Up-Close with Atkins Properties: Northeast is Hard Market to Break Into, But Consolidation, Suburbanization of Healthcare Driving Demand
WEST ORANGE, NJ — The Atkins Companies is an industry-leading, award-winning, New Jersey-based real estate organization active in the development and management of high-quality commercial, retail, and residential properties throughout New Jersey and beyond. Over the course of more than six decades, they have kept pace with the demands of an ever-changing marketplace while staying highly focused on the aesthetics, corporate and marketing strategies, and the bottom line budget requirements of the people and businesses we serve. Responsible for more than a million square feet of space, they are committed to carefully planned corporate growth and diversification as we continue to strengthen our leadership position. Through the years, their scope of operations has expanded to a variety of specialties including medical office facilities, retail, and mixed-use residential/commercial development. In this Q&A, we sat down with Principals Bob Atkins & Charles “Chick” Atkins to explore the latest in their office and in the Garden State healthcare real estate arena.
CapRE: Thanks for chatting with us today, guys. Please share with our readers a bit about the Atkins Companies and where your focus lies.
Chick Atkins: The Atkins Companies is a third-generation family real estate development and management firm. We’ve been around since our father started building homes in the 1950’s. Bob and I currently run the company, along with our brother Jack and my son Cory . So we have a lot of experience in all sorts of real estate development throughout our careers. Our business strategy for the last ten years has been to focus almost exclusively on healthcare real estate. We’re a North Jersey based firm with great healthcare relationships in this region. Over this time, we’ve had the opportunity to speak as expert panelists at numerous healthcare conferences, and is how we first came into contact with CapRE.
CapRE: Tell us about any recent deals or developments on your plate lately.
Chick Atkins: We now have healthcare properties in New Jersey, Connecticut, Pennsylvania, Maryland and Ohio. We also have some new projects currently under development and construction. One of the projects we’re really excited about is a mixed -use development in Washington Township, Gloucester County, NJ, a suburb of Philadelphia, called Washington Square Town Center. Over ten years ago, we were named redeveloper of a 35-acre parcel by the Township. After many years, we successfully received approvals for a 40,000 square foot medical office building, 330 apartments, 100 townhomes, 30,000 square feet of retail, and an assisted living facility The medical office component is a joint venture with the Rothman Orthopaedic Institute out of Philadelphia, one of the largest orthopedic groups in the country. It took a lot of time and effort, but it’s nearing completion and it looks like it’s going to be a very successful project.
We continue to look for ground-up development but it’s a harder game in the Northeast, which is why we moved into acquisitions over the last ten years as well. We asset manage all of the properties we own, in addition to some we manage for third party owners. We’ve become very adept at managing the on-site maintenance and leasing through our relationships in the local markets.
One of our initiatives for 2019 is establishing a healthcare medical office fund for future acquisitions, in order to continue our growth plan. We think it’s a logical next step for us.
CapRE: So what kind of national trends are driving all of this positive development?
Chick Atkins: Putting aside for a moment the overall national economic picture, what drives our focus is how dramatically healthcare has changed over the last 15 years. The medical office properties we developed in the early days were very different than what’s happening in the marketplace today. There weren’t a lot of groups focused on healthcare at the time. Because of the nature of healthcare in those days, the vast majority of medicine was practiced by small physician groups, and most medical students coming out of school looked to hang their shingle somewhere. You had buildings with multiple small practices as tenants. There was a constant flow of demand from young doctors looking for space to replace retiring physicians.
That’s just not the case anymore. In the last ten years, buildings that we previously might have wanted to own and manage, we’re not really looking at anymore, because a lot of those old buildings are no longer competitive. In our new building in Washington, the Rothman group took 20,000 square feet on a 20-year lease. A large cardiology practice in the area took another 10,000 square feet. It’s either single-tenant occupied buildings or buildings with a few large tenants that we’re looking at today. So it’s a challenge to make sure we stay competitive in today’s healthcare environment.
CapRE: So honing in on New Jersey, how is it unique from the rest of the country?
Bob Atkins: New Jersey is more of a mature marketplace in terms of its population. It’s not necessarily growing like some of the southern and western states are, so you are not seeing the expansion of new product quite as much. But you’ve got a mature marketplace in terms of the aging population, the baby boomers specifically. So we see it as there is going to be continued strong demand for medical space in mature markets like New Jersey, New York, and to a certain degree Pennsylvania. Obviously Florida and states like that, who have a significant percentage of an aging population base, will show continued demand as well.
CapRE: What about telemedicine? How has that impacted your game?
Bob Atkins: There is a lot of talk about that and the concept will continue to grow, where healthcare is delivered over the internet and the phone, but in our opinion there will still be continued strong demand for brick and mortar space where people have to visit their doctors. But as Chick mentioned, the whole integrated concept of medicine is going to continue into the future, where people can see multiple physicians under one umbrella.
CapRE: Are any other demographic or geographic trends on your radar?
Bob Atkins: Well, the suburbanization of healthcare systems is also occurring. It used to be that hospitals were centralized on one campus. Most healthcare systems now want to get out into the suburbs because it’s easier for their client base to visit their doctors. We’ve been the beneficiaries of that, because we do a lot of suburban development. That is definitely something we are seeing in New Jersey and surrounding states and are also the kind of opportunities we are looking for. We’ve had some great success with value-add acquisitions in the suburbs – where we’ve taken buildings that were originally built for other uses and converted them to medical space.
Chick Atkins: Regionally, the Northeast is a great place to own medical. Everyone wants to be here, but it’s not an easy market to break into. There’s rarely a lot of medical property on the market and when owners do sell, values tend to be at a premium.
CapRE: So what’s next for the Atkins Companies?
Chick Atkins: Our focus is going to remain the same. We are a medium sized healthcare real estate firm. We look for properties just under the radar of the large REITs. We’ve purchased numerous properties in the last couple of years, that for one reason or another REITs weren’t looking at. We’ve successfully partnered with high net worth investors or with private equity groups. We this continuing.
CapRE: Anything else about your firm you’d like to share?
Bob Atkins: Something else that sets us apart from most of our competition is that we are very hands on. We are the principals of the firm, but we are very hands on and we’ve established relationships over 40 years that have lasted all this time. For example, with RWJ/Barnabas Health, the largest healthcare system in the State, we have a relationship that is over 35 years old, and is as strong as it was the day it started. We’re very proud of the relationships we have with our healthcare partners, our tenants, and our investors. And I think that has proven to be the formula for success for us – our relationships and our reputation.
Real estate is a tough game out there. But we have always conducted ourselves with honesty and integrity, looking out for our partners and our tenants, keeping them happy. So we have phenomenal success with our retention rates – even tenants that have been with us for 35+ years – because of how we conduct ourselves in our business. That is what sets us apart from a lot of the competition.
CapRE: Thanks guys. We’ll see you at a CapRE CRE Summit soon!