Wednesday, February 27, 2008
Universities and Practice Locations
There is a trend that we think is worth mentioned regarding practice sites near major universities. Many (even most) universities own property on the edge of their campuses. Due to the fact that the demographics of the U.S. are such that large increases in enrollment are unlikely, many of them including Cleveland’s Case Western Reserve, University of Pennsylvania, Harvard and Columbia are taking that land and developing retail centers. They are not likely to cater exclusively to the student population. Rather, they are using this property to open retail and professional spaces that create a more appealing environment for the universities (which in the case of Penn is long overdue, IOHO). We do not recommend considering these sites BECAUSE of the student population but because they are becoming some of the most desirable practice sites in many inner cities. Rates are generally favorable and their potential value over a long period of time will go up. And it doesn’t hurt the universities’ bottom line to have some non-donor cash coming in when the economy seems troubled.
Hit in the Gut: Jacksonville, FL
We are NOT saying that Jacksonville is a bad bet for a new practice. Actually, we are not saying anything terrible at all but we are offering a warning. Jacksonville may have overbuilt itself and construction continues. That means that if you come to Jacksonville to open a practice, don’t take the first offer. Don’t take the second offer. This market is getting soft and there are some good deals one can make, especially in the downtown.
Will Office Rates Rise Due to Home Foreclosures?
This is important to anyone who is thinking about opening a new practice in the next few months or moving to a new site or renegotiating their lease. There has been a fear that there was a relationship between foreclosure volume and retail property delinquencies. The current wisdom is that if there IS a relationship, than the cost of properties will go up AND they will be more difficult to qualify for if the doctor is young, a new graduate and/or has a credit ding or two.
The good news is: there is NO relationship that we can find.
Detroit is the top market for home foreclosures. It had a 0.48% delinquency rate (which is pretty good) on commercial loans. This data comes from TreppLLC, a data and real estate analysis firm.
The next three highest-ranked markets for home foreclosures – Stockton, CA; Las Vegas, NV; and Riverside, CA – posted no delinquencies on retail loans. Just because I know you want to know, the highest commercial real estate delinquencies were in Indianapolis and New Orleans. That is some great new!
The good news is: there is NO relationship that we can find.
Detroit is the top market for home foreclosures. It had a 0.48% delinquency rate (which is pretty good) on commercial loans. This data comes from TreppLLC, a data and real estate analysis firm.
The next three highest-ranked markets for home foreclosures – Stockton, CA; Las Vegas, NV; and Riverside, CA – posted no delinquencies on retail loans. Just because I know you want to know, the highest commercial real estate delinquencies were in Indianapolis and New Orleans. That is some great new!
Wednesday, February 20, 2008
El Paso, Texas Potential
El Paso already has a strong military population. But that population is going to get a lot bigger SOON. Fort Bliss is going to nearly double the size of the base to 37,000 within the next five years. Also, nearby White Sands Missle Range is going to increase from 130 soldiers to 4,000.
The El Paso International Airport will be increasing in size as nearly 3,000 acres next to it are developed into an industrial park to host the military contractors. The bottom line is that by 2012, there could be an additional 100,000 residents moving to El Paso. We strongly suspect this is going to have a profound effect upon Las Cruces, New Mexico.
"The early bird catches the worm."
The El Paso International Airport will be increasing in size as nearly 3,000 acres next to it are developed into an industrial park to host the military contractors. The bottom line is that by 2012, there could be an additional 100,000 residents moving to El Paso. We strongly suspect this is going to have a profound effect upon Las Cruces, New Mexico.
"The early bird catches the worm."
Friday, February 15, 2008
Which Way Did They Go? Potential Practice Sites
I have a daughter with a newly minted diploma just move into a new "career" employment situation. Being responsibile parents, we helped her move. Now, keep in mind, we track demographic and psychographic data EVERY DAY but one NEW resourse I wanted to pass along to the new doctors out there is U-Haul's web site - www.uhaul.com.
It was a wakeup call when we compared the simple COST of moving from one location to another. The site allows you to enter two cities. It then calculates the cost of making the move. We began to see a pattern that was, well, chilling.
Take, for example, moving from Austin, TX to Los Angeles, CA, the van will cost $407. Going the other way will cost $1,831. The reason is that they want one-way vans in Los Angeles because they are losing population. Dallas to Philadelphia costs $633 versus $2,422 in the opposite direction.
United Van Lines released as study in January 2008 that showed the top destination states as being:
- North Carolina
- Nevada
- Alabama
- Oregon
- South Carolina
The top departure states are:
- Michigan
- North Dakota
- New Jersey
- New York
- Illinois
Is it possible that the reason for this has to do with Taxes? One could say that it is just a coincidence that the Big Departure States are also the Big Tax States. One really odd statistic involves South Dakota versus North Dakota. The weather and economics are about the same. But South Dakota, one of the top ten destination states, has no income tax while North Dakota, a major loser of population does.
To be honest, we don't believe that taxes should be the major reason why one considers one state over another for practice. Nevertheless, if you want an indication of potential of growth, look to State Income Taxes as a major indicator of the future.
It was a wakeup call when we compared the simple COST of moving from one location to another. The site allows you to enter two cities. It then calculates the cost of making the move. We began to see a pattern that was, well, chilling.
