Category: Medical Office

Grady Healthcare System to open outpatient clinics at Ackerman & Co.-owned properties in metro Atlanta to bridge healthcare gap.

Grady Health System is striving to cover gaps in healthcare access, particularly in underserved areas of Fulton and DeKalb Counties.

Two new neighborhood health centers that Grady will open later this year in these parts of metro Atlanta are important steps in that initiative. These centers, located in Ackerman & Co. properties, will provide comprehensive primary care and specialty services.

Grady, which is one of the largest safety net health systems in the U.S., will establish a 16,342-square-foot outpatient center at Lee + White, the popular mixed-use development in Atlanta’s West End community. The health system will also open the Cascade Outpatient Center at 3355 Cascade Road in Southwest Atlanta.

These new centers are examples of Grady taking steps to meet patients closer to where they live to remove barriers to health treatment. In opening the new centers, Grady is seeking locations that are close to dense housing and that provide convenient transportation options.

Lee + White definitely meets those criteria. It’s in the heart of the West End community just south of Downtown Atlanta, walkable from the surrounding residential streets, and it’s less than a half mile away from the West End MARTA rail station, further improving its accessibility. The Cascade Road neighborhood center is conveniently accessible via Cascade Road and I-285 and is surrounded by Cascade Heights and other neighborhoods.

“We conducted research and identified these neighborhoods that have seen significant population growth but have historically lacked access to primary and specialty care,” said John Haupert, President and CEO at Grady in an announcement about the new centers.

He added in an interview with WANF (Atlanta News First): “We care about health improvement and health equity, and to achieve that you’ve got to get services where people live.”

By opening neighborhood-focused health centers, Grady is also able to tailor services to meet the needs of the community. The Lee + White and Cascade Road centers will provide comprehensive primary care and specialty services, including cardiology, HIV services, mammography, rehabilitation, x-ray, lab and pharmacy.

“Based on the communities’ health issues, we custom-design the availability of specialty care to that neighborhood,”  Haupert said.

These new outpatient centers at Cascade Road (scheduled to open in July) and Lee + White (targeted for a late 2023 opening) also address the impact of the closures of Wellstar Health System’s Atlanta Medical Center and Atlanta Medical Center South. Grady received federal and state funds from the Georgia Advancing Innovation to Deliver Equity (GA-Aide) program to open the two new centers.

Lee + White’s Diverse Offerings Now Include Medical Services
In acquiring the Lee + White mixed-use development in 2019 and continuing the transformation of the 442,562-square-foot property, Ackerman & Co. and investment partner MDH Partners had a goal of diversifying the offerings by expanding the roster of breweries, retailers and restaurants to include office users and essential services benefitting residents of the West End.

In the past year, the owners have added a number of businesses and service providers, including high-tech companies such as Carbice and JTEC. Healthcare providers Westside Dental and Team Rehab also have recently opened at the mixed-use hub.

“With Grady occupying Building 1000, we are getting closer to Lee + White becoming a one-stop-shop for all dining, shopping, entertainment and practical service needs,” said Jeff Small, CEO of MDH Partners.

Frank Farrell, Ackerman & Co. Senior Vice President, noted that the addition of Grady and other tenants are an important asset to the West End community. Farrell completed the lease with Grady on behalf of ownership at Cascade Road, and Cushman & Wakefield’s Porter Henritze and Melanie Garlock completed the lease with Grady at Lee + White.

“In addition to a shortage of healthcare services, this part of Atlanta has been underserved in retail, restaurants and office space, and Lee + White is helping to fill the void,” Farrell said. “With Grady opening at Lee + White as well as on Cascade Road, residents will be able to travel a short distance instead of having to drive to Buckhead or another part of the city for healthcare services.”

Coming up later this year, Lee + White will also be opening a 19-vendor food hall and more than 100,000-square feet of Class A creative offices in Building 929.

After Initial Pandemic-Induced Challenges, Outlook Is Healthy for Medical Office Sector

During the initial months of the pandemic, the medical sector faced its fair share of challenges.

Job losses were on the rise, as some medical practices were forced to shut down temporarily. In all, there were 1.4 million healthcare services industry jobs cut in the first two months of the pandemic.

Vacancies also rose, peaking at nearly 9% nationwide.

But the sector recovered quickly – and at a much faster rate than traditional office – and long-term trends are on a healthy trajectory.

