CREJ

Page 26 — Retail Properties Quarterly — August 2021 www.crej.com Management C ome August, more than 9,000 wildfires burn in the U.S., on average, causing nearly 2 mil- lion acres of damage, which includes residential and busi- ness structures. Looking at historical data of the 20 largest wildfires in Colorado’s history, nine of those have occurred since 2018, 15 of those have occurred since 2012 and all 20 have occurred since 2001. Even more alarming, the three largest fires all occurred in 2020. “We’re having fire years, not fire seasons anymore,” said Colorado Division of Fire Prevention and Con- trol Director Mike Morgan. Ahead of the wildfire season, we put together prevention tips and con- trols property owners can implement to better protect their assets and ten- ants from wildfires. n Examine building materials. From your roof to your patio, it’s important to understand what materials offer the best fire protection and the con- trols you can implement to reduce the likelihood of your property going up in flames. • Roofing: Class A fire-rated roof- ing material is most effective against fires. Fire-resistant roofing materials include clay tile, slate tile, concrete tile (fiber-reinforced) and metal. It is equally important to keep roofs and gutters clear of pine needles, leaves or other debris. It’s also a good idea to have a local fire marshal or roofing professional assess your roof. • Exterior walls: Noncombustible siding materials like brick and con- crete offer the best protection against fire. Try to leave 6 inches of clear- ance between the ground and the start of the siding to prevent dam- age from direct flame contact. If a combustible siding material is used, these 6 inches of clearance, as well as defensible spac- es, are especially important. • Windows and vents: Dual-pane windows with tem- pered glass offer increased protec- tion against radiant or direct flame contact. Vents should be covered with 1/8-inch (minimum) noncombus- tible metal mesh screening to help minimize the size of embers that can enter attic or crawl space area vents. • Patios, decks and porches: Flam- mable materials should not be stored on or under decks. Consider enclos- ing your elevated deck, patio or porch. Some manufacturers also are incorporating fire-retardant chemi- cals into products like wood-plastic composite decking, so be sure to look into this material option. If you have an existing wood deck and are not looking to replace it anytime soon, consider having it treated with exte- rior fire retardant. • Enforce smoking controls: The National Park Service estimates at least 85% of wildfires are caused by human activity. Provide receptacles in easily accessible areas and place these away from the building and combustible materials. Ensure your employees empty these receptacles regularly. The ground should be cleaned of cigarette butts to elimi- nate fire hazard. n Identify and proactively address your defensible zones. The Federal Emergency Management Agency defines a defensible space as an area around a building in which vegeta- tion, debris and other types of com- bustible fuels have been treated, cleared or reduced to slow the spread of fire to and from the building. The National Fire Protection Agency rec- ommends a defensible space of up to 200 feet from a structure, which encompasses three zones. Each zone has different maintenance needs: • Zone 3: 100-plus feet (to property line) – Remove dead trees and plants. Keep trees spaced. • Zone 2: 30 to 100 feet – Remove dead vegetation. Remove hang- ing branches at least 6 feet off the ground. Trim tall grasses/plants that would allow fire to travel up trees. • Zone 1: Zero to 30 feet – Use grav- el, rock or mulch. Relocate firewood piles. Plant high-moisture-content annuals and perennials. n Understand your severity zone. Which severity zone a business is in ultimately will dictate what prepara- tions need to be done to protect the property. As you can expect, prepar- ing for a potential wildfire is even more critical if your property is clas- sified as being in a high or extreme severity zone. A severity zone is classified as moderate, high or extreme. These classifications can be based on fire history in the area, vegetation/land- scaping, slope and other terrain fea- tures. Search where you operate in Colo- rado to view the risk using this tool from the United States Department of Agriculture. You also should con- sider contacting your local insurance agent to discuss in more detail. Last year was an extremely chal- lenging fire season in Colorado, and in July, the National Significant Wild- land Fire Potential Outlook expected warmer and drier than normal condi- tions, especially in the West, through- out the summer. Additionally, more than 90% of the West is in drought, with over half the region in extreme to exceptional drought. By investing in quality building materials, tak- ing proactive measures of regularly maintaining the landscape around your building, and