Healthcare real estate remains one of the strongest commercial sectors, with demand for medical office buildings, freestanding medical facilities and ambulatory centers soaring across the country. And one growing trend? People want to live in dense multifamily communities that are located near these medical providers.
That’s part of the reason behind Kansas City, Missouri-based Grayson Capital’s acquisition of Leawood, Kansas-based Monument Healthcare Development. Grayson’s goal with this acquisition is to create multifamily communities in which their residents have easy access to healthcare.
“This was a great opportunity for us,” said Michael Collins, chief executive officer of Grayson Capital. “We are interested in this nexus between housing and healthcare. We think that providing our residents with easy access to healthcare will be a value-add to the communities that we are developing. This is a development strategy that is important to us.”
What does easy access to healthcare services mean? Collins pointed to dense multifamily developments in urban areas. It makes sense to develop medical office buildings and outpatient care facilities within easy walking distance or a quick bus or train ride to these apartment communities.
But there are opportunities for this mix of healthcare and housing in the suburbs, too, Collins said. Many suburban communities are creating their own walkable downtowns. These downtowns need both multifamily housing and healthcare real estate that can serve the residents of these walkable communities.
“Where healthcare used to be is not where people want or need it to be today,” Collins said. “People want to have their medical needs met in outpatient facilities that are located closer to them. They don’t want to have to go to the big hospital campus for most procedures. The hospital campus today is increasingly being reserved for the more intense medical procedures.”
Suburban residents also don’t want to travel downtown for their medical care. Because of this, it’s important for developers to bring more healthcare real estate closer to their suburban homes, whether these suburban residents are living in apartment homes, townhomes or single-family residences.
“Do the Baby Boomers who have retired to the suburbs want to go downtown or do they want to migrate to the suburbs to be closer to their family or friends?” Collins asked. “Do they want to stay in a suburban area or do they want to live that urban experience? You have a large population and demographic across the United States that is splitting now between the suburban and urban areas. For us to crack that nut, we need to have both high-density housing and healthcare real estate in both environments.”
Grayson Capital acquired Monument Healthcare Development in December of 2022. Grayson specializes in transit-oriented multifamily developments. Collins founded the company in April of 2022 after spending time as managing director of JE Dun Capital Partners and president of the Port Authority of Kansas City.
The company’s recent Kansas City, Missouri, projects include multifamily developments at 15th and Holmes and 18th and The Paseo in the city.
Monument Healthcare has been in business since 2005 and specializes in healthcare real estate. The company has developed such facilities as Saint Luke’s Southridge Medical Office Building and Ambulatory Surgery Center in Overland Park, Kansas.
Shawn Frost, director of design and construction with Monument Healthcare Development, says that healthcare real estate today is about the user experience.
“People are taking a more proactive approach in their healthcare,” Frost said. “They are more knowledgeable about healthcare, and they want to integrate their healthcare into their daily routines. They want their healthcare provider close to the grocery store so that they can stop by their physical therapist on the way to the store or the occupational therapist on the way home. They want to have healthcare facilities closer to where they live and shop.”
This would leave the sprawling central hospital campuses for heart specialists, brain surgeons, major surgeries and serious emergency care.
If you are suffering a serious emergency and you call an ambulance, that ambulance would still take you to the central hospital campus, Frost said. But if you need outpatient surgery, physical therapy or other services that aren’t considered emergencies, you’d instead take yourself to one of these medical office buildings or freestanding clinics, hopefully one located near your home.
“Ambulatory care services are playing a bigger role in healthcare real estate today,” Frost said. “They are providing knee replacements and outpatient surgeries in which the patients are walking out in the same day.”
Collins said that medical office facilities and outpatient centers are becoming the favored way for patients to receive a growing number of healthcare services today. That’s because they don’t have to spend an entire day traveling to and from a hospital campus in the middle of the city.
“Going to the hospital is a chore, but going to an ambulatory care center or your doctor’s medical office is just a part of your daily life,” Collins said. “If a physician group can open offices in closer proximity to where their patients live, it makes a heck of a lot more sense. If your physicians are closer to you, you’ll also be more likely to see them on a more routine basis. Healthcare becomes more of an outcome-based model versus going in because you are sick.”
That leads to a big question: Do people consider nearby healthcare options when they move? Do they wonder whether an occupational therapist or freestanding medical clinic is a short walk, train trip or car ride away?
Probably not. But Collins did say that people do consider whether they can live a healthy lifestyle when they move to a new multifamily or single-family home.
“People are considering options for their health,” Collins said. “They aren’t focused solely on whether their doctor or future physician is nearby. But they do wonder how a certain community will work for their lives. What is the real estate doing for me? What is around me?”
Collins said that people increasingly consider whether they can walk to grocery stores, public transportation, parks and restaurants when choosing a home. They want to live by healthy eateries and be able to take a short trip to experience green space. Many want to limit the amount of time they spend driving on crowded roadways.
It makes sense, then, for developers building mixed-use developments to include healthcare options along with multifamily residences, Collins said.
“The future involves adding the health and physician component into some of our developments,” Collins said.
Frost said that Monument Healthcare Development will continue to chase healthcare developments that are near a mixed-use space. The company works with healthcare systems across the country as they are expanding their footprints in both urban and suburban areas, he said.
“If the stars align and we can provide a healthcare development near a mixed-use, high-density development, that is the best option,” Frost said.
Collins said that Grayson Capital loves multifamily developments and healthcare assets.
“Even in these interesting economic times, we see that healthcare and multifamily are stable assets,” Collins said. “We have experience in both, and we like those asset classes. They are the future.”