According to CoStar, nationwide vacancy rates in the medical sector are near decade-long lows, while the construction pipeline is extremely limited (less than 1% of total inventory). Healthcare trends are also favorable. Demand for services is picking up as patients schedule elective office visits and procedures that were postponed during the height of the pandemic. In the long-term, the aging of the U.S. population will drive demand for services that will, in turn, boost the need for medical space.

Kevin Ehringer, Vice President for Ackerman Medical in charge of leasing Ackerman & Co.’s portfolio of medical office properties in metro Atlanta, said he has been seeing robust demand for space, particularly in recent months.

“At the outset, healthcare practices were dealing with various issues caused by the pandemic or had to shut down temporarily – dermatology, ophthalmology, dentistry to name a few,” Kevin said. “Things are pretty much back to normal now. Primary care and specialty practices are going gangbusters.”

The heightened demand for space is reflected in recent statistics. According to CoStar, medical office space leased monthly has surpassed the five-year average for the past six months.

Ackerman is seeing solid demand for its medical office availabilities. The company, which has developed and acquired more 3.5 million square feet of medical office space since its inception, has been consistently completing leases with physicians and healthcare practices.

Recent leases Kevin has completed for Ackerman Medical include a 7,669-square-foot lease with Schilling Cosmetic Surgery & Aesthetics at 1050 Eagles Landing Parkway, a 3,320-square-foot lease with Avail Dermatology/Epiphany Dermatology at Prestige Park and 1,452-square-foot lease with Regenerative Spine & Pain Specialists at Prestige Park. Some of his major lease renewals include a 9,057-square-foot deal with Georgia Urology at Marietta Medical Center.

Although demand is strong, Kevin pointed out that snowball effects brought about by the lingering pandemic have led to one increasingly common criteria among tenants seeking space.

“Medical practices want built-out, turn-key space, rather than shell space that needs to be planned, engineered and constructed,” he said.

The increasing costs of construction materials, access to those materials and labor shortages, along with  delays in permitting, inspections and other municipal approvals are some of the issues tenants can avoid by moving into turn-key space.

The type of build-out space tenants are seeking are currently available at several Ackerman & Co. medical office properties, including the 58,317-square-foot 1050 Eagles Landing, 41,450-square-foot Prestige Park, 98,534-square foot Marietta Medical Center and at Perimeter Town Center, an Ackerman redevelopment.

While the ongoing pandemic and current economic uncertainty are creating challenges for all commercial real estate sectors, the medical sector is proving to be resilient and is expected to benefit from healthy long-term growth prospects.

There’s no doubt that the COVID-19 crisis created unexpected challenges for the commercial real estate industry in 2020.

Despite the uncertain environment, there were many bright spots at Ackerman & Co. throughout the year, thanks to the hard work of our experienced and diverse team of brokers and professional advisors.

From industrial and office leases to building and land sales to deals for restaurant and retail space, our brokers completed a steady flow of transactions.

Some of our major transactions during the year included a 710,962-square-foot lease of an e-commerce distribution facility in Florida; a 325,000-square-foot build-to-suit project at Ackerman’s Rockdale Technology Center for a regional distribution center; and a 75,205-square-foot lease with Goodwill of North Georgia for their new distribution and donation center.

Our Ackerman Retail brokers had a successful year completing a number of high-profile restaurant and retail leases. These included lease signings that will bring gourmet food market Savi Provisions and workout studio Twisted Cycle to Crabapple Market in Milton, Ga., this spring; a 17,850-square-foot lease for a new Shoe Gallery store in Cumming, Ga.; lease signings that added Henri’s Bakery & Café, Siete Tacos + Tequila, and The Original Hot Dog Factory to Marietta Square Market; and a lease for a new location of the upscale brunch spot Gocha’s Breakfast Bar in Fayetteville, Ga.

Also, our Investment Sales team was busy in 2020, with transactions that included a 30,000 square foot medical office building in Newnan, Ga., where Ackerman Medical also completed lease extensions to maintain 100 percent occupancy.

These represent just a sampling of our transactions.

And Ackerman & Co. and its partner MDH Partners are moving forward with the $85-million redevelopment and expansion of the Lee + White mixed-use project in Atlanta’s West End. The next phase of development at the popular entertainment destination will include loft offices, a food hall, public spaces, additional retail options and multifamily units.

