A Strategic Tenant Representation Success Story
Overview
In 2021, Digestive Healthcare of Georgia, a top gastroenterology practice in Metro Atlanta, began relocating from Piedmont Hospital’s main campus to a new space capable of housing a state-of-the-art Ambulatory Surgery Center (ASC). By 2023, the move was successfully completed at Northwest Medical Center, Howell Mill Road, showcasing strategic negotiation and collaboration in medical office real estate.
FEATURED
Relocating Digestive Healthcare of Georgia
Challenge
The relocation of a high-performing medical practice such as Digestive Healthcare presented several complex challenges, including:
- Cost Management: A proposed build-to-suit option would have cost over $50/SF, a prohibitive price for Digestive Healthcare. Our solution cut costs by nearly 50%, saving the client $12 million in the lease term and $25 million over the lifecycle.
- ASC-Specific Needs: Planning for four surgery rooms, room for future expansion, and meeting Certificate of Need (CON) requirements.
- Parking Logistics: Cost overruns for the parking deck escalated from $750K to $3M. Through negotiations, we ensured the landlord covered this cost entirely.
- Construction and Coordination: Managing the balance between base construction and tenant improvements (TI), all while ensuring smooth move coordination for the transfer of medical equipment and patient services.
Our Approach
To address these challenges, our approach focused on cost optimization, strategic planning, and precise execution:
- Cost Optimization & Lease Negotiation: We identified Northwest Medical Center as an ideal alternative to the initial build-to-suit proposal, reducing the overall costs by nearly half and saving significant time and capital.
- Strategic ASC Build-Out Planning: We guided Digestive Healthcare through the ASC construction process, collaborating with architects and engineers to design a space that meets both current and future needs, including room for expansion and the necessary infrastructure for medical equipment.
- Parking Deck Negotiation: We successfully negotiated with the landlord to cover all cost escalations related to the parking deck, ensuring exclusive patient use of the facility’s parking spaces.
- Move Coordination & Signage: To ensure a smooth relocation, we facilitated the transfer of medical equipment, coordinated patient notifications, and secured prominent signage, boosting the visibility of Digestive Healthcare in the new location.
Outcome
By the end of 2023, Digestive Healthcare successfully opened its new facility at Northwest Medical Center, achieving the following outcomes:
- $12 Million in Savings: By choosing the alternative location and negotiating favorable lease terms, Digestive Healthcare saved $12 million in the lease term and over $25 million over the lifecycle compared to the original build-to-suit option
- Faster Construction Timeline: The relocation reduced construction time by 1.5 years, enabling Digestive Healthcare to open sooner than originally planned.
- State-of-the-Art ASC: The new facility includes four fully operational surgery rooms, room for future expansion, private physician offices, and an emergency generator.
- Dedicated Parking Deck: The relocation included a dedicated parking deck with no additional financial burden on Digestive Healthcare, ensuring ease of access for patients.
Lesson Learned
Key takeaways from this project highlight the importance of comprehensive planning and negotiation. First, it’s essential to negotiate beyond the lease rate—effective negotiations that address not just the rent, but also construction, parking costs, and tenant improvement responsibilities, can protect clients from unexpected financial burdens. Additionally, specialized ASC planning is crucial, as relocating healthcare facilities involves navigating complex regulatory compliance, medical infrastructure requirements, and certificate processes. Cost efficiency also plays a pivotal role in healthcare real estate, as time and cost savings can be the defining factors between an acceptable solution and a truly transformative one. Finally, seamless move coordination is key to minimizing disruption and ensuring both patient satisfaction and operational continuity throughout the entire relocation process.
Closing Thought
This relocation success story underscores the importance of partnering with a skilled healthcare real estate advisor. Effective negotiation, strategic planning, and expert move coordination can make a significant difference in achieving both cost savings and operational success. If your medical practice is planning a move, expansion, or new development, I’d be happy to share my expertise and help you achieve similar results.
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