amt2 task 1

Topics: Real estate, Net lease, Leasehold estate Pages: 3 (840 words) Published: November 5, 2014
Service Line Development
Trinity Community Hospital
New Orthopedic Line
Business Summary
The following is a summary of advantages and disadvantages of building, buying and leasing space for the new orthopedic line at Trinity Community Hospital. Included in this summary, is the option I recommend and my basis for this choice. When considering building, buying or leasing space for the new orthopedic service line, one must consider current trends in healthcare. Hospital construction continues to struggle to recover from years of unfavorable economic news. As hospital building activity has spend the last few years under the shadows of Wall Street’s financial meltdown and Capitol Hill’s health reform debate, industry planning, design and construction professionals found themselves riding out an extended down market (Hrickiewicz, 2010). Construction costs for building the space is estimated at $600,000 (5,000 square feet @ $120 per square foot). The advantage to this option is the potential for the building to increase in value resulting in increased equity for the hospital. Additionally, the hospital would retain total control of design and modifications to the building. In a leasing scenario, any modifications would require landlord approval. Also, Trinity Community Hospital would have the ability to lease any excess space within the building to others to generate additional revenue. Costs for purchasing the building adjacent to the hospital to house the orthopedic service line is estimated at $700,000 ($525,000 for the building and $125,000 for the lot). As with building, an advantage to this option includes the potential for this space to increase in value and build equity for the hospital. Also, expansion and modifications to the space are only limited by licensing and budget and not under landlord control. Additionally, to generate extra income, the excess space could potentially be leased to outside service providers. Leasing costs for the 5,000...

Cited: Hrickiewicz, Mike (2010). Trends in Healthcare: To Build or Not?. Health Facilities
Management. Retrieved from
http://hfmmagazine.com/hfmmagazine/jsp.?dcrpath.
Spohn, Rachel (2010). The Costs and Benefits of Leasing Your Medical Office Space.
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