic planning, market evaluation and transaction management.

Continuing the company’s history as the premier medical real estate provider, Stephen has developed relationships with the major hospital systems in Indiana, such as Indiana University Health, Community Health Network, Ascension St. Vincent, Lutheran Health, Parkview Health, Hancock Regional Health and Johnson Memorial Hospital.  In addition, representation services have been provided to many private physician groups such as OPTUM, Otolaryngology Associates, Dawes Fretzin Dermatology, Indiana Spine Group, Midwest Fertility, Northside Gastroenterology, The Surgery Center of Indianapolis, the Suburban Health Organization and the Indiana Hospital Association.

Stephen also counts several publicly traded REITS and Private Equity groups as clients.  Major investment sales experience includes on-campus MOBs at St. Vincent – Indianapolis, Indiana University – Methodist Downtown, Indiana University Health North and West Campuses, Parkview Health, Lutheran Health and various other campuses.  Also, he has completed several national, single-tenant, industrial sale/leaseback transactions including tenants such as Hershey’s, Firestone and several 3PL providers.

Stephen has devoted his time to various organizations including Noble of Indiana, Penrod Arts Society, Youthlinks Indiana, Hoosier Oncology Group, Allisonville Youth Baseball, St. Pius X School, and Cathedral High School the Governors Awards for Tomorrows Leaders.  He is also a member of the Stanley K. Lacy Executive Leadership Series, Class XXXVII.

Jay B. Gehl

Vice Chairman
jbg@hokansoninc.com

Jay Gehl serves as Vice Chairman of Hokanson Companies, Inc.  With over thirty years of experience, Jay has been directing and managing the company’s expertise in the areas of corporate advisory work, strategic planning, tenant representation, financial analysis of leases, brokerage, and build-to-suit assistance.  He has been instrumental in assisting the efforts of several major corporations establishing or relocating their corporate headquarters and managing vast portfolios of leased and owned properties across the United States.  His attention to detail and his unparalleled customer service have been the foundation of his relationships with the institutional customers served by Hokanson Companies, Inc.

Jay has excelled in investment sales with multiple transactions each year that annually rank him as a top producing broker on a local and national level. In addition, Jay’s efforts have helped corporate clients establish or renew leases in facilities across the United States from Connecticut to California.  He has also served the international needs of his clients in six countries including a facility in Turrialba, Costa Rica with 230,000 square feet and 35 acres.

Jay’s resume includes multiple build-to-suits of logistics and manufacturing facilities.  In addition, investment sales such as the 550,000 square foot U.S. Postal Facility in downtown Indianapolis and a 450,000 square foot medical portfolio make Jay a top producer in the local market while managing a team of highly experienced real estate professionals.  The success of Jay’s business is benchmarked by the multiple transactions and ongoing relationships with customers that have remained satisfied by the level of service and the quality of the transactions resulting from his guidance.

Today Jay continues to excel at providing excellent advice and service to several customers that lead their individual industries in quality, growth, and innovation.

Stephen P. Hokanson

Chairman of the Board and Chief Executive Officer, CRE, CPM, RPA
sph@hokansoninc.com

“We put our clients’ interests first… always.”

Steve Hokanson serves as Chairman of the Board and Chief Executive Officer of Hokanson Companies, Inc. He began with HCI in 1971, and has been its President and CEO since 1983. When Steve joined the organization, Hokanson Companies was primarily focused on property management. Under Steve’s leadership, Hokanson Companies has grown to include four active divisions and five separate disciplines.

HCI currently manages over 6 Million square feet under its property management division, and has over $100 million in project management and development. Its sales and leasing division closes over $100 million in sales and leases annually, while they continue to be very active in construction management for its various clients and out-of-ground buildings.

In addition to his role at HCI, Steve has also fulfilled numerous civic and professional leadership roles locally, statewide, and nationally, including the International President of BOMA International 1991-1993. Steve’s other accomplishments include being selected for the Stanley K. Lacy Executive Leadership Series, the Eagle Scout Silver Beaver Award, the National Distinguished Eagle Scout Award, named in Outstanding Young Men in America, and the Sagamore of the Wabash award, which is the highest award given in the State of Indiana by our Governor.

Steve Hokanson graduated from Indiana University in 1969 with a Bachelor of Science in Management and Administration. Steve is a licensed Real Estate Broker in the State of Indiana, and his designations include Counselor of Real Estate (CRE), Certified Property Manager (CPM), and Real Property Administrator (RPA).

Boyd R. Zoccola

Chief Development Officer
brz@hokansoninc.com

“Your ideas become reality through our combined efforts.”

Boyd R. Zoccola serves as Chief Development Officer of Hokanson Companies Inc. With over 25 years of experience, he focuses his expertise on development of office and medical space, and corporate consulting. Boyd has been actively involved in the development of nearly $600 million worth of real estate, including client partners like IU Health, Springleaf Financial, Vectren Corporation, and Old National Bank.

Boyd’s industry involvement with The Building Owners and Managers Association (BOMA) is extensive beginning in 1994. He served as Chair and Chief Elected Officer of BOMA International, and has also served on the Executive, Finance, Medical, and Healthcare Facilities Committees. He also served and chaired numerous task forces along with being a panelist and/or speaker. Boyd’s BOMA Indianapolis experience includes positions as President, Vice President, Treasurer, Secretary, and multiple committee chairs. In addition, Boyd served as a Board Member of the Real Estate Round Table from 2011-2012.

Boyd graduated from Indiana University with a BA in Biology and is a graduate of the Stanley K. Lacy Leadership Series. Boyd has served the community through his involvement with Horizon House, Girls Inc., and the IYHA. He is a member of Second Presbyterian Church, Sigma Chi Alumni Association, Meridian Hills Country Club, and is an Indiana Real Estate Principal Broker.

Tony R. Townsley

Chief Financial Officer, CPA
trt@hokansoninc.com

“A great company has great people who are passionate about what they do! I am proud to be a part of the Hokanson Team, where we demonstrate that passion every day in helping our customers solve their Real Estate challenges.”

Tony Townsley serves as Chief Financial Officer of Hokanson Companies, Inc. Tony began with HCI in 2001, bringing with him 25 years of accounting and operations management experience including four years with Arthur Anderson. This vast knowledge has contributed to his success overseeing the corporate financial reporting, cash management, budget coordination, and year-end audit and tax responsibilities at Hokanson.

Tony graduated from Indiana University in 1985 with a Bachelor of Science degree in Accounting. He is a Certified Public Accountant, and was appointed by the Governor to serve on the Governor’s Council of Impaired and Dangerous Driving. Tony also served on the Wine and Spirit Wholesalers’ Board of Directors. Currently, he’s involved with the Merciful Help Center, and is an active member of Our Lady of Mt. Carmel Catholic Church.

Tony enjoys spending time outdoors with his family, camping, fishing, biking, and reading. Those same family values led him in publishing a children’s book titled “Three Cups”, which teaches children how to save, spend, and be charitable with their money. There are more than 50,000 copies of the book in distribution.