Congratulations to our brokers of the year
Continuing an annual tradition, Ackerman & Co. also recognized the achievements of our brokers with our Broker of the Year and Young Broker of the Year awards.

The leader of our Land Group John Speros enjoyed another banner year, earning him the Broker of the Year honor – for the second year in a row. The dollar value of his deals exceeded $100 million. John works closely with his colleagues Kyle Gable and JT Speros in the Land Group.

“John really didn’t skip a beat this past year in his deal-making, which is a testament to his experience and the proven process he and his team have developed to complete land sales on behalf of their clients,” said Kris Miller.

In 2020, John’s biggest deal was the sale of 14.8 acres at Sandy Plains Marketplace for $42 million. Another major deal, completed with David Branch of SSG Realty partners, was the sale of a 4.6-acre parcel for $15.8 million that will become Porter on Peachtree, a mixed-use project featuring 291 multifamily units and 17,600 square feet of ground-level retail.

Other significant transactions for John included the sale of 67.9 acres for $5.8 million for a Meritage Homes development of 152 single-family homes and 20.37 acres for $5.6 million for the next phase of the Exchange at Gwinnett mixed-use project.

In addition to recognizing the top producer, Ackerman is also excited to announce that our Young Broker of the Year for 2020 is Will Goff.

Will’s main focus is brokering raw land and redevelopment sites, along with providing site selection services. Since joining Ackerman in 2017, Will has been involved in brokering land transactions for a wide range of uses, including residential, retail, mixed-use and industrial projects. His transactions during that time total nearly $40 million.

“Will is one of our hardest-working brokers. He can often be seen in his office at 7:30 in the morning to get started on his work, and he always has a positive attitude,” said F. Keene Miller. “In addition to his commitment to helping his clients achieve their business goals, Will is always trying to expand his knowledge. These qualities will serve him well as he grows his career in commercial real estate.”

A large portion of Will’s business is currently focused on representing developers to identify sites for multifamily and industrial projects. Will has carved out a niche in Low-Income Housing Tax Credit (LIHTC) and outside storage space, with current projects spanning across the Sunbelt from Atlanta to Houston and Charlotte to Tampa.

Will is pursuing a Master of Real Estate Development at Georgia Tech and is a CCIM candidate, having completed all course work and portfolio requirements for the designation. He plans to take the final qualifying exam at the next availability.

Read more about our brokerage group here: https://www.ackermanco.com/real-estate-services/overview/

As Ackerman & Co. steadily strengthens its services platform and adds talent to its brokerage group, the firm continues to solidify its position as a leading commercial real estate firm in the Southeast.

One way to measure a firm’s success is by the number of its brokers who are named to the Atlanta Commercial Board of Realtors (ACBR) Million Dollar Club. A total of 11 Ackerman brokers were named to the Million Dollar Club at the recent 2020 ACBR awards.

“This is the most brokers we’ve ever had named to the Million Dollar Club,” said Kris Miller. “Our brokerage team is producing great results for our clients and we’ll continue building our team and the quality of our services to keep those results coming.”

The Ackerman brokers added to the 2020 Million Dollar Club include Courtney Brumbelow, Brett Buckner, Bryan Davis, Brian Lefkoff, Chris Miller, Kris Redding, Sean Patrick, John Speros, Jimmy Stevens, Kelly Wilson and Larry Wood.

Three of Ackerman’s 2020 Million Dollar Club members took home Top 10 Broker honors – Brian Lefkoff (the No. 5 Retail Broker), Courtney Brumbelow (the No. 8 Retail Broker) and John Speros (the No. 5 Land Broker).

As leader of Ackerman Retail’s Tenant Representation Group, Brian’s major deals included a 30,000-square-foot lease on behalf of Painted Tree Marketplace in Buford, Ga., which marked the retailer’s first store in Georgia, while Courtney completed nearly 100 real estate transactions as the head of the Landlord Representation Group.

A long-time high producer for Ackerman as Senior Vice President of the Land Group, John’s biggest transaction was the $18 million, 65-acre land sale for the Exchange at Gwinnett mixed-use project, which he brokered with Senior Vice President Larry Wood. The project, also named one of the three finalists for ACBR’s 2020 Alvin B. Cates Award, will feature Top Golf, Andretti Indoor Karting & Games, Rooms To Go and more.

The Million Dollar Club recognizes brokers with production of $5 million or more in annual commercial transactions.

