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Retail Spaces Offer a Fix to the Medical Space Shortage in Southern California

Recently, I wrote about the shortage of medical space and an increase in retail vacancies in Southern California right now. My suggestion was to have medical tenants lease space in retail centers as compared to an office or medical building that they traditionally leased space in. This may seem like an unusual suggestion to solve the problem, but recent news suggests that this issue is beginning to grow.

According to CoStar Group, the gaining US population is expected to drive demand for medical space with more than 200 million square feet of medical office space needed in the next decade:

Driven by an aging U.S. population, within 10 years the amount of medical office space needed is projected to be 16 percent more than today, based on current trends. That’s greater than the combined medical office space in New York, Los Angeles, Chicago, and Dallas–Fort Worth, the nation’s four largest medical office markets. This undeniable demographic trend in the U.S. is both a headwind for traditional office demand and an incredible tailwind for medical office demand in the coming years.

So, what are medical tenants to do with this shortage? Lease space in retail centers.  When you lease in a quality retail center, your business has good parking, signage, and retail visibility from shoppers at the retail center.  The main criteria for any business is usually the bottom line so, if being in a retail center increases your net income, wouldn’t you want to be there?  This is rule #1.

Retail space in southern California is undergoing a change.  The smaller to medium sized retail centers in particular are starting to become more restaurant/food and service focused as opposed to other types of retail uses.  Customers at retail centers want to enjoy their experience and be able to do as much as they can at one location.  So, with the foregoing in mind, wouldn’t many medical tenants fit in with this new retail trend of a retail landlord leasing to service providers like doctors and providing a better experience for the retail customer?  I think so.

Read more on this fix for Medical Space Shortage & Retail Vacancies in Southern California.

David Massie specializes in buying, selling and leasing office, medical/dental, retail and industrial buildings -especially off market ones that are hard to find in Southern California that only his clients are made aware of first.  Contact David now if you have interest in finding one for you:  david@djmcre.com or 805-217-0791.

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DJMCRE Closes Escrow in 30 Days on a Medical/Dental Property in Oxnard at Premium Price

David Massie of DJM Commercial Real Estate recently closed escrow on a medical/dental property in Oxnard, CA at 1600 W Gonzales Rd. This was a building in need of work that David was able to sell at a premium price for the seller he represented. In addition, the escrow was only 30 days compared to the normal 4 months or more. This is a prime example of why a seller or buyer should hire an experienced broker like David to successfully sell or buy a commercial building.

Remember, because of David’s experience directing some of the largest real estate companies in the US, he can help both tenants and landlords with any of their commercial real estate needs for any type of commercial real estate for leasing, buying, selling and acting as a legal expert witness.

So, why should a seller hire a broker and pay him a commission when a seller can do it on their own?

  • Simply put, the seller will not be able to get the maximum price that a good broker can. Many brokers have clients waiting in the wings to buy a property and these clients will pay top dollar if they are allowed to make the offer first.  Also, the price a broker is able to sell a property for more than pays for their commission.
  • Sellers don’t have the same marketing ability as a broker. The world has become international and your reach has to be international.  The dollars are flowing into the US from other countries right now and international buyers are willing to pay more many times.  Brokers also know what is needed in terms of a marketing package to interest buyers. It’s complicated, expensive, and time consuming to put this package together properly.
  • The timing of when to put the property up for sale is critical. When is the market peaking?  Is there a lot of competition on the market for sale now?  Good brokers will usually know what is for sale on the market as well as off market, but sellers won’t.
  • The repairs that you need to make to the property before you put it on the market are also important. Some are worth making and some aren’t.  A good broker usually knows what to recommend.
  • What should the asking price of the property for sale be? What if there are no comparable prices for the sales price because the sales price is higher and the property won’t appraise for the sales price and therefore might not sell for this price and waste everyone’s time?
  • There are many other factors in selling a commercial real estate property; but, in our opinion, it starts first and foremost with the right broker. Doing it on your own is always a mistake.  If you don’t hire the right broker or if you do it yourself, it will cost you.  We have seen it many times.

If you want to learn more about leasing, buying and/or selling any and all types of commercial spaces in California or if you have questions about any subject related to commercial real estate, please contact David Massie of DJM Commercial Real Estate at david@djmcre.com or 805-217-0791.

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Most Important Factors to Consider When Buying Commercial Real Estate

If you’re like most commercial real estate (CRE) investors, you probably receive deal packages from brokers with CRE properties (defined here generally as multi-family, office, retail and industrial) for sale. Often, these packages contain executive summaries that position the deals as excellent investment opportunities. This should come as no surprise, as the job of the real estate broker is to present their property in the best light.

In many cases, sellers exaggerate the potential opportunity and don’t usually reveal the bad stuff. Instead, they’re just giving you the good points of their property. The due diligence is up to you, the investor, to determine whether what they’re telling you is accurate. The key, of course, is to know how to perform the due diligence so you have a true and accurate reading on what’s being offered. It’s important to understand the key metrics to always look for in any real estate investment and I am always surprised at the most obvious metrics that I see the majority of investors miss.

When you look at the potential of a CRE property, you’re really looking at how much income or profit it is generating for its owners. What should you be evaluating to determine that? Start with all the basic purchase information. This includes the price and any additional costs involved in renovating or repairs that need to be done.

You should also look at factors that might make you pass on the deal like: the condition of the area in general, crime, surrounding job market, property and other governmental taxes (Example:  High business tax is a big one in the City of Los Angeles that can cause a tenant not want to lease in this city) and the age of the property. These are often deal-breakers if they reveal too much potential risk.

