President’s Message: The intersection of retail and healthcare
It’s no secret that the retail real estate environment is evolving at lightning speed. E-commerce and technology are driving much of that transformation, as well as the shift in consumer shopping behaviors.
You’ve heard me talk of today’s ‘high-maintenance’ consumer. Their expectations have changed. They want convenience, they want choices, and they want it now. Those same consumer demands are also driving a shift in the outlook and strategies for the healthcare industry.
New healthcare laws have significantly increased the number of consumers seeking medical care. Combined with advances in technology, it’s created a type of healthcare marketplace, where consumers are now able to shop for providers and compare costs and services across multiple channels. Patients have morphed into customers.
In commercial real estate, there is substantial growth in the integration of healthcare in the retail setting, and on the flip side, retail is emerging in the medical space. Clinics providing same-day urgent care, primary care, specialty care, and wellness services have boomed over the last few years. More recently, we are seeing the healthcare services provided in retail environments expanding beyond your typical medical office buildings. Healthcare providers need many of the same components as retailers do, and having various locations increases the entry portals into their respective healthcare networks.
Very similar to the last mile in retail, the entire healthcare delivery system is changing. It’s all about getting the product to the consumer in the shortest amount of time possible. That means connecting with them closer to where they live, in their own neighborhoods and communities. Speed, convenience, and cost efficiency are at the core of this integration.
Retail environments offer high visibility with easy access and ample parking. Customers want a one-stop shop for all of their daily needs. They want to get their groceries, buy new shoes, and visit a physician all in convenient locations.
Another attractive quality for the retail location is surrounding amenities such as restaurants and entertainment options. Patients can eat lunch, go to a movie theatre, or shop in between medical appointments or while waiting on test results. Surrounding hotels provide convenience for extended medical care needs of visiting patients and their families.
Cost efficiency is also a major factor in shifting healthcare services away from traditional hospitals and acute care settings. Smaller facilities are easier to maintain and cost less to operate. Segregating various outpatient medical services into specialized clinics can also provide customers with higher-quality, focused care—while freeing up more expensive hospital beds for extensive inpatient care.
Technological advancements—e-commerce (or should I say e-healthcare?)—are disrupting healthcare in much the same way as retail. We are seeing the rise of innovative digital medical services such as virtual doctor visits, robotics, and simulated wellness plans. Customers are now researching doctors and reading online reviews. They are price shopping providers and services. They want to order prescriptions and supplies and schedule medical appointments right from their mobile devices.
Ochsner Medical Complex River Parishes in LaPlace, LA
At Stirling Properties, we are adapting to this changing environment. As the demand for new healthcare services increases, so are our service lines to meet those local needs. As part of our company’s strategic growth plan, we are expanding into new real estate sectors where we have a translatable skillset that can add value—specifically one of those is healthcare—and diversifying our commercial portfolio.
“The types of uses coming out of the major regional hospitals is expanding beyond what we have seen in the past. Emergency departments and imaging services, maternity and phlebotomy, long-term and short-term acute care, outpatient acute care surgery, and behavioral health facilities are all emerging outside of the typical hospital setting,” said Townsend Underhill, Senior Vice President of Development for Stirling Properties.
“With this shift from inpatient to more outpatient services, there is a demand for new development to meet healthcare facility designs and product offerings, like the micro-hospital concept—a hybrid of urgent care centers and traditional hospitals. They provide more specialized services with specialized doctors in a more convenient footprint.”
Late last year, Stirling Properties announced the development of a new mixed-use medical facility in LaPlace, Louisiana. Phase I of this development included a lease to Ochsner Medical Complex-River Parishes for a roughly 20,000-square-foot freestanding Emergency Room & Imaging Services clinic. The micro-hospital concept opened to the public last week. The adjoining property is available for additional commercial development.
