Case Study

Medical Retail Client

Portfolio Growth and Site Selection

Challenge

This retail healthcare client sought Vestian for site selection and portfolio growth strategies within the Atlanta metro market. The client was looking for both medical space and retail space and had specific parameters to meet their needs.

Approach

Vestian worked to evaluate the current and future demographics of the entire metro market to determine the optimal geographical footprint. The strategy considers a 1-and-3 Flagship model that are centric to the highest concentration of the targeted demographic.

As part of the assignment, Vestian performed a macro view of the Atlanta market to recommend a sequenced growth plan to optimize the Flagship and Supporting model. This recommendation uses a multiple layered approach for data driven decision making, including:

1. Targeted Demographics – Patient densification (60+) with high Medicare spend
2. Real Estate Alternatives – Existing and planned real estate developments
3. Demographics Outlook – New demographics in the 55-64 age range is very strong

The approach taken by the team began with identifying the “Flagship” de novo location(s) and build out the “Supporting Hub” and “Spoke” locations for a geographically optimized footprint, prioritizing sequential market entries with strong current and future target demographics.

Vestian has proposed a 1-and-3 Flagship model. The final decision will ultimately be driven by the operational aspiration for the Flagship and Supporting locations.

Vestian evaluated all real estate assets for potential repurposing as the speed to market and cost vs. a ground up development could delay ROI and the competitive footprint.

Resources used for the assignment were: ArcGis Business Analyst by ESRI, Inc, and the client’s 2020 Premium Demographic dataset; Espatial; multiple Atlanta market studies, Census data and a final layer of local broker intel.

Results

Vestian initially identified 20 sites (5 existing medical and 15 retail). After reviewing with the client, eight options were shortlisted to tour.

Following tours, 3 options were chosen to move to RFP. Having 2 viable options and utilizing a low-cost alternative, Vestian negotiated optimal terms.

With emphasis on flexibility, Vestian was able to negotiate a 5-year term with an above market TI and abatement allowance. Additionally, we were able to secure two 5-year renewal options v. the initial proposed one option, and the ability to amortize an additional $10/SF in TI’s without interest.

The client was able to secure a location at a net effective rate of 35% below market value.