This year’s Deloitte’s Commercial Real Estate Outlook Report focuses on how technology and changing tenant and investor expectations are ramping up competition and creating shifts in how products are sold or leased.

With these shifts, what can CRE Companies do to stay competitive and ensure they capture the rapidly growing demand?

Out-of-the-Box Properties and Business Plans – The report states that this year investors plan to increase their focus on mixed-use properties, nontraditional products and retail developments. Flexible leases and business spaces are also going to be an attractive investment.

Adaptability – Investors will be looking for the companies that can quickly respond to the rapidly changing waters of the CRE business world, whether it be with new business models or by adopting “a variety of technologies to make buildings future-ready.”

Tech-savvy presence – To attract potential investors, companies need to be able to stay shoulder to shoulder with technology and present technological agility in the way they market their properties and in their business plans.

Catering to investor and tenant needs should move CRE companies to have a different perspective on the way they do business. By increasing mixed-use, nontraditional and retail products in their portfolios, becoming more adaptable to the changes in the industry and using technological advancements in their favor, CRE companies can change with the industry and be ready for the future to come.

The combination of job growth and the surge in GDP during the long-running economic recovery has been a boon to the commercial real estate sector.

In Atlanta and across the country, there has been continued strong demand and absorption for virtually all product types, and capital has been readily available for investment.

But will the good times continue? What next?

That was the focus of Ackerman & Co.’s recently held 12^th Annual Investor Conference, attended by some 150 guests, including owners, operators, investors and brokers.

Host Kris Miller and keynote speaker David Haddow weighed in with their perspective on current economic trends and their outlook for the commercial real estate sector. Joining them with in-depth discussions of investment opportunities for specific product types were F. Keene Miller (Brokerage), Leo Wiener (Retail), Brett Buckner (Industrial) and Evan Ziegler (Investments).

“After the last two years of success, growth and prosperity, the numbers would suggest that the future of commercial real estate has never been brighter. Yet each of us feels less certain than we did two years ago. Why? Is that how we should feel?” asked Kris Miller.

There are causes for concern, said David Haddow. Current economic soft spots, he said, include the rising national debt (now at $21.6 trillion, an increase of $10 trillion since 2008), government gridlock, fast-rising home prices and diminishing consumer confidence. Combined with those issues, the length of the current cycle (nearly 10 years) makes an economic correction more likely in the next 24 months, Kris added.

How should investors respond? Here are the three biggest takeaways provided by Kris and his Ackerman & Co. colleagues:

• Stay on the field.

• Focus on the specific strengths and weaknesses of each deal – rather than macro conditions across property types or markets.

• Adopt a bias toward selling.

The annual conference also provided guests an opportunity to learn about Ackerman & Co.’s 2018 business highlights as well as its goals for the coming year.

Last year’s highlights included Ackerman’s $70-million sale of Braselton Logistics Center to Uline Inc.; the $9.75-million acquisition of the four-building Warren Drive industrial portfolio in Atlanta; the completion of the 181-key Crowne Plaza Hotel in North Augusta; and the $15-million disposition of seven industrial buildings at Stone Mountain Industrial Park, to name a few.

Kris and the team thank everyone for attending despite the rare winter-weather advisory in Atlanta!

“Supply and demand has never been in better balance,” Kris Miller told the more than 100 guests at Ackerman & Co. 11th Investor Conference, recently held in Atlanta.

He added that the ongoing strong demand for product – and lack of overbuilding in sectors such as office during this cycle – puts Atlanta in position to be a leading market for investors in 2018 and beyond.

The company’s annual Investor Conference is an opportunity for Ackerman & Co. to provide perspective on trends in commercial real estate and for guests to network with leading owners, operators, investors and capital sources.

Conference themes are sometimes broad in scope but this year the focus was squarely on the Atlanta market as Kris Miller addressed the question:  Atlanta – the Next Gateway Market?

Atlanta lacks the land constraints, barriers to entry or “24/7” attributes of established gateway cities such as New York, Chicago, San Francisco and Boston. Yet, Miller added, Atlanta’s diversified economy, success at attracting corporate relocations and growth as an entertainment hub are bringing it closer to the status of a gateway market.

Together with his partner F. Keene Miller (President, Brokerage) and Leo Wiener (President, Retail), Brett Buckner (SVP, Industrial), John Willig (Principal) and Evan Ziegler (SVP, Investment), the speakers offered insights into the investment climate in the office, industrial, retail and medical office sectors.

