By Peter Cangialosi and Doug Pauly, Contributing Writers

Site selection for healthcare organizations has become more complex in recent years due to changes in economic and demographic factors. In light of these changes, the pressure is mounting to maximize the value and efficiency of real estate assets. 

In turn, the growing complexity and pressure is leading organizations to make mistakes. Beyond the mistakes described in the first part of this article, here are three more potential missteps healthcare executives and facility managers too often make in the site selection process. 

Failing to leverage data 

While convenience remains a primary factor for patients, finding a viable site requires rigorous, data-driven analysis, such as using specialized geographic mapping and advanced data analytics to pinpoint true market white space — untapped areas with the exact demographic density needed but without an oversaturation of competing providers. Organizations should avoid cutting corners by guessing where patients and competitors might be. Instead, they need to make decisions based on evidence. 

Data can give real answers to questions, such as, “How will this location affect our referral patterns within a 15- to-20-minute drive time?” or “Have we pressure-tested volume assumptions against competing projects in the pipeline?” 

Data also becomes valuable as more providers lean into adaptive reuse to transform standard commercial spaces into dedicated boutique medical buildings. Vetting a property for hidden compliance limitations, building restrictions and even such issues as a lack of gurney-sized elevators often happens too late in the process. Data is an immensely powerful tool for avoiding costly conversion missteps. 

Not considering market nuance 

While the core principles of medical site selection travel across markets, local conditions — especially supply, demand and the development pipeline — can dramatically change the calculus. One strategy that works in a mature, supply-constrained market like Chicago may not map cleanly onto a high-growth market like Austin. 

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It also is important to consider that 35 states and Washington, D.C., operate with certificate of need (CON) laws. In those states, a health planning agency or other entity must approve the new build or expansion of an existing facility’s services in a specified area. The acquisition of major equipment can also fall under CON laws. 

These regulations control market competition and prevent duplication of services. Healthcare providers should understand the impact on the timeline when entering or expanding within a CON state because the approval process can slow or even stop real estate development. 

Leaving leverage on the table 

Whether leasing a clinic, owning the real estate or looking toward retirement, the current market dynamics work heavily in an organization’s favor if it plans accordingly. Global healthcare private equity set a record last year with more than $190 billion in estimated deal value, according to Bain & Company’s 2025 Global Healthcare Private Equity Report. More than ever, a stable, well-positioned outpatient clinic is considered a premium financial asset. 

For tenants, this stickiness provides immense leverage at the negotiating table. When a successful provider signs a long-term lease renewal, it provides guaranteed cash flow that immediately increases the resale value of an institutional landlord's building. 

Organizations must use this cash flow to their advantage. This is the time to negotiate with the landlord for substantial tenant improvement allowances and facility upgrades in exchange for the long-term security the medical lease provides their portfolio. 

For owner-occupiers, this surging institutional demand creates unprecedented opportunities. If a clinic is housed in an efficient, well-maintained space, the real estate is a highly attractive asset. Organizations can unlock trapped equity through a strategic sale-leaseback — selling the property to an investor while remaining as a long-term tenant — to fund new acquisitions, expand the footprint or significantly boost the overall enterprise value during a merger or retirement buyout. 

Healthcare providers that treat site selection as a strategic clinical and business decision, not a simple real estate deal, will be positioned for long-term success. Clear, prioritized actions can put them on the path to operating a stable, well-positioned financial asset. 

The 2026 real estate market heavily rewards proactive decision-making. Before jumping right in, organizations need to understand that executing a healthcare real estate strategy is rarely a solo endeavor. Successfully analyzing true market availability, assessing the hidden compliance traps of an adaptive reuse project and negotiating effectively requires a specialized infrastructure. 

Ensuring alignment early with a collaborative team that includes a healthcare-focused real estate advisor, a general contractor and a healthcare attorney is the most effective way to protect the bottom line, manage facility costs and give the organization total control over growth. 

Peter Cangialosi and Doug Pauly are principals at Lee & Associates of Illinois, a commercial real estate firm. 

Editor’s note: This is part two of a two-part article. Click here to read part one.