Take, for example, moving from Austin, TX to Los Angeles, CA, the van will cost $407. Going the other way will cost $1,831. The reason is that they want one-way vans in Los Angeles because they are losing population. Dallas to Philadelphia costs $633 versus $2,422 in the opposite direction.
United Van Lines released as study in January 2008 that showed the top destination states as being:
- North Carolina
- Nevada
- Alabama
- Oregon
- South Carolina
The top departure states are:
- Michigan
- North Dakota
- New Jersey
- New York
- Illinois
Is it possible that the reason for this has to do with Taxes? One could say that it is just a coincidence that the Big Departure States are also the Big Tax States. One really odd statistic involves South Dakota versus North Dakota. The weather and economics are about the same. But South Dakota, one of the top ten destination states, has no income tax while North Dakota, a major loser of population does.
To be honest, we don't believe that taxes should be the major reason why one considers one state over another for practice. Nevertheless, if you want an indication of potential of growth, look to State Income Taxes as a major indicator of the future.
Monday, February 11, 2008
Mid-Atlantic Signs of LIfe
Almost every day a doctor will ask me toward the end of our of consultation, "Scott, you look at locations all the time. Is there anywhere I should consider?" When I first started answering that question, I would get all kinds of heat from those who thought I had some kind of agenda.
Nope, no agenda. But I AM being more cautious than I once was. So take this with a grain of salt:
Prince William County DEFINTELY has some potential. (Ditto for Loudoun County) New "big box" stores are the key indicator of new neighborhoods, office sites, and expanded traffic areas. There are several developments that are opening up and several general practices considering their options. This is NOT a "room for one more" situation. We believe that general practices as well as specialists may want to take a look at the Counties and decide for themselves.
On the other hand, we have been much cooler on Maryland (for the most part although some neighborhoods have been showing great potential). So what makes the difference? TAXES!
There are few locations where the differences between state tax policies have had as dramatic a contrast as in the Mid-Atlantic region. We are not in the business of pitching states JUST BECAUSE they have lower taxes but it is a "no duh" moment when we see how lower taxes affect growth both in populatinos and employment.
Nope, no agenda. But I AM being more cautious than I once was. So take this with a grain of salt:
Prince William County DEFINTELY has some potential. (Ditto for Loudoun County) New "big box" stores are the key indicator of new neighborhoods, office sites, and expanded traffic areas. There are several developments that are opening up and several general practices considering their options. This is NOT a "room for one more" situation. We believe that general practices as well as specialists may want to take a look at the Counties and decide for themselves.
On the other hand, we have been much cooler on Maryland (for the most part although some neighborhoods have been showing great potential). So what makes the difference? TAXES!
There are few locations where the differences between state tax policies have had as dramatic a contrast as in the Mid-Atlantic region. We are not in the business of pitching states JUST BECAUSE they have lower taxes but it is a "no duh" moment when we see how lower taxes affect growth both in populatinos and employment.
Friday, February 1, 2008
Hidden Dangers of the Perfect Location
We just ran an analysis on Aurora, Colorado. This suburb of Denver is growing (well parts of it are), and filled with upscale, affluent households with children present in the home. These are all great indications. The ratio of dentists to population in Zip Code 80015 is a favorable 1:3,000+. Granted the contiguous Zip Codes of 80013 and 80016 are not so good but they are still better than "just acceptable.
The problem that local doctors might have as they examine these locations is an "apparent glut" of dental practices because so many are found within a narrow geographic region. Cities like Aurora do not want to build "strip malls" or "professional centers' in their residentail areas. In this way, the community appears to be well-planned. But what do you do when you are considering a location with a good demographic character and reasonable competition ration but you can throw a rock and hit 10 dental offices?
The answer is "diversity of branding." If the practice is going to compete in an apparently crowded market, it must look or seem different or unique in some way. In the olden days of practice marketing, the advise would be to vary one of the Four "Ps" of Marketing:
- Product
- Price
- Place
- Promotion
So, which office will be perfect for those who commute into Denver? Which one will best serve a mother with two small children? Or teens? Or Catholics? Or "the thrifty"? Or "the extravagant." It is less a matter of "niche" marketing as it is a means of providing some clear differences from the guy next door. And if you want to serve EVERYONE, then the practice may suffer because no one knows that they are part of EVERYONE. They are just "me." This is the reason why we preach the effectiveness of "Market Segmentation."
The problem that local doctors might have as they examine these locations is an "apparent glut" of dental practices because so many are found within a narrow geographic region. Cities like Aurora do not want to build "strip malls" or "professional centers' in their residentail areas. In this way, the community appears to be well-planned. But what do you do when you are considering a location with a good demographic character and reasonable competition ration but you can throw a rock and hit 10 dental offices?
The answer is "diversity of branding." If the practice is going to compete in an apparently crowded market, it must look or seem different or unique in some way. In the olden days of practice marketing, the advise would be to vary one of the Four "Ps" of Marketing:
- Product
- Price
- Place
- Promotion
So, which office will be perfect for those who commute into Denver? Which one will best serve a mother with two small children? Or teens? Or Catholics? Or "the thrifty"? Or "the extravagant." It is less a matter of "niche" marketing as it is a means of providing some clear differences from the guy next door. And if you want to serve EVERYONE, then the practice may suffer because no one knows that they are part of EVERYONE. They are just "me." This is the reason why we preach the effectiveness of "Market Segmentation."
Subscribe to:
Posts (Atom)
