Forte Real Estate Partners co-founder Steve Brown loves to ski in the mountains of Colorado, a pastime that perhaps has prepared him well for the peaks and valleys of the real estate market.
“I have an affection for the mountains. I love going out there,” said Brown, who graduated with a business degree from Colorado College, where he also played hockey. “I think that was a big draw of how I ended up there for college. And who knows, if I ever retire, maybe that’ll involve a mountain of some type.”
Brown, who co-founded Bloomington-based Forte Real Estate Partners in 2021, doesn’t sound ready to hang it up anytime soon. A leading health care adviser in the Twin Cities, he serves clients in the areas of strategic facility planning, site selection, portfolio and transaction management, and patient demography, according to his corporate bio.
Brown has been in the real estate business since 1985. Before starting Forte Real Estate Partners, he worked in the office, industrial and retail brokerage services for American Commercial Properties, and established a Healthcare Real Estate Advisory practice within the corporate division of United Properties.
In the following interview, Brown talks about trends, opportunities and challenges in health care real estate. In particular, he touches on the specialized needs of health care tenants and the challenge of finding the right office space at a time of high construction costs and rising interest rates. The interview has been edited for length and clarity.
Q: Talk a little bit about Forte Real Estate Partners and the services you offer.
A: I’m going on my 38th year [in real estate]. [One of my] business partners here, Jim Jetland, and I started in a similar capacity with a boutique real estate company back in 1985. We both spent a good portion of our career at what became Cushman & Wakefield. And in 2014, I think, he left to form the Excelsior brokerage. I joined him there in 2017. And then we merged our group, our Excelsior group, with Phil Simonet’s company, Paramount Real Estate Services.
We basically are a boutique, full-service real estate company focusing on health care, industrial and office. I head our health care group. … My father was an oncologist. When I got into the business, one of the very first medical deals I did was finding him an office.
A lot of people didn’t really do work with physician groups. I had kind of learned how to speak physician, if you will, with my father. Pretty soon I was getting calls from people he worked with saying, ‘Can you help us?’ In 2000, I started a health care advisory practice over at Cushman & Wakefield and have been doing health care exclusively ever since.
It’s a very interesting, unique submarket. When I started, there wasn’t a lot of people that dealt with it. And it’s kind of grown and become its own, quote, food group within the commercial real estate market.
Q: Tell us about some of your recent transactions.
A: Well, it’s been a very interesting run-in health care for the last few years with the pandemic. We’ve had an enormous amount of employee burnout. And between that and what’s happened in the office market with the work-from-home situation, you have an office market that’s starting to kind of tip and the healthcare market that has high demand.
But the costs — we kind of got hit by a tsunami. You had interest rates that went up, construction costs went up, supply chain went up. And those are three things that have been very constant for the past 10 or 15 years. And the most interesting part about it is that the burnout, and the ability to attract employees, is a major component of what’s affecting health care.
I’ve got clients that want to expand, and the cost for new construction is so much higher, they’re basically saying, ‘I can’t afford the rent of what it would cost to do it’ and — this is one of the most interesting parts — ‘I don’t have the capacity staffing-wise to do it because there just aren’t the employees in general [or] skilled employees that you need within health care because many of them are burned out.’ So it’s been a pretty interesting dynamic.
We’ve had seven or eight clients who have chosen to relocate to general office buildings, which has been a win for them, because the costs are more in line with what they’re used to paying. And they’ve been a win for the landlord, because the landlord has an office market that’s starting to deteriorate. So it’s been a very interesting transition. And I think as this office market continues to find its way post-pandemic, we will likely see much more of this.
Q: How do medical office clients, with their specialized needs, make that transition to general office space?
A: This is not the first time we’ve seen this trend occur. One of the things that was learned back in the late 1990s and the early 2000s, where people tried to do this, is that infrastructure in the physical building for a general office building is very different than for a medical building. A big part of it is plumbing.
The second part of it, oftentimes, is parking capacity. Parking requirements, depending on the type of practice, are different. From my perspective, as we’ve gone to the market to look at alternatives that are in the general office category for healthcare clients, we do a little bit of underwriting that’s very different than maybe some people might, because we have to make sure to check certain boxes. Because if they end up in the wrong building that doesn’t have good parking or doesn’t have adequate water capacity, or there’s a risk that the other tenants may become problematic for their ability to see patients, those are issues that can really be problematic.
We had one client, Skin Rejuvenation, that had been in a traditional medical office building for the past 17 years. We relocated them to the first floor of an eight-story office building. But the thing that was unique is, the building had excellent parking capacity. It had a separate entrance to the outside, so the general office tenants don’t even necessarily need to interact with them. It’s like their own little building within a building.
So it requires a little bit more scratching and looking under the surface. But there are definitely opportunities that are in the general office market and there are some that we looked at that simply don’t work.
Q: What attracted you to real estate as a line of work?
A: I played hockey when I was in college, at Colorado College, which had a very unique program, a block program. In the block program, you took one class at a time, you learned quickly, and you changed subjects. I didn’t realize at the time, but it was training for what I ended up doing in my career, because you’re constantly changing from deal to deal and client to client.
When I first graduated, I thought I was going to go into advertising. My mom would tell me, ‘You like the commercials more than you like the shows.’ And I learned very quickly as I started to look at that, after I got done playing hockey, I was like, ‘I don’t have the skills for this.’ A friend of mine introduced me to the commercial real estate business and I fell in love with it.
I think part of it for me, and I can say this with pretty much complete honesty, I love what I do. I really have never had a day of work where I haven’t come in and enjoyed what I’m doing. There are stresses, etc. But it’s constantly different. You’re solving problems for people who are providing care for people, and so there’s an end product where you can see the result of what you’re doing and how it benefits other people. I guess this is my way of living vicariously in health care because I’m not able to be a physician.
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