Land development for the purposes of building a facility is a complicated process with several stages involving multiple parties and encompassing many financial risks. The process consists of a series of actions from that of land purchase to leasing, construction and sale, but most of the items that pertain to development occur prior to land acquisition.
While the process of healthcare real estate development planning will differ based on medical type, the preferred series of events is one which eliminates risk early through pre-construction commitments for leasing, permanent financing and potential final sale. Prior to initiating the development process, it is necessary to analyze how the development will assimilate into its market. Planning for a medical development requires the consideration of these general principles:
Land Analysis – A potential medical development site has physical characteristics that make it more or less adaptable for a specific use. These include the terrain, dirt composition for land, its shape and size, accessibility, neighboring residential areas and appearance of surrounding land uses.
Planning Commissions – Zoning and city planning will limit certain types of medical development that may be permitted or refer to the process for change to these requirements. An aspect for the approval of a project consists on how the community will accept the development and what will be received in terms of quality, appearance and use. In most cases, developers will be required to identify who the principals are and how approval and how the structure is arranged for project completion.
Market Analysis – Because the market ultimately determines the success or failure of the developed medical project, initial planning should assess demographics, patient or trade area, competitive projects and supply of demand.
Financing – Identifying the potential lenders, equity participants, terms and interest rates, along with the developers level of participation should be outlined early in the process. All too often the original plan is modified or entirely changed by lending requirements.
Uses – While specialized medical development is difficult to reconfigure for alternative uses, determining whether the facility may be re-adapted easily should be outlined early.
Site Selection – Consideration for the medical site’s capacity should includes tests of layouts and site coverage arrangements required by zoning and certain users. Analyzing parking areas, access roads, utilities, floor and common area ratios and building-to-site ratios are specific requirements that will alter the original development.
Highest and Best Use – A few tests may help to determine the feasibility of a medical development for a certain area. Whether the development is physically possible, legally and economically achievable and maximally productive should be applied to the site analysis. This examination should take into consideration development costs, assumptions for financing and potential revenues, and subject to multiple variables.
Development Plan – The healthcare real estate master plan embodies the assemblage of land, the layout of the development and its phases, parcel configuration(s), and ingress and egress from on and off-site components.
Visual Identification – Initial architectural drawings and graphic layouts of the medical project should be prepared to illustrate the results of each item within the master plan.
Financial Proforma – With the specific items and costs identified, the planning unit must ready a financial projection that chronicles such costs, the project’s funding sources, project revenues and investment returns for the entire project.
Marketing Strategy - The marketing procedure chosen for the project will help to identify the project’s place in the market. It will highlight the themes of the marketing plan and provide a strategy for marketing implementation to ensure the success of the project.
Implementation - Lastly, the itemized agenda includes all of the development steps, time management goals, the members to the development and responsibilities of each.
In January 2013, MREA will highlight the process of securing, permitting, construction and potential sale of a medical real estate development. If you have not already, please click the orange RSS icon at the top right of this web log to have our posts delivered to your inbox or preferred reader.