Earlier this year, we announced the acquisition and redevelopment of the shuttered Louisiana Heart Hospital property in Lacombe, Louisiana, and the subsequent lease to Ochsner. With its local partners, St. Tammany Parish Hospital and Slidell Memorial Hospital, the company plans to redevelop and repurpose the building to open a Post-Acute Care Hospital including long-term acute care, skilled nursing, and inpatient rehabilitation services in one central location.
We’ve also recently announced the development of a new medical facility at The Grove in Baton Rouge, Louisiana, planned near the Mall of Louisiana fronting Interstate 10. The project includes a five-story medical office building and an ambulatory surgery center amongst other uses that in total equals 260,000 square feet. Anticipated completion is scheduled for early 2019.
Dentists of Slidell at Fremaux Town Center
In addition to these development and acquisition opportunities, our brokerage and asset management teams are also adapting to the emergence of healthcare in the retail environment. Many of our agents are already leasing local retail space for medical office uses such as dental clinics, physical therapy, eye clinics, and dermatologists. These healthcare providers in some cases are even helping to fill vacant space left by shuttered retailers. Because of this increased diversity of tenants and needs, more and more property owners are outsourcing their asset and property management services to companies that can effectively maintain and operate them.
Stirling Properties handles the management and leasing of Lakeview Medical Office Building, a 5-story, 75,000-square-foot, class-A office building located in Mandeville, Louisiana. The office is attached to Lakeview Regional Medical Center, one of St. Tammany Parish’s major hospitals, providing an opportunity to bring in various medical tenants that cater to and support the healthcare industry and its patients—a built-in customer base.
As the delivery method of healthcare continues to evolve, so should commercial real estate companies. Those of us in real estate can (and should) use the valuable lessons that we have learned through retail to help us adapt and respond to the needs of medical service providers. When retail and healthcare intersect, many opportunities emerge.
Marty
Stirling Properties Expanding Portfolio
Stirling Properties’ Asset & Property Management Team has recently secured several new management contracts, adding nearly 700,000 square feet to our commercial real estate portfolio. As part of our company-wide growth plan, Stirling Properties is expanding and diversifying our footprint into new asset types and geographic regions—and our asset & property management services continue to play a major role.
Earlier this year, Stirling Properties partnered with New Orleans-based PMAT to manage the company’s newly acquired shopping centers located across the Southeast, Sunbelt, Carolinas, Mid-Atlantic, and Midwest. As part of that ongoing partnership, we have added three new properties—Legacy Crossing and North Heights Plaza in Ohio, and Pavilions At Hartman Heritage in Missouri.
North Heights Plaza in Huber Heights, OH
Legacy Crossing is a 134,389-square-foot Kohl’s-shadow-anchored community center located at State Route 95 and US Route 23 in Marion, Ohio—across the street from Ohio State University’s Marion campus. The retail center includes a strong mix of tenants such as Hobby Lobby, MC Sports, Dollar Tree, AT&T, Starbucks, and Petco.
North Heights Plaza is a 295,348-square-foot retail center located at Troy Pike (SR 202) and Executive Blvd. in Huber Heights, Ohio (Dayton MSA). National tenants include Bed Bath & Beyond, Big Lots!, DICK’S Sporting Goods, Five Below, Hobby Lobby, and Party City.
Pavilions At Hartman Heritage is located at Interstate-70 and Little Blue Parkway in Independence, Missouri (Kansas City MSA). The 223,473-square-foot retail center included tenants such as Bed Bath & Beyond, buybuy BABY, Party City, Cost Plus World Market, David’s Bridal, and Half Price Books.
Stirling Properties also recently assumed the management and leasing contract of Ambassador Plaza, a 29,405-square-foot Albertsons-shadow-anchored retail center in Lafayette, Louisiana. We will also be taking over the management of Handsboro Square, a 156,500-square-foot Rouse’s Food Market-anchored center in Gulfport, Mississippi, which Stirling Properties currently leases.
