Outpatient Projects (Febuary 2007)

Florida developer to let docs own MOBs

15-BUILDING, 16-ACRE MEDICAL OFFICE PARK WOULD BE NEAR LOCAL HOSPITAL

 

By John Mugford

 

Taking the concept of the medical office condo and adding a bit of different twist, a Florida developer is planning a 16-acre medical office park in which physicians, or group practices, can buy their own small buildings.

The medical office park, to be called South Lake Medical Arts Center, would contain up to 15 buildings ranging in size from 2,500 square feet to 30,000 square feet – for a total of about 116,000 square feet. The project is slated for land across the street from South Lake Hospital in Clermont, which is located about 30 minutes west of Orlando.

According to the developer, Clermont-based Schmid Construction and Development Inc, the project would be the first of its kind in the area. Schmid, however, has developed two similar projects: one in Haines City, Fla., and the other in Clermont. In a press release from Schmid, Wayne King, the firm’s vice president of business development, stated: “Our research shows more and more physicians want to stand out in their own buildings with the name of their practice permanently affixed.”

“It’s a great concept that Schmid is having a lot of success with,” says Cid Kent, a broker with the local office of Stirling Sotheby’s International Realty. Ms. Kent is marketing and selling the buildings on behalf of Schmid Construction. “Doctors here are very interested in owning their own buildings, and the fact that this complex is so close to the hospital is an additional selling point.”

While the most-cited knock against medical condos is that they restrict a physician’s chance to grow, the South Lake project gives doctors the option of buying a building larger than their immediate needs, according to Ms. Kent. 

“We have one doctor who only needs 1,500 square feet, but is buying one of the 3,000 square foot buildings,” says Ms. Kent. “He’s planning on leasing the remaining 1,500 square feet to another professional until the time he might need the extra space.”

According to Ms. Kent, buildings are sold as shell structures and come in the following square footages: 2,500, 3,000, 8,000, and 30,000. Buyers would be responsible for completing the interior of their buildings – they can choose Schmid or another firm. As an example of how the financial structure works, a 2,500 square foot shell building costs $210,000. Finishing the building would bring the total investment to about, $525,000 – depending on what type of improvements each owner decides upon. The building owners also own the land underneath the buildings, Ms. Kent says.

Schmid Construction describes the project as being similar to a “medical campus,” as the buildings will form a circle on the landscaped property. Parking lots would be on the perimeter, and the project calls for a 200-space parking garage.

As of late January, three of the buildings had been sold, according to Ms. Kent, who noted that negotiations were ongoing with three other potential buyers, including someone interested in one of the 30,000 square foot buildings. Schmid is considering developing, finishing and retaining the ownership of one of the 30,000 square foot buildings and making it available to doctors who would rather lease than own.

A groundbreaking was scheduled for mid-February, Ms. Kent says.

Stanford ventures

away from campus

for outpatient center
PALO ALTO, Calif. – For the first time in its history, Stanford Hospital & Clinics is venturing outside of its campus in Palo Alto, Calif., to embark on an outpatient healthcare project. In late January, Stanford began redeveloping the 360,000 square foot former headquarters of Excite@Home in Redwood City, Calif. The site of the future Stanford University Medicine Outpatient Center is located just off U.S. Highway 101, just a few minutes north of Stanford.

Most of the construction will take place on the interior of the four buildings on the campus, which includes parking for about 1,175 vehicles. The comprehensive outpatient clinic will offer such services as orthopaedics, sports medicine, orthopedics spine, neurosurgery spine, dermatology, pain management, ambulatory surgery, a freestanding imaging center, a sleep center, and others.

Stanford officials say the project is needed to serve a growing population and because space is getting tight for outpatient services on the hospital campus in Palo Alto, where the system has plans for $1 billion worth of projects. Plans call for constructing 1.4 million square feet of new space to replace 700,000 square feet at its main hospital and to add 104 beds and 425,000 square feet at its Lucile Packard Children’s Hospital.

The outpatient facility in Redwood City is slated for completion by late 2008.

MOB could help

Tenn. hospital

stay competitive

SHELBYVILLE, Tenn. – Folks involved in medical office real estate often talk about utilizing facilities as part of a health system’s strategy. A good example of this thinking can be found in Shelbyville, Tenn., where Franklin, Tenn.-based-First Colony Healthcare is planning a new 30,000 square foot medical office building (MOB) near a future 60-bed replacement hospital.

The future hospital is being planned by Community Health Systems, which in 2005 acquired the operations of Bedford County Medical Center for $20 million from Bedford County. As part of that agreement, Community Health agreed to build a replacement hospital costing at least $35 million. Developing the on-campus MOB, which is to be called Physicians’ Plaza, is expected to cost about $5.5 million, with the hospital retaining the ownership of the land underneath the structure.

At a recent event for the launching of the new hospital, several doctors spoke about their desire to be located in offices on the campus of the future replacement facility, according to local news reports.

At the recent reception event, hospital officials said the two-story MOB will help attract new physicians and provide the hospital with the ability to compete with Middle Tennessee Medical Center in Murfreesboro, Tenn., which recently began a massive expansion. Murfreesboro is about 25 miles up the road from Shelbyville.

Officials were quoted in news reports as saying there’s a good chance the MOB could be 100 pre-leased by the time construction begins this coming spring. The architect is Brentwood, Tenn.-based Thomas Miller & Partners.

For the Record

Irgens Health Care Facilities Group, a division of Irgens Development Partners LLC, broke ground in late 2006 on a 37,672 square foot medical office building (MOB) for Kish Health System in Sandwich, Ill., about 45 miles outside of Chicago. The MOB is being constructed on the campus of Kish’s Valley West Community Hospital. The project is slated for completion in August 2007. Ziegler Healthcare Real Estate Fund (ZHREF), a series of private-equity funds managed by Wisconsin-based B.C. Ziegler, is the main investor in the project, which includes investments from physicians. The general contractor for the project is Chicago-based GC Berglund Construction and the architect is OWP&P Architects of Chicago… Houston-based PM Realty Group (PMRG) recently began construction on Lake Pointe Medical Arts, a 52,000 square foot MOB in Rowlett, Texas, outside of Dallas. The architect on the two-story building is Dallas-based McCalla Rios and the general contractor is El Paso