Use your widget sidebars in the admin Design tab to change this little blurb here. Add the text widget to the Blurb Sidebar!

Third Quarter Market Report Released

Posted: November 16th, 2010 | Author: | Filed under: Trends | Tags: , , , , , | No Comments »

We have released our Q3 2010 market report for the Silicon Valley Medical office space market. Vacancies continued to rise slightly to about 8% across 385 buildings. Rents remained fairly steady at an average of $2.44 psf/month. Despite the gloom and doom that hangs over the economy, there are signs of improvement. May of Silicon Valley’s largest companies are flush with cash, and continue to hire. There is also activity in the venture-backed world and competition for engineers at many of Silicon Valley’s tech companies is fierce right now as evidenced by Google’s 10% across the board pay-raise (30% for execs) and year end bonuses.

In the medical office market though, if you are a tenant, it continues to be a good time to lease or purchase. Interest rates are low on the purchasing front, and landlords are being aggressive with rent concessions and improvement allowances on the leasing front. It’s not quite a landlord’s market, but some sub-markets have experienced great leasing activity this past quarter, while others such as the El Camino/Mountain View and Palo Alto markets never really went down.

If you would like to receive the full quarterly report, sign-up on our website to receive it, and you’ll also receive next quarters report when the time comes around.

Second Quarter Market Report Released

Posted: July 29th, 2010 | Author: | Filed under: Leasing, Trends | Tags: , , , , , | No Comments »

We have released our quarterly market report for the Silicon Valley medical office market. Vacancy rates remain fairly steady, slipping from 7.82% from 7.51%. Rental rates went from $2.55 gross in the previous quarter to $2.39 gross. Despite the up-tick, the medical market continues to benefit from far better fundamentals than the generic office and R&D market which are suffering from historically high vacancy rates. Even the most seasoned office landlords we know feel less optimistic about the future than at anytime they did before in Silicon Valley when the market slumped.

We also continued to add properties to our database, and we now track over 375 buildings.

If you would like to receive the full quarterly report, sign-up on our website to receive it, and you’ll also receive next quarters report when the time comes around.

Notes From The BOMA Medical Office Conference

Posted: May 11th, 2010 | Author: | Filed under: Construction, Finance and Lending, Investment, Trends | Tags: , , , , , | No Comments »

There was a BOMA conference on Medical Office Building (MOB) and Healthcare Facilities in Chicago last week in Chicago. The CRE Insider blog attended and did a great job outlining the conference.

Like other commercial real estate asset classes, MOB too is faced with too much capital and too little product. In other words, if you are a seller – it is a good time to consider selling. This is especially true if you plan on taking capital gains and not exchanging into another asset as capital gains taxes will very likely be headed up soon.

Anyhow, here are some key points from the article, but visit the blog for all the notes:

  • Cap rates have compressed 50-75 bps since a year ago and range anywhere from 7.5% for on-campus, Class A MOB to 9.5%-10% for off-campus, Class B.
  • The REITs have had a buying spree, particularly Healthcare Trust of America. HTA has been raising $2-$4 million a day on average and has not been shy about putting it into acquisitions. In our opinion, HTA alone has caused cap rates for Class-A to compress by ±25 bps from a year ago.
  • Foreign investors are showing “tremendous interest,” as one panel participant put it, in the medical real estate market due to the higher relative returns and lower volatility compared with many European markets. Healthcare reform has, however, kept some foreign capital at bay due to a perceived uncertainty of outcome in its application.
  • National developers are looking to partner with local developers
  • Regionalization of health systems will lead to new freestanding emergency departments with some MOBs as a way to limit costs while expanding footprint size

and the last one is our favorite, because we’ve felt this is the direction healthcare is going to go in:

  • There is a growing trend to redevelop retail space to medical use because:
    • Retail provides immediate access to an existing consumer base
    • Providers can leverage stronger branding of their names
    • There will be a higher need for primary care as the insurance rolls expand
    • Occupancy costs are generally lower, especially in the current real estate market
    • Retail vacancy can provide immediate occupancy
    • End-cap users, like Blockbuster, are leaving and providing premium locations
    • Hospitals and providers want to be near their customers
    • Retailers can leverage increased daytime traffic, particularly as most medical consumers going to these locations tend to be women

iPad in the Operating Room

Posted: April 26th, 2010 | Author: | Filed under: Trends | Tags: , , | No Comments »

NBC BayArea TechNow featured a story on Dr. Claudio Palma, of the Spinal Diagnostics and Treatment Center in Daly City using his iPad in the operating room.