Ambassador Plaza Lafayette, Louisiana
Once a management contract is secured, Stirling Properties will assign a customized team of professionals to create a strategic business plan specific to each asset to help accomplish the client’s goals and objectives. Asset and property management services are becoming more complex in today’s industry due to the challenges facing commercial real estate and the ever-evolving retail landscape. Additionally, we see a significant growth in diverse asset types, especially among office, industrial, and medical properties and tenant uses. As a result, more and more owners are outsourcing the responsibilities.
At Stirling Properties, we understand the intricacies of commercial real estate. Our experience spans multiple property types, including retail, restaurant, office, industrial, medical, and mixed-use. We have local market knowledge, and we stay apprised of shifts in the industry, especially consumer shopping habits and retail trends. As the demand for diverse property types is increasing, so are our service lines. Our team has extensive experience in office properties—in fact, this sector makes up nearly 20% of our overall portfolio. We have also recently partnered with several high-profile medical and industrial projects, helping to shape Stirling Properties into one of the most comprehensive asset & property management teams in the Gulf South.
Our management services go far beyond providing day-to-day operations. We work hard to create the best return on investment for our clients. Our team strives to create value through cost efficiencies, economies of scale in our markets, vendor relationships, insurance, crisis preparation and response, leasing, and project/construction management to give each asset an operating advantage. We look forward to working on these new properties, while also continuing to build upon the relationships and progress that we are making across our entire asset portfolio.
Stirling Properties manages more than 18 million square feet of commercial property, with 120 million square feet of property and land for sale or lease. Click here to view a comprehensive list of our managed and leased portfolio.
For asset & property management questions or information, please feel free to reach out to us. Our team would be happy to assist you.
Shreveport-Bossier City Retail Market Survey July 2017
Stirling Properties is pleased to present the semi annual Shreveport-Bossier City Retail Market Survey. This report, compiled by Stacy Odom and Karen McElroy, of our Shreveport office, is intended to give the reader a broad understanding of the market as well as specific information about the available square footage, occupancy and rental rates of each retail center greater than twenty thousand (20,000) square feet. It was created to be a resource for agents as well as tenants, landlords, developers, lenders, fellow brokers and anyone else looking for information about the Shreveport-Bossier City retail market.
Retail Market Assessment
Shreveport-Bossier City’s retail sector grew by eight percent (8%) since 2015 with the opening of three (3) grocery anchored community shopping centers – two (2) Kroger Marketplace anchored centers in Shreveport and Bossier City and a Whole Foods anchored center in Shreveport. The retail market is healthy as evidenced by the Community Shopping Center category which shows an increase of approximately 580,000 square feet with their occupancy rate remaining stable at 92%. Although the Neighborhood Shopping Centers experienced a large drop of occupancy to 77% due to the closures of Rite Aid and K-Mart, this vacancy was offset by occupancy increases in Specialty Shopping Centers and Regional Malls. With the addition of over 580,000 square feet of new construction and the proposed demolition of approximately 25,000 square feet at Bayou Walk Shopping Center in Shreveport, year-end 2016 net absorption was approximately 417,000 square feet for our retail market. Shreveport-Bossier City’s overall retail occupancy rate has remained relatively stable at 88% at year-end 2016.
5 Dos and Don’ts of Reaching Generation Z
We’ve all read numerous statistics, studies, and articles regarding the infamous “Millennials.” Over the last few years, this generation has reshaped the way we do business and even how we interact and communicate with one another.
One major industry that has been significantly impacted by the Millennial generation is commercial real estate, especially the retail sector. Millennials have changed the game with consumer shopping habits and buying preferences—retail real estate is still trying to catch up.
But now, we are seeing the emergence of the new kids on the block: Generation Z. And if preliminary studies are accurate, they too are altering the rules of retail. Here’s a little insight shared by one of Stirling Properties’ summer interns, Kylie. She gives us a real-life perspective on the mindset of Generation Z:
5 Dos and Don’ts of Reaching Generation Z
Generation Z (aka Post-Millennials, iGeneration, Founders, or Plurals) refers to those born roughly between the years 1995 and 2010. They currently make up 25.9% of the United States population and account for $43-44 billion in direct spending. By the year 2020, it is estimated that they will represent one-third of the nation’s population. Though the youngest members are still in first grade, their overall impact is extensive.
