As seen originally in the Colorado Real Estate Journal – Health Care, Senior & Life Sciences Quarterly – July 2023 

Colorado Springs, the City for Champions, is not only renowned for the Olympic Training Center and Olympic Museum, or its vast outdoor recreational opportunities, but also for its thriving health care industry. In recent years, the city has experienced a notable population surge, with many individuals and families choosing to make Colorado Springs their home. This population growth, combined with an aging demographic, has led to an increased demand for health care services. Consequently, health care providers have been expanding their facilities and establishing new medical centers to meet the growing needs of the community.

Vacancy rates. When examining the health care real estate market in Colorado Springs, it is important to consider the vacancy rates. While the overall office vacancy rates in the city hover around 10% (CoStar), it is crucial to note that the reported medical real estate vacancy rate of 29% (CoStar) can be misleading. This discrepancy arises due to several factors. First, some office spaces are listed as medical without meeting the necessary requirements, leading to an inflated figure. Second, certain prohibitions and lease restrictions limit the use of existing spaces for medical purposes. Lastly, the presence of a few large-block spaces hitting the market at the same time are skewing the numbers. In reality, the availability and vacancy rate for high demand spaces ranging from 4,000 to 7,500 square feet are even lower. Furthermore, the lack of new construction projects currently underway is expected to maintain downward pressure on vacancy rates, especially for well positioned, true medical office building assets.

Challenges. The health care real estate market in Colorado Springs faces several challenges that impact its growth and development. First, the limited supply of new construction projects poses a significant hurdle. Currently, only 4,000 sf are under construction in the entire market (that are not associated with a hospital system), which falls short of meeting the demand. Moreover, high interest rates and construction costs add to the challenges faced by developers and providers. These factors make many projects financially unfeasible, as the cost of borrowing and construction expenses outweigh the potential returns. Developers may need to adjust to a higher capitalization rate in the market, leading to higher rents for tenants and potentially making projects even less feasible. Additionally, health care practices and tenants are struggling with provider and support staff labor shortages, making it difficult to generate enough revenue to cover the higher rental costs. Furthermore, reimbursement rates from payers are not keeping pace with rising expenses. 2022 was a reassessment year, the higher taxes put more pressure on landlord and tenant operating costs. This further impacts the feasibility of health care real estate projects in the region.

Growth potential and opportunities. Despite the challenges, the health care real estate market in Colorado Springs presents significant growth potential and opportunities. The city’s population growth and the increasing demand for health care services create a strong foundation for future development. As the market matures and adapts to the growing needs of the community, there is room for innovative solutions and investments to help address the challenges of limited supply and high costs. For example, it is imperative to have all team members involved from the very beginning of project conception. Collaborations between developers, lenders, construction contractors, vendors and health care providers save substantial time and costs. Landlords need to get creative in incentivizing tenants. Creating spec suites with highly usable, and somewhat flexible floor plans helps providers by offering a quick solution to their growing practice, and, most importantly, saves time and issues for the provider. Additionally, there is an opportunity to focus on enhancing the quality of health care facilities, incorporating advanced technology and adopting patient centered design principles.

Conclusion. The health care real estate market in Colorado Springs is witnessing growth and facing challenges simultaneously. The city’s population surge and increasing demand for health care services underscore the importance of expanding and improving health care facilities. However, limited supply; volatile and high interest rates; labor shortages; and construction costs present obstacles that need to be overcome. By addressing these challenges and leveraging the growth potential, stakeholders can contribute to the development of a robust and sustainable health care real estate market in Colorado Springs, allowing providers and staff to focus on the most important aspect of the industry, the patient experience and patient outcomes.

Colorado Real Estate Journal – Health Care Quarterly July 2023 Edition

www.crej.com

As seen originally in the Colorado Real Estate Journal – Property Management Quarterly – July 2023 

The team includes a lot of individuals and organizations. This series to date has focused on the external team of vendors, owners, and service providers. For most of us, there is another team that is integral in making our daily life work like a finely tuned machine. This area can be one of the hardest and most important. This team may be made up of some direct reports, some colleagues, and even your supervisor. This team is your office teammates. It may be the accounting and administrative professionals you work with; or it could be the assistant property  manager you have on your team; and it is also your supervisor. This team is one with very different dynamics than all the other teams we have discussed. This team is usually other employees of the company you work for. Your boss is on this team, your direct reports are on this team and your colleagues are on this team. This is the home team, or your work team. This is usually where you are deepest in terms of time, personality and sometimes frustration. It is also one of the teams you play an outsized role of leader in. You make a difference, in all your teams – this one is typically a bit more personal. Sometimes it is easier, sometimes not so much.

Focused. As we have seen, life is full of focus and, in the world of property management, focus is essential and very difficult. One of the most important teams that we work with is our internal team at our company. With this team, you may know more about birthdays, relatives and other personal issues than you really wanted to know about, but you do. Keeping a focus on the right things to discuss and things to skip are easy to get confused with. These relationships can become very personal, which can be good and create an atmosphere of trust, but also can create a smog of fear and misunderstanding. There is nothing more focused than the home team, and nothing that takes more effort or produces more rewards.

