Considering an investment in a medical office building or trying to maximize the investment you already made? You aren’t alone.
Healthcare real estate has emerged as an intriguing investment for many commercial real estate investors. The reasons are simple. The “consumerization” of the healthcare industry and growth in healthcare demand from an expanding (and aging) population have prompted new and existing healthcare organizations to open more facilities. That’s led to expansion in the number of medical office buildings and integration of healthcare into mixed-use properties.
The question is, how do you know which properties are well positioned for healthcare services? And after you’ve made the investment, how can you maximize use…and ROI?
Traditional methods of evaluating healthcare real estate investments are valid, but emerging technology and data sources can provide an additional layer of insight to help inform your decisions. In this blog, we’ll explore how investors can use consumer intelligence technology to better understand opportunities at medical office buildings.
Defining Terms: What Is Consumer Intelligence Technology?
Consumer intelligence technology has been available for a couple of decades and has been a trusted component of site selection decisions in the retail and healthcare industries. However, it is relatively new to the commercial real estate industry.
Features vary, but you will want to look for a platform that offers mapping and data visualization features, consumer insights for the markets you are exploring, trade area analysis, and healthcare-specific datasets for reports and visualization. Some platforms may also offer scoring tools to quickly assess a property’s potential for various service lines or medical facility types.
Applying Consumer Intelligence Technology to Assess Medical Office Building Investments
Consumer intelligence technology can play a helpful role in the due diligence process for a potential healthcare real estate investment. Using these tools, investors can go beyond traditional real estate metrics to understand a property’s true potential.
Assess the Location
Is the property in a good location for medical services? With consumer intelligence technology, you can evaluate the location from multiple angles.
- What’s the consumer profile of people in the property’s trade area? Age and income certainly matter but look beyond that to consider lifestyle characteristics that may influence a person’s likelihood to seek medical care.
- Payer mix plays a huge role in a healthcare organization’s strategy. Is the population in the trade area mostly uninsured, commercially insured, or enrolled in Medicare/Medicaid? The answer may dictate the type of tenant you will be able to attract.
- What’s the existing supply of healthcare providers in the trade area and how does that compare to the level of healthcare demand? If the market is saturated, it may be more difficult for tenants to compete…and for you to maintain high occupancy rates.
Determine the Best Service Mix
Matching healthcare services to the property can make you more informed about what it will take to succeed before moving forward with the investment, guide your tenant attraction efforts, inform renovation decisions, and help you to maximize ROI.
Some consumer intelligence technology platforms, like Buxton’s platform, offer a couple of options to conduct this analysis. One approach is to use data visualization layers and reports on healthcare demand and supply as well as payer mix to find areas of opportunity. Another option is to use pre-built site scoring models that combine multiple datasets to assess the performance potential of medical service lines and facility types at the selected property.
The Bottom Line
Consumer intelligence technology offers real estate investors a powerful new tool for vetting healthcare real estate investments. By combining consumer and healthcare insights about the property’s trade area with traditional financial analysis, investors can make more confident investment decisions.
Interested in putting consumer intelligence technology to work on your next healthcare real estate investment decision? Contact us to learn how our CRE Technology Platform and healthcare reporting packages can transform your vetting processes.