Due to the closeness in years between Millennials and Generation Z, it is easy to blur the line between the two. But as anyone who owned a BlackBerry ten years ago can tell you, a lot can change within a short period of time.
One of the biggest mistakes companies could make is treating Generation Z the same as the Baby Boomers, Generation X, or even the Millennials. Each generation is affected by their environment and receptive to different things, and Gen Z is no different. It’s a new time, and new tactics are needed to reach this market.
1. Do Embrace Social Media
Gen Z has never lived in a world without the internet. It is estimated that 73% of Gen Z owns smart phones. We are comfortable with technology and use online platforms and social media for the majority of our communication. We expect to be connected to the virtual and physical world at all times. Your products must also have this dual existence. Euclid Analytics’ CEO Brent Franson says, “online is the efficiency, offline is building the experience…The king or queen of retail will master both online and offline.”
2. Don’t Make Them Wait
“I like my products the way I like my ACT results: quick.” A good friend of mine recently said this while explaining why he loves Amazon. Generation Z is used to instant gratification and impulsive decisions. We are used to having the answers immediately at our fingertips, and something just as simple as a long load time, a difficult to navigate website, or long lines will turn us away.
3. Do Get Influencers
The influencer marketing platform, MuseFind, discovered that 92% of consumers trust an influencer more than an advertisement or traditional celebrity endorsement. This is because influencers are authentic. They are everyday people using Snapchat, YouTube tutorials, or blogs that we have built relationships of trust with. We follow their stories and rely on their opinions as real people just like us. Although, as soon as the authenticity is gone or the content is poor, we will unsubscribe and move on.
4. Don’t Rely On Brands
Brand loyalty is not the same as it once was. With so much information flooding in, we are not blind lambs waiting for directions. If a brand has shoddy workmanship, the name won’t save it. The price should be reflective of the value, and if it is not up to standard, Gen Z is not afraid to switch brands. Also, keep in mind, Gen Z is big into individualism and creating our own personalized brand, we don’t want to be walking advertisements.
5. Do Be Transparent
If your company is hiding skeletons in the closet, be prepared to start cleaning. Through sites such as Yelp, transparency is more relevant today than ever. Prospective customers can learn everything from where products are made, to what a company stands for, and all of this matters to Gen Z. Kyle Andrew, the CMO of American Eagle Outfitters, says, “Gen Z seems to really care about engaging with brands that have values that align with their own…You can’t just make stuff: You have to stand for something.”
Businesses must be prepared now to change their traditional methods to appeal to this next generation, because they may not get a second chance. The online group committed to building a better world, EY, says, “Gen Z’s low threshold for mistakes and ‘system issues’ will make Millennials look like patient saints.”
As the world changed for Millennials, it must change once again. Gen Z is informed, impatient, and fast paced. And they are quickly becoming the largest generation with significant buying power. If companies don’t begin adapting now, they may never be able to catch up.
Commercial Real Estate Advocacy
Stirling Properties recently had the opportunity to participate in the ICSC Strategic Leadership Summit (SLS) Fly-In to Washington, DC. My colleagues—Townsend Underhill, Sr. VP of Development; Will Barrois, VP & Regional Manager AL/FL; and Jimmy Maurin, Stirling Properties founder—and I joined nearly 200 industry representatives from 35 states on Capitol Hill to create awareness and advocate for issues that are critical to the commercial real estate industry—OUR industry.
During this drastically changing and erratic political environment, many critical topics that affect our business are on the legislative table. Now, it is more obvious than ever that we must have a seat at that table to help shape laws and regulations that will surely impact all of us. It is essential that we create a strong, united approach to educating elected officials and bringing these issues to their attention.