understanding the risk where your business is, you are taking control of the variables in your power and taking proactive measures for a situation that can seem out of your control. s Wildfire season: Best practices to protect assets Jarrett Wagner, AIC, AIS, WACH Risk control representative, Society Insurance Looking at historical data of the 20 largest wildfires in Colorado’s history, nine of those have occurred since 2018, 15 of those have occurred since 2012 and all 20 have occurred since 2001. I t is no secret that the medical spa industry is booming. In the last 10 years, medical spas have moved from the barely known fringe to a competi- tor to plastic surgeons. The global medical spa market is predicted to expand at an impressive compound annual growth rate of more than 15% over the period between 2021 and 2031. If you own retail, mixed- use or even traditional office space and haven’t seen a letter of intent from a medical spa, you probably will soon. Here is what you need to know when you get one. First, what is a medical spa? A medical spa offers nonsurgical treatments including injectables such as Botox, lasers and body con- touring. These procedures require medical training and licensure but stop short of actual surgery. You can think of aesthetic and spa treatments as a continuum that runs from nail and hair salons to plastic surgery practices. Salons deal primarily with hair and nails, while traditional spas will offer massages, facials and other “well- ness” treatments, and plastic sur- geons perform ... well ... plastic sur- gery. Generally speaking, the further you move to the right along this continuum, the older, higher edu- cated and more wealthy the demo- graphics of an area will need to be in order to support the business in question. While awareness of the efficacy of treatments grows and the poten- tial for profitable business ventures becomes obvious, the industry is still new, fragmented and mostly unregulated. The industry did not truly exist until approximately 2008. Additionally, over 75% of medi- cal spas are owned and run by a single owner who is like- ly a doctor, nurse or esthetician with no previous expe- rience running a business. In short, there is growing demand, lots of money to be made and very few sophisticated operators. It’s the Wild West out there. So, you have a letter of intent from a bona fide medical spa, not a hair salon with nail tech and a part-time injector in the back. Is this a stable, successful prospective tenant? Below are some factors that you may want to consider. n Number of locations. Less than 25% of medical spas nationally have more than one location. If a multi- location practice approaches you, chances are you are dealing with a business owner – not a physician who wants to be left alone to prac- tice medicine with limited under- standing of how to run a business. This has a higher rate of long-term success and is less reliant upon a single person’s injecting hand con- tinuing to work well. n Does the owner perform the majority of the procedures? Looking at what the owners are doing will tell you a lot about the practice. Are they in the room treating patients on a daily basis? This means that they are working in the business, not on it, and their growth is lim- ited by the hours they have in their day. Their practice may be profitable but not scalable, and will likely dis- appear completely if they retire. If they have hired and trained midlev- els (nurse, estheticians, etc.) to do a majority of the procedures, then you may be dealing with a scalable and resilient organization that has the potential to grow. n What is the ratio of lasers to injectables to esthetics? While Botox gets all the buzz, it is actually one of the least profitable procedures due to the high, inflexible costs of goods and cost of skilled labor. (Be aware that most medical spa owners do not know this. Doctors are notoriously bad at understand- ing their own books.) To help you understand the profitability of the practice, look at the ratios of the service types. • Esthetic procedures: These are things that do not need a doctor’s supervision – such as facials and light peels. Most medical spas will offer one or two of these things, but it is a small part of overall revenue. • Injectables: This is Botox and its cousins, fillers and platelet-rich plasma therapy. These can be prof- itable, but if they are more than 50% of appointments, profitability will be elusive. • Lasers: These are by far the most profitable services a medical spa The medical spa tenant: What you need to know Flora Waples, MD Founder, Restor Medical Spa Restor Medical Spa Space requirements typically comprise four to eight treatment rooms, some storage area and a lobby. The most similar layouts are those for massage studios or a tradi- tional doctor’s office but with fewer or possibly no offices. The finishes, however, will be more expensive. Clients are paying luxury prices and expect a luxury experience. Please see Waples, Page 28