Third-Party Deals Increase For Medical Office Space To Free Capital For Other Uses
Miami Today | By: Janel Shoun
With the advent of managed care, hospitals have come to increasingly rely on third parties to build medical office space, say real estate experts.
"With the success of managed care, margins for the providers are being scaled down." Mr. Weston said, "They are looking to operate more efficiently and to cut costs."
Hospitals are taking advantage of a common practice in real estate called a sale-leaseback, in which a third party constructs a medical office building and then leases it to the hospital, which then subleases to physicians.
"In such a situation, a hospital might not be interested in the outlay of cash necessary to either build or buy an office building. So they will guarantee to lease the entire building," said Kenneth Weston, broker and consultant and president of Kenneth Weston & Associates.