- In Business Las Vegas, CRE Special Section, November 2008

The American dream is to own a home; a doctor's dream is to run a successful practice.

Owning a beautiful office with the latest equipment and a crackerjack staff is something to be proud of. Rather than paying a lease with no return, the physician pays off a loan, gaining equity with each payment while at the same time depreciating the building's value and reducing taxable income, all of this as the property value rises over time.

Achieving the dream can be a daunting endeavor. While physicians are experts in their chosen fields of medicine, they typically know little about land acquisition, construction costs and other important issues involved in the development and building of a new office. This fact alone keeps many of our best doctors from striking out on their own and gaining the freedom of managing their practices as they see fit. Fortunately this hurdle can be reduced significantly with a new business model called co-development.

Co-development involves bringing in a second party with a vested interest in the success of the development. Quite often the second party is a general contractor, bringing construction expertise to the table including land acquisition, financing, design, permitting and many of the other important needs in which a doctor has no experience.

The cornerstone of co-development is the general contractor's investment in the new building. As a minority partner, the general contractor benefits from making sound decisions regarding design, financing and other key factors. They keep the project moving forward, using qualified craftsmen to ensure the new office opens as soon as possible. After all, the investment doesn't mature until the office is open for business.

In addition to having the contractor's full attention, the doctor is free to concentrate on staffing, equipment, insurance and other areas in which he is dramatically more qualified.

The process is similar to hiring an interior designer to decorate a new home. The designer may begin with a conversation about what the homeowner sees in the perfect living space, before moving forward with swatches of material and paint chips. Finally, the curtains are hung and walls are painted.

In the case of the physician, it's a matter of the location in town and very specific needs for the office and its individual spaces. The doctor is provided with regular updates and is involved in all important decisions in which he is qualified.

Selecting the right co-developer is important. Qualified candidates need the financial strength to see the project through to completion. In addition, it's extremely beneficial to partner with a company who has constructed similar buildings and has the know-how and proven track record of performing other tasks such as purchasing property, working with engineers to develop the ideal office and the ability to expedite government and utility permitting.

While most co-developers view the process as an investment, few consider these arrangements as long term deals. Most doctors are able to buy-out their construction partner once their practices are sufficiently profitable.

An increasing number of medical offices are springing up across the valley using this or similar models. Physicians are moving into expertly built offices, often in less time and at a lower cost than if the project was attempted without the co-developer. Also there are none of the stresses of dealing with architect, engineers, and municipalities endemic to the development and construction process.

As co-development spreads across the valley, doctor's offices will find there way into the areas where we live and work. Our family practitioners and eye doctors will be only minutes away, and our dentists could be just down the street. Getting that six month check up will never be easier.

Daniel Amster is co-owner of Dakem & Associates, LLC., a general contractor with vast experience building medical offices, banks, retail centers and office developments.