While at the SLS, a Louisiana delegation met with several political leaders, advisors, and staff, including Senator Bill Cassidy, Senator John Kennedy, Congressman Ralph Abraham, Congressman Garret Graves, Congressman Cedric Richmond, and representatives from Congressman Steve Scalise’s office. A small group of us were also able to briefly talk with Senate Majority Leader Mitch McConnell.
Townsend Underhill, Andy St. Romain, Jimmy Maurin, Congressmen Graves, Marty Mayer, Ken Lamy
While there are many areas of concern regarding legislative policy that will affect the real estate industry, there are three major issues that we have prioritized—Tax Reform, ADA Reform, and E-Fairness.
Tax Reform is by far the most critical of the issues we are facing because it is the most uncertain and could potentially have the most devastating effects. Even though there has been a great deal of discussion regarding the generalities of reform, specifics of any legislation have yet to be determined.
As some of you may remember, the last major tax reform in 1986 represented the largest ever tax imposed on the real estate business. Taxation policy changes to the elimination of any transition rules and the treatment of pass-through entities hammered our industry and caused many companies to nosedive. The law had a considerable detrimental effect on our industry, the financial markets, and the economy in general, from which it took years to recover.
And now, numerous impactful tax reform policies are back in the spotlight—everything from Border Adjustment Tax (BAT) to the elimination of Interest Deduction and Like-Kinded Exchanges. As these discussions are taking place, it is critical that we convey a solid, informed message so our government representatives understand the ramifications of the policies that they set. To learn more about these tax reform policies, click here.
The ADA Education and Reform Act, H.R. 620, is aimed at improving compliance and discouraging abusive lawsuits over trivial issues mostly in an effort to collect attorney’s fees. This bill closes a loophole that has unintentionally contributed to the significant growth in federal “drive-by” lawsuits, which have increased 37% from 2015-2016.
At the same time the legislation adds safeguards that incentivize the remedy of alleged violations without taking away the right to pursue negligent business owners who ignore compliance. Congressman Ralph Abraham is a co-sponsor of this bill and we need to maintain bipartisan support. To learn more about ADA reform, click here.
E-Fairness legislation continues to be a major challenge, but it is recently gaining broader traction. H.R. 2193, the Remote Transactions Parity Act and S. 976, the Marketplace Fairness Act aim to create a level playing field in the retail marketplace. A sale is a sale regardless of whether it takes place in a brick-and-mortar store or on the Internet. The same rules that apply to local businesses across our nation should apply to online retailers. To learn more about E-Fairness legislation, click here.
Tony Brown, Lacy Beasley, Scott McLain, and Will Barrois
Stirling Properties’ Will Barrois, who is serving as ICSC’s AL & MS State Director, was also on Capitol Hill with a business delegation from Mobile, Birmingham, and Huntsville. In all, they had nine meetings with Alabama senators, congressmen, and legislative advisors. He noted, as a whole, they were receptive to working with us on these priority issues. Our government leaders realize the importance of the retail real estate industry—it employs a lot of people and is an integral part of local communities and government funding.
“Every political leader we spoke with was open to hearing our message. They were engaged and invited future discussion—they want to hear from their constituents. Legislators understand the need for open dialogue and for us to have a seat at the table in the decision-making process,” said Barrois.
Overall, the Strategic Leadership Summit was a success and we were able to shine a light on the real estate industry and policy matters that will affect it. We thank ICSC and its staff for doing a fantastic job with coordinating these meetings, while helping us to be more efficient with limited time and thoroughly prepared with effective messaging.
Click here to view ICSC’s Shopping Center Impact Infographic
How can you help? Let your voice be heard. As informed business leaders and constituents, we can play the most important role of all in shaping legislation. To contact your representatives or to find your local elected officials, visit the ICSC Legislative Action Center.
If you have questions, concerns, or simply need clarification on any of these policy topics, please feel free to reach out to any one of us directly. We would be more than happy to talk with you.