The loan is another key metric: What type of loan will you have to finance the property? This will spell out the loan totals, down payment, interest rate, closing costs and other fees. Make sure you are comfortable with the loan structure (fixed versus floating rate, long-term versus short-term, etc.). You should also receive a detailed expense report on the property including: property taxes, insurance, maintenance costs, property management costs and others.

To buy a property correctly, I always recommend you have proper representation.  This first and foremost means using an experienced CRE broker and a good CRE attorney.  Most CRE brokers can refer you to a good CRE attorney because they have to use them all the time.  But a good CRE broker can also usually find better properties that are better values. They can also negotiate better than you can and your broker is paid by the seller. So really, it’s a no brainer to use a good CRE broker.

If you have any further questions about buying CRE or just want to make sure you do it right, contact David Massie at david@djmcre.com or 805-217-0791 or look us up at www.djmcre.com.

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West Coast Real Estate, Will it Continue to Boom or Will it Bust?

History would say that West Coast commercial real estate market success should be ending very soon. Kevin Shannon, co-head of U.S. Capital Markets for Newmark Knight Frank, has a different opinion:

If there is a downturn, Shannon does not expect it to be as “dramatic” as it was a decade ago. “When the game ends, it will be a short spring training, and we’ll be back playing ball again,” Shannon added. […] “If you look at the engines of real estate on the West Coast: If you build it, they will come,” he said. As long as things continue to go well, Shannon said he thinks next June would mark the longest recovery in history. […] The West Coast commercial real estate market is faring well, and the good news does not appear to be ending very soon, according to some of Los Angeles’ top commercial real estate experts.

I wholeheartedly disagree with the view posed here. This broker from CBRE thinks that the buying and selling market for commercial real estate (CRE) is in the 7th inning, but I think it’s in the 12th inning.  If you want to learn more about buying or selling CRE at the right time and why brokers like this think it’s always a good time to buy or sell CRE (why not, they make a commission whether you the buyer or seller lose money or not) contact David Massie at david@djmcre.com for more details.  I have successfully bought and sold properties ranging in size from about 1,000 sf to millions of square feet and ranging in price from about $100,000 to $100 million.

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Westlake Village Medical, Dental or Office Space for Lease in Prime Location

We have a fantastic property for lease currently. This existing dental office is in a prime Westlake Village location and the price was just reduced from $1.95/SF/month to $1.50/SF/month. This space is not limited to dental office use though. The office can be used for dental, medical or even office uses.

This amazing location has the best of both worlds. It sits appealingly at end of a quiet cul de sac while also being walking distance to retail, the post office and many other amenities nearby.

There are several opportunities with this location as the landlord will allow new prospective tenants to sublease all or part of the space. The landlord is also giving the option to have the lease assigned or do a direct lease, your choice.

This really is the perfect opportunity to dive in on a prime Westlake Village location with a sublease or a direct lease with low rent for dental, medical or office space. Interested in learning more? Full property details can be found by clicking here.

Contact us today for more information! Call 805-217-0791 or email david@djmcre.com

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Potential Fix For Medical Space Shortage & Retail Vacancies in Southern California

There is a shortage of medical space and an increase in retail vacancies in southern California right now.  So, why don’t medical tenants lease space in retail centers as compared to an office or medical building that they traditionally lease space in?  Doesn’t this solve some of the problems for both types of spaces?

Some medical tenants such as optometrists, dentists, physical therapists, chiropractors, and a handful of others do lease space in retail centers.  Why do they lease space in a retail center?  Because they probably make more money when their businesses are in a quality retail center with good parking, signage, and retail visibility from shoppers at the retail center.  The main criteria for any business is usually the bottom line so, if being in a retail center increases your net income, wouldn’t you want to be there?  This is rule #1.

Sometimes the rent, improvements and other costs can be higher in a retail center, but not always. If you make enough additional income leasing at a retail center to offset this cost, then this objection isn’t a good one.  Another objection might be that medical providers get more referrals from other medical providers that lease in the same medical building.  This can also happen in a retail center if there are other medical providers there. They can still get referrals from outside the retail center from these medical providers that lease in the medical office buildings if they develop a relationship with them. It might not be the same, or potentially as many, referrals as the medical building scenario, but again, see rule #1 above. At which location are you making more net income?  The referrals might not be the same as in the medical building scenario, but there might actually be more referrals in a retail setting because of the other retail tenants now referring you and the amount of potential customers a retail center has. This is especially true in comparison to a traditional medical building scenario which is much more limited in potential new customers finding you.  Finally, it’s possible that some medical providers simply think their status will be somehow lowered by leasing space in a retail center and that a nice medical building is preferred by their patients.  This might be true for some patients, but I would doubt most of them would care. If they are like me, they want their trip to the doctor to be the least painful as possible. Not to mention that a good retail center is much more fun than a boring medical building any day.  I can see some types of medical users and their patients wanting it to be quieter than a retail setting, but again -doesn’t rule #1 above trump even that for most medical tenants?

Retail space in southern California is undergoing a change.  The smaller to medium sized retail centers in particular are starting to become more restaurant/food and service focused as opposed to other types of retail uses.  Customers at retail centers want to enjoy their experience and be able to do as much as they can at one location.  So, with the foregoing in mind, wouldn’t many medical tenants fit in with this new retail trend of a retail landlord leasing to service providers like doctors and providing a better experience for the retail customer?  I think so.

If you want to learn more about leasing, buying and/or selling any and all types of commercial spaces or if you have questions about any subject related to commercial real estate, please contact me at david@djmcre.com or 805-217-0791.