Some highlights from this year’s conference:

• Economic drivers including the 2017 tax plan and the easing of numerous regulations are likely to free up money for capital investment and boost demand for CRE space.
• The continued strong performance of the Atlanta industrial sector – which posted 19.9 million square feet of absorption in 2017 and is experiencing historically low vacancy levels – puts Atlanta’s growth potential ahead of the top 4 industrial markets (New York/New Jersey, Los Angeles, Chicago, Dallas).
• Fundamentals weakened slightly in the office sector in 2017, but there are still excellent investment opportunities for the right property in the right location across Atlanta’s office submarkets.
• Although the retail sector is out of favor amid store closings, “brick and mortar is not dead” and good retail product is available but at high cap rates.
• Strong demographics continue to fuel investment in medical office space, as does the heightened demand for “convenience” medical space located near retail.

Kris and the team enjoyed hosting the conference and look forward to seeing everyone again next year!

San Antonio, the seventh most populous city in the U.S., is attracting new residents at an impressive clip – the Alamo City added 24,473 residents between July 1, 2015 and July 1, 2016. During that time, only Los Angeles and Phoenix added more residents.

In fact, all of Texas’ major cities are popular relocation destinations – Dallas, Fort Worth, Houston and Austin all ranked in the top 10 for population gains.

The state is also experiencing extremely strong demand in the healthcare market, with a medical construction pipeline totaling $15.8 billion – second largest in the nation.

Ackerman & Co. was impressed with this extremely active construction pipeline and ongoing investment in new health system facilities. In particular, the $135-million investment by CHRISTUS in the city’s first stand-alone children’s hospital was a key reason the firm decided to team with Artemis Real Estate Partners and MLL Capital on the acquisition of a four-building, 423,411-square-foot MOB portfolio.

Two of those assets – Santa Rosa Professional Pavilion (128,578 SF) and Rosa Verde Tower (123,324 SF) – are on the campus of the newly-renovated and expanded CHRISTUS Children’s Hospital of San Antonio. Rounding out the portfolio, Northwest Towers I & II are on the campus of the CHRISTUS Santa Rosa Hospital – Medical Center.

So, it’s easy to see why Ackerman determined that the four on-campus properties offered a promising investment opportunity. Ackerman and its partners will spend $27 million to reposition the four MOBs into top-tier medical facilities to meet the rising demand for outpatient services.

In addition to the city’s strong demographics and thriving medical market, Ackerman & Co. viewed the $175-million redevelopment of San Pedro Creek – which runs past the children’s hospital and will be transformed into a linear park – as another incentive to expand into San Antonio.

“They’re willing to take their own money and spend $175 million reinvesting in San Antonio. Those are the kinds of communities – thoughtful, forward-thinking communities – we want to do business in,” Kris Miller, President of Ackerman, told the San Antonio Express-News.

Congratulations to Bryan Davis, our March Broker of the Month!

Bryan, who earned the Ackerman & Co. Top Young Producer of the Year award years before, continues to surpass expectations, evidenced by his most recent deals.

Last month, Bryan signed a new medical tenant and renewed an existing one, both at ten-year terms. The active broker also signed a brand new retail tenant and assisted a long-term tenant with a major expansion, doubling their space for another 10-year term.

If you’re in the market for a diligent, service-oriented commercial real estate solution provider, Bryan is your expert.

Kirk Rich, Ackerman & Co. President of Brokerage, Keener Miller (center) and Sim Doughtie

Keene Miller, Ackerman & Co. President of Brokerage and also President of The Atlanta Commercial Board of Realtors, spoke at the 59th Million Dollar Club Banquet, celebrating the best in commercial real estate. The Atlanta Commercial Board of REALTORS® is one of the largest commercial in the nation with more than 2,200 members. The 2017 Million Dollar Club produced over a record-setting $26+ billion in commercial real estate transactions, surpassing the previous record of just over $25 billion, set in 2016.

Ackerman congratulates all Million Dollar Club award winners, including our own, for their outstanding achievements. Each of the following Ackerman brokers has generated in excess of four and a half million dollars in commercial real estate sales and leasing activity last year.

Kevin Hermetz $20+ Million		Sean Patrick $20+ Million		Larry Jarema $10+ Million
Frank Farrell $4.5+ Million		Jimmy Stevens $4.5+ Million		Brett Buckner $4.5+ Million