Speak up, speak out!
Marty
2017 Stirling Olympians Triumph During Annual Games
Raise $53,000 For Local Nonprofits!
Stirling Properties has its own version of the Olympic Games! Employees recently celebrated the 5th Annual Stirling Olympics, an event hosted by the Stirling Stewardship Committee to raise money for charitable causes throughout the Gulf South region. The event was a HUGE SUCCESS, raising $53,000 for local nonprofit organizations!
Next Generation
Funds raised benefited Next Generation, which helps facilitate student-initiated lunch clubs on Junior and Senior high school campuses to connect students in conversation and with local mentors for guidance on real-life issues such as bullying, suicide, violence, drug abuse, relationship struggles, and excellence in education, as well as The Learning Tree, which provides educational, residential, and support services for children and adolescents with developmental disabilities. Representatives from each organization were on hand to accept a check for $26,500 each.
The Learning Tree
Throughout the day, Stirling Properties’ team members battled one another in quirky competitions and relay races such as Musical Chairs, Hula Hoop Chain, Caterpillar Race, Dodgeball, Bucket Heads, Puzzle Relay, and The Funky Chicken. Scores were tallied, and individual medals were awarded for each event. Although our athletic skills were not of world-class caliber, a good time was had by all!
The games were judged by Christi and Steve Zito (Zito Russell Architects), Steve Serio (Fishman Haygood), Elizabeth Schmelling (New Orleans Moms Blog & Red Stick Moms Blog), Tommy Buckel (Duplantis Design Group), and Kasey Dorr (RCI). (A couple of flags were thrown, but no players were ejected this year for unsportsmanlike conduct!) Dick Cyr served as the event emcee. Fidelity Bank, Smoothie King, and Whole Foods Market provided participants with food and beverages throughout the day.
Elizabeth Schmelling, Tommy Buckel, Christi and Steve Zito,
The Gold Medal overall went to the Lime Tamers. Congratulations to Roslyn Rogers, Denise Tatum, Peggy Sayler, Kelly Wellmeyer, Donna Allsup, Jack Conger, Johnny Tolson, Grady Brame, Chris Mastio, and Tracy Gandy! The Blue Team took home the Silver Medal—Chris Abadie, Claire Draper, Joyce Ori, Sharon Amacker, Brandon Gerak, Rachel Jerkins, Cheri Magee, Kennedy Striplin, Rebecca Pritchard, and Bradley Cook. Gangsters in Paradise secured the Bronze Medal—Griffin Lennox, Donna Derokey, Amanda Goldman, Lynn Blanchard, Kathy McGoey, Scott Macdonald, Saban Sellers, Townsend Underhill, Carly Plotkin, and Kylie Ferguson.
At the end of the day, Stirling Properties’ partnership group treated everyone to a special presentation called “The Mane Event.” They competed among themselves in a hobby-horse obstacle course race! Employees were able to cast votes for Best of Show and Course Grand Champion. Donna Taylor swept the competition in both style and grace with her horse, Sassy Sparkle Boots. Townsend Underhill took home the award for Outstanding UNDERachievement with his horse, Race For The Crown.
A heartfelt thanks to all of our supporting sponsors, including Wright & Percy, Richard Price, Brasfield & Gorrie, Fishman Haygood, Duplantis Design Group, Zito Russell Architects, Whitney Bank, Walker & Dunlop, Rotolo Consultants, IBERIABANK, Fidelity Bank, Capital One, Vinson Guard, Rozas Ward Architects, Louisiana Landscape, J&B Machine Co., BH Management, Berkadia Commercial Mortgage, VergesRome Architects, Tudor, Stratum Engineering, Regal Construction, Jefferson Sprinkler, Baker Donelson, and Acadia Land Surveyor.
And a big shout-out to the Stirling Stewardship Committee and the Olympics Committee for all their hard work organizing the event and making it happen! You all deserve a round of applause!!
#StirlingProud
