Case Studies

A Start-Up Interventional Radiology Practice In Novi, Oakland County

The Situation

Dr. Morgan Whitmore and Dr. Mitchell Ermentrout were both medical doctors, practicing out of state when they decided to build something in Michigan. It would be a new interventional radiology practice, started from nothing.

This was not the conventional move. Interventional radiology is overwhelmingly hospital-based. Starting an independent outpatient practice in a market you don’t currently live in is doing a hard thing on hard mode.

But they had roots in Michigan. They knew what they wanted to build and who they wanted to serve.

• So, they flew into Detroit, toured, learned the market, flew home, and did it again.
• We ran a deliberately wide search with more properties than the plan required and more configurations than they thought they needed. That thoroughness looked like overkill at the time, but it was the only reason this story has a good ending.
• And then we found it in Livonia – a space in the right size, right location, and the right bones for a procedural practice.
• We did the work – space plans and drawings, contractor budgets, and fully negotiated the lease terms.
• And then we waited. And waited. The problem was that the building had been constructed by a private developer, but the land underneath it was owned by a large hospital system.
• When a building sits on ground leased from another party, that landowner typically holds consent rights over what happens inside. Therefore, your lease with the building owner isn’t final until the party who owns the land signs off on it too. This means someone who you may never meet, never speak to, or never involve with the negotiations, can just say no without ever explaining why.
• This situation is not uncommon in medical real estate, because large health systems own a great deal of land around their campuses, and this is not by accident. Controlling the dirt is how they control who practices near them.
• We had no reason to think we would not be approved. The developer told us the use would be, and they had been through the process before. They wanted the deal done too.
• But the landowner would not permit the use, and nothing we could offer would change their mind. Intervention radiology was not going in that building. And to be fair, that was a smart business decision for them. The hospital system was concerned that patients who might otherwise be treated in their network would go to the private clinic instead.
• The developer got the rug pulled out from under them too. They signed a tenant who they thought had a good use for the space, and they fully expected the deal to close. The landowner’s decision cost them as much as it cost us. Nobody was acting in bad faith, but we were all operating under the same assumption, and that assumption was wrong.

The Solution

• The doctors handled it well. They were disappointed, but they were ready to move on. And because our initial search was so thorough, moving on didn’t mean starting over.
• Plan B was already vetted. We went back to a medical office building we’d identified earlier and moved forward quickly.
• We worked on the space planning and negotiated the terms – afterall, we’d just done all the steps before. And we made the deal.

Radiant Vascular Institute is now open in Novi! The space is gorgeous, and the practice is doing exactly what they set out to do. Two physicians who were living in other states when this all started, now run an independent interventional radiology clinic in Michigan.

Congratulations, Dr. Whitmore and Dr. Ermentrout!

They sure earned it! Deals fall apart for a hundred reasons a good broker can anticipate and manage, but this one was sabotaged by someone who never even entered the conversation.

So many lessons can be learned from their story:

• Ask who owns the land in the first conversation – not just the building,
• Understand that health systems compete through real estate,
• Get use approval in writing from the party who actually grants it during the LOI process,
• A landlord’s confidence is not consent – and they can be wrong,
• A silent approval process is a warning, not a delay, and
• Search wider than the plan requires.

That last one is what saved us here. The extra properties you tour and underwrite may feel wasteful at the time, but they provide peace of mind that you won’t have to start from zero if your primary deal is taken away from you.