Inclusive. Playing favorites is a no-win game. While we may like certain personalities, and some people perform better than others, this is your chance to rise to your challenge as a leader. Everyone on your team at the office needs to see you as the leader you are, with or without the title. Your focus and encouragement of each of the  individuals on the team is an important part of growing your team and getting results. You cannot play favorites, and you must be inclusive of everyone. You will find with time that each of these individuals requires a different type of focus or relationship. Not everyone will want to sit with you at lunch or bring you coffee each day. Each of your teammates is an individual, and just like you, they expect to be treated like an individual. This includes your supervisor, your direct reports, and those with a similar job or title. They all expect to be treated with respect and as an individual, just like you do.

Strategic. Looking at the issues of today with the goals of tomorrow in mind will keep your focus a strategic one. While the frustrations of problems that need to be solved now are vitally important, they must be solved with care, diligence and compassion. At the same time, it may also be time to think about the issue and determine if it has a need for long-term change. Maybe this is the time to evaluate a policy, process or even a team member. These items help us see what is important to all and to develop a game plan that fits the whole team. The focus always must be on the current situation and its needs, without forgetting about tomorrow and how you will plan for longer-term needs and issues, they both work together. A focus on the future makes today and tomorrow a better place to be.

Dynamic. The need to be ready for change is imperative. We all like to get comfortable in our skin and make life simple and focused, with our personal needs met. The reality is we have so many different personalities and mindsets we work with, we must have a process to look at all that is coming at us and make strategic long-term decisions. Short-term anger and frustration do not solve problems or build a team. The building of your team comes with a willingness to listen and act. Both skills are necessary. What is the real issue at hand, and what possible range of solutions are there? Once we have reviewed the real issues, the future becomes clearer, and we can make decisions and take action that can make the team a team

Colorado Real Estate Journal July 2023 Edition

www.crej.com

As seen originally in the Colorado Real Estate Journal – April 19, 2023 

Service providers are the lifeblood of property management. Property managers are not so much doers as they are leaders. The service provider is the doer, and we want the best we can get. Yes, price is an issue, but quality is at the top of the list. This becomes the biggest focus of your relationship with your service providers. Are you able to achieve the highest level of service at a great price with timely results? It may seem like a dream in today’s market, but it is the expectation of every property manager about every service provider hired. Your relationship here is foundational to your success. It is not about becoming best friends; it is about becoming trusted colleagues. While a service provider may not work for you like an employee, you need to know him or her like a brother or sister. Strengths and weaknesses need to be well understood and communicated to allow service providers to be at their peak to achieve
the desired performance. 

Focused. Service providers are probably some of your most frequently dialed calls. Your relationship must be hyperfocused. You
need to know a lot, but it is the basics that are important in this relationship. The contract spells out all the work to be performed.
It also gives terms of pricing, timing and payment schedule. It will most likely have some focus on quality expectations. This can all be spelled out on paper. The rubber hits the road when you find out if the tenants are satisfied, not just you. Ensuring satisfactory work is
done in a quality manner at the times expected becomes the bigger task. Your tenants will be certain to have input on this area, even if you don’t ask! Contracts are very important, but the relationship you have provides for the final level of service you receive. Quality,
service and pricing are sometimes called the three essentials of customer service. You are the guardian of this happening with your property.

Inclusive. The service provider must have a special place in your life. A close relationship, but not too close. A lunch date on an occasional basis is great. Box seats to all the best events might be pushing your relationship a bit too far. Your goal is to ensure that the needs of your owner and your tenants are well understood by your service provider. Each owner has different goals, and each tenant has different needs and issues. Service providers working with several owners need to understand the expectation of each individual owner and tenant. Professionalism becomes the biggest part of this relationship. While some jobs we must have done are down and dirty, grimy services, service professionals must know how to behave knowing the customer is the most important person. Your team of
service providers needs to be at the same level of professionalism as your team members. They are part of your team and need to be treated as professionals. If for some reason they are not professionals, maybe they should not be part of your team.

Strategic. Each service provider has one specific task to accomplish: great customer service. And yes, providers must cut the grass, fix the HVAC system, clean the office, and do dozens of other major tasks that you have hired them to accomplish. To ensure your tenants and owners are happy, they must be great at providing the best customer service in the industry. Communication becomes one of the most important tools with your service provider. Since you have many tenants and owners, and they have many clients, and the service levels and expectations vary between these numerous parties, communication is a priority. It is acceptable to double your communication on a complex or important task. A call followed up with a text or email may be just the way to avoid miscommunication. The service contract itself needs a full review and focus of your attention, not something that is signed as you are rushing out the door for a lunch date. Your job is to be sure that they know what your tenants, owner and you expect. You help them see the big picture and then follow up on the details to ensure that the tasks are accomplished, and the customer, your tenants and your owner are pleased with the results. It is a balancing act that never gets easier, but relies on your ability to communicate with your service providers in
a way that sees them as valuable partners.

Dynamic. Your job as a property manager is not to glance at a prefilled contract, sign it and go on to the next one. Your job is much more important than that. You need to understand what the services you are buying for your owner really are. You do not have to
be an HVAC expert to procure the services of a contractor. You do have to have a basic understanding of your building or have a team or engineer or expert that keeps you up to date. It is also not your job to be an attorney. If needed, you should feel comfortable hiring
an attorney to review contracts. This may save you a bigger issue later in the relationship. The use of a good attorney can be important. Small details or a short paragraph can bind you to something you were not aware of. Contracts with new vendors need a bit more attention to ensure you know the terms and conditions, as well as payment terms and the full extent of liabilities. Read before you sign!

Colorado Real Estate Journal April 2023 Edition

www.crej.com