Maintaining good health isn’t always convenient or easy. Even if you’re relatively healthy, and have a physical once a year, it still often involves several tests and follow-up appointments, labs, preventative examinations, eye exams, and dental checkups at a bare minimum. For those over a certain age or for anyone with chronic or ongoing health issues that need frequent monitoring, checkups and exams can increase exponentially. Can you imagine not having access to your healthcare providers in a close, convenient location that is easy to get in and out of?
Charlottesville, Virginia-based Anchor Health Properties has built a business model on the “retailization” of healthcare. This means, offering multiple – usually complementary – services in areas of the community that are easily accessible for patients who in days past had to travel to congested hospital campuses for routine appointments. Often located in crowded, urban areas, getting to these hospital campuses involved fighting traffic, navigating crowded parking garages, contending with security, and walking long distances to get to the office of their provider.
Anchor Health Properties was originally founded in 1985 by two retail development pioneers who recognized the need to bring healthcare closer to patients and providers for the greatest patient and physician ease of access and convenience. They were in business 30 years when they sold the platform and partnered with healthcare real estate management and development expert Ben Ochs in 2015. Chief Investment Officer and Co-Managing Partner, James Schmid, joined Mr. Ochs in 2016 to grow an investments business within the Anchor platform.
“The two principles that founded Anchor Health Properties were retail developers. Their concept was to take their retail practice to the medical-office industry, which at the time was a relatively fledgling concept,” says Schmid. “They basically pitched the health systems the concept of building outpatient facilities within the community – a novel concept for most of the legacy health systems.”
Once Schmid joined Ochs, the two ramped up the three current business verticals: development, management and leasing, and investment and dispositions.
The company is now a national, award-winning, full-service healthcare real estate company with more than $1.5 billion in completed development projects, more than 8 million square feet under management, and nearly $3 billion invested in stabilized medical office and similar facilities. With about 130 employees in offices around the country, they are currently making major moves across the state of California, including large investments in the Los Angeles and Orange County MSAs.
For example, the firm recently closed on a fully renovated, 30,000-square-foot medical office building in the Westlake Village submarket of Los Angeles County.
“The overall growth in the state of California has been significant for us,” says Schmid. “We now have eight investments in San Diego, six in Northern California, and nearly a dozen across Orange, Los Angeles, and Riverside Counties – totals that continue to increase. We acquired a big project in Beverly Hills and one in Santa Monica earlier this year in conjunction with our joint venture equity partner Harrison Street Real Estate. We acquired a project in the Brea submarket of Los Angeles and are working on several forward take-out investments building on our presence in the Beaumont submarket of Riverside County, in the eastern part of the Inland Empire. We acquired the building across the 101 from the Westlake Village property in Agoura Hills, so we now have a good-sized presence in San Fernando Valley. A lot is happening for us in and around metropolitan Los Angeles.”
Southern California – with its dense traffic and lack of consistent mass transit is particularly rife for the healthcare “retailization” concept.
“Capturing more patient population is the name of the game in bringing people into your network,” he says. “You want to place your brand in the best locations in the communities where they’re needed. You want to create a consumer-centric product and take a page from the McDonald’s, Burger Kings and Starbucks of the world. Get the best retail locations, with convenient parking and modern structures so it’s easy for consumers to see and understand your brand, and get in and out of in an efficient manner.”
Schmid explains that the path into a new market usually starts with an initial acquisition of existing medical office facilities. Such an acquisition will create a need for operations infrastructure so the company puts “boots on the ground” to manage the property and get to know the tenants, evaluating the opportunity to eventually expand and nurture long-term relationships through property management and leasing.
“Our investments business – where we acquire existing projects of all shapes and sizes, so long as they’re medical office related – are around $3 billion since July 2016,” says Schmid. “That’s what’s really brought us to new markets like Los Angeles and San Francisco.”
The company’s relationship doesn’t end with development or acquisitions, as the relationships with health systems and providers continue through property management.
“By managing the properties, we get the opportunity to build more projects in our investment sector,” says Schmid. “Our model centers on assessing needs of current or prospective tenants, who need space in a particular area. We then go out and put together a project for them that fits their needs. Other commercial residential sectors tend to operate on a speculative basis – you develop a property and hope the demand will come to you. We do the reverse. It also gives us a great opportunity to put together complementary tenants – in the same way retail developers do – where one supports the needs of the other.”
Schmid explains that maintaining that relationship often compels the tenant to go to its trusted partners at Anchor Health Properties when it’s time to expand. They know they can assist finding another ideal opportunity, with an advantageous location in their target area with complementary co-tenants that will bring foot traffic and word of mouth.
For the development segment of the business, Anchor Health Properties currently has about one million square feet in active projects around the United States, which ranks among the top across developers nationwide.
“The Westlake Village asset fit squarely within our thesis of investing in well-located, state-of-the-art medical office buildings with excellent tenants that have long-term commitments to the property through their buildouts and leases,” he says. “It complements nicely with our other owned medical office building across 101 in Agoura Hills that we acquired earlier this year. We look forward to additional investments in the area in the months to come.”
As healthcare demand continues to grow and this trend keeps pace, consumers should be able to look forward to greater convenience in excellent facilities that meet a wide range of service needs, closer to them.
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