CHS just can get enough MOB space

CAROLINAS HEALTHCARE IS BUILDING AND LEASING SPACE THROUGHOUT CHARLOTTE

By Murray W. Wolf

 

Carolinas HealthCare System (CHS) opened the 185,000 square foot Morehead Medical Plaza on the campus of its flagship Carolinas Medical Center in Charlotte, N.C., in 2004. Has that provided enough medical office space to satisfy the system’s needs? Not even close.

The Charlotte-based not-for-profit health system is currently developing three more medical office buildings (MOBs) totaling more than 345,000 square feet at a cost of about $116 million. It’s also adding leased space in other Charlotte MOBs, and its long-range plans allow for the construction of a twin for Morehead Medical Plaza.

Population explosion

CHS is already the largest health system in the Carolinas and one of the largest public health systems in the nation. Yet the system continues to expand at a rapid pace to keep up with the area’s exploding population.

“There’s a lot of growth taking place here,” Scott White, director of media relations for CHS told Healthcare Real Estate Insights^™ in a recent interview.

Charlotte’s population now stands at nearly 650,000 and at nearly 1.6 million for the seven-county metro area, according to statistics provided by the Charlotte Chamber of Commerce. By 2030, Charlotte alone is projected to add another 330,000 people – the equivalent of adding an entire St. Louis, Cincinnati or Pittsburgh.

As the expanding population fuels growing demand for healthcare services, CHS needs to add the infrastructure to deliver those services where people need them, Mr. White explains.

Besides providing greater convenience for a growing population of patients, the new medical office space will help to satisfy growing demand from practices in the Carolinas Physicians Network, which includes about 70 physician groups across the region. Plus, the new facilities are intended as a tool for the recruitment practices that are not currently part of the network, he says.

Three new MOBs

On Fairview Road, across from Phillips Place in the upscale SouthPark area of southern Charlotte, CHS recently kicked off construction for a $40 million, four-story, 120,000 square foot MOB. The project, which will also include a two-level, 600-space parking deck and a 170-space surface lot, is scheduled for completion by July 2007. Mecklenburg Medical Group has signed on to anchor the multi-tenant MOB.

LS3P Associates Ltd. is the architect for the building shell and FMK Architects is handling tenant interiors. Shelco Inc. is the general contractor. CHS’s in-house real estate and architecture departments are working on all three of the new MOBs, according to Mr. White, with support from third-party architects and contractors.

Further south, on the campus of At Carolina Medical Center – Pineville, plans call for a $39 million, 100,000 square foot facility with a parking deck. That project is scheduled to get under way in August with completion by September 2007.

In central Charlotte, on the campus of Carolinas Medical Center-Mercy, plans are in the works for a $37 million, four-story, 125,000 square foot MOB. Construction is slated to begin in October with completion by winter 2008.

Charlotte-based Lincoln Harris is earmarked to manage all three buildings.

Skokie, Ill.-based Alter+Care developed, financed and owns Morehead Medical Plaza. Working with Alter+Care “met some specific needs,” Mr. White says, and CHS plans to work with the firm for the future development of Morehead Medical Plaza II – even though there’s no current timetable for that project. Meanwhile, CHS decided to handle the three current MOB projects on its own.

CHS is also the anchor tenant for an $11.5 million, two-story, 60,000 square foot MOB now under construction on 6.2 acres in the Museum Medical Plaza medical park. CHS is leasing the space for four of the physician practices it owns. That MOB is scheduled to be completed next month and occupied by June. The developer is Museum Medical Plaza II, a partnership affiliated with Charlotte-based E.C. Griffith Co. and Griffith Equities. ADW Architects is the project architect and Rodgers Builders in the general contractor.

CHS is also busy with inpatient projects. The CHS board recently approved a $390 million capital budget for 2006. The system plans $1.5 billion in capital improvements through 2010.

One project is the expansion of Carolinas Medical Center. CHS recently requested state approval to increase the size of its previously approved plan to add 19,369 square feet to a surgical tower that had been approved at 146,800 square feet. The additional square footage would add $13.8 million to the previously approved cost of $70 million.

Rendina Cos.

breaks ground for

Las Vegas MOB

LA JOLLA, Calif. – The California office of Rendina Cos. announced that it broke ground March 16 for San Martín Medical Arts Pavilion, a three-story, 75,000 square foot MOB on St. Rose Dominican Hospitals’ new San Martín Campus in southwest Las Vegas. The new MOB will complement a new four-story, 111-bed hospital that is scheduled to open this summer. St. Rose Dominican is part of the San Francisco-based Catholic Healthcare West system.

In Florida, Rendina Cos. also announced that the third Medical Arts Pavilion on the campus of Regional Medical Center in Wellington, Fla., is 100 percent leased prior to the start of construction. Wellington Medical Arts Pavilion III is to be located just west of Medical Arts Pavilion II on the hospital campus. The anticipated completion date for the project is December 2006. The 120-bed Wellington Regional Medical Center is owned by Universal Health Services Inc. (NYSE: UHS) of King of Prussia, Pa.

Rendina Cos. also announced recent lease transactions totaling more than 23,000 square feet in MOBs in Tennessee, Florida, New York and New Jersey, and an office building in Florida.

Docs’ $25 million

MOB plan advances

In Peoria, Ill.

PEORIA, Ill. – Plans for a $25 million physician-owned MOB on the campus of the University of Illinois College of Medicine took a big step forward in mid-March. The Peoria Renaissance Park Commission voted unanimously to approve a special use request for the Illinois Medical Center project, sending the plan to the City Council for final approval.

About 35 physicians have been working with the city since January 2005 to plan the four-story, 111,000 square foot MOB on about 5 acres leased from the university for $1 per year for 50 years.

City officials are generally supportive of the project because it will be a shot in the arm for the medical school and downtown Peoria. The city plans to contribute about $4 million for street work and a new two-level, 424-space parking deck.

If the plan is approved and financing is secured, ground could be broken by late summer. Construction would take about 18 months.

For the Record

Local real estate developer Tom Reed and construction service company Conseco Group Inc. plan to break ground this spring on a $12 million, one-story, 50,000 square foot, multi-tenant MOB in the Midtown Hospital District of Nashville, Tenn.… Ground was recently broken for a new 9,500 square foot building for the Center for Women’s Health of Wichita, Kan. The OB/GYN practice recently purchased more than an acre of land within the Wilson Estates Medical Park in Wichita for the project. Architectural Innovations is the project architect and Dondlinger & Sons Construction Co. is the general contractor. A fall opening is planned… Anchor Health Properties of Wilmington, Del., has broken ground for the 70,000 square foot Hazleton Health and Wellness Center in Hazle Township, Pa. The project, which is designed to integrate medical care with personal health/wellness services, is a partnership of Greater Hazleton Health Alliance and physician investors. Completion is slated for December… An $11 million-plus, 60,375 square foot MOB is scheduled to open by January 2007 on the campus of Lakewood Ranch (Fla.) Medical Center. The new building is more than 50 percent pre-leased. A twin MOB opened in January 2003. NDC Development Co. is the developer, HKS Architects is the project architect and Gold Bank is providing financing… Ground was broken last month for a $9 million, four-story, 67,500 square foot MOB being developed across the street from Del Sol Medical Center in El Paso, Texas. The new office building was designed and is being built for the hospital by HealthCare Facilities Development Corp. (HCFD) of Austin, Texas. Completion is scheduled for spring 2007. q