The iPad has proven to be an efficient tool for Dr. Palma, and in conjunction with other apps, is a tool to help improve patient safety.

Here’s a short video of the segment below. If you listen closely, you can hear Dr. Palma describe some of the other apps he uses on his iPad to help with his practice.

US Faces Shortage of Doctors; 150,000 Short in 15 Years

Posted: April 13th, 2010 | Author: | Filed under: Trends | Tags: , , , | No Comments »

The Wall Street Journal is out with an article detailing the burgeoning demand for doctors in the United States. By some estimates, the United States will face a shortage of 150,000 doctors in fifteen years. Healthcare reform is anticipated to increase the demand – primarily at the PCP level – and medical schools are having trouble keeping up.

At current graduation and training rates, the nation could face a shortage of as many as 150,000 doctors in the next 15 years, according to the Association of American Medical Colleges.

That shortfall is predicted despite a push by teaching hospitals and medical schools to boost the number of U.S. doctors, which now totals about 954,000.

The greatest demand will be for primary-care physicians. These general practitioners, internists, family physicians and pediatricians will have a larger role under the new law, coordinating care for each patient.

The U.S. has 352,908 primary-care doctors now, and the college association estimates that 45,000 more will be needed by 2020. But the number of medical-school students entering family medicine fell more than a quarter between 2002 and 2007.

Some other notables from the WSJ article:

  • The law offers sweeteners to encourage more people to enter medical professions, and a 10% Medicare pay boost for primary-care doctors.
  • As of last October, four new medical schools enrolled a total of about 190 students, and 12 medical schools raised the enrollment of first-year students by a total of 150 slots, according to the AAMC. Some 18,000 students entered U.S. medical schools in the fall of 2009, the AAMC says.
  • There are about 110,000 resident positions in the U.S., according to the AAMC.

The following graphic produced by the WSJ also highlights where the shortage falls:

[via WSJ]

The Silicon Valley’s Perspective on the Massive Healthcare Bill…

Posted: March 31st, 2010 | Author: | Filed under: News, Trends | Tags: , , , , , , , , | No Comments »

With so much at stake given the recent healthcare legislation, it’s interesting to consider a local perspective on the matter. The Business Journal recently published an article with the opinions of some of the Bay Area’s most influential healthcare leaders. For the most part, many are holding their breath awaiting further clarification on Bill’s policies and overall implications. The following is a glimpse of their perspectives. 

Jane Ogle, chief operating officer of the Santa Clara Family Health Plan, “called it 100 years overdue”. She expressed disappointment that the number of the Law’s provisions, including the establishment of insurance exchanges and the expansion of Medi-Cal, don’t take effect until 2014. But she called “huge” the protection given to the Healthy Families Program that provides low-cost insurance to children and teenagers who don’t qualify for Medi-Cal.

Paul Beaupre’, CEO of Good Samaritan Hospital, said that right now the federal government is talking about insuring people at the same rate as MediCal, the states program to cover the poor. But in California, this doesn’t ensure access to care, he said. Many physicians won’t accept these rates, which are some of the lowest in the nation for medical reimbursement. He added that the bill is an important first step, nonetheless. He hopes small business owners will finally see those premium increases subside.

Jim Dover, CEO of O’Connor Hospital, explained that when the expanded coverage begins in 2014, hospitals will see fewer uninsured patients in their emergency rooms. At O’Connor, which is run by Daughters of Charity Health System, about one third of those currently walking in through the doors have no insurance.

Read the rest of this entry »

Trending Away From Private Practice

Posted: March 29th, 2010 | Author: | Filed under: Trends | Tags: , | No Comments »

More and more doctors are shifting away from private practice towards salaried positions with hospitals and health systems. The New York Times has written an article about the trend, which has led the percentage of medical practices owned by doctors to less than 50%, down from around 70% five years ago.

As recently as 2005, more than two-thirds of medical practices were physician-owned — a share that had been relatively constant for many years, the Medical Group Management Association says. But within three years, that share dropped below 50 percent, and analysts say the slide has continued.

The trend away from small private practices is driven by growing concerns over medical errors and changes in government payments to doctors. But an even bigger push may be coming from electronic health records. The computerized systems are expensive and time-consuming for doctors, and their substantial benefits to patient safety, quality of care and system efficiency accrue almost entirely to large organizations, not small ones. The economic stimulus plan Congress passed early last year included $20 billion to spur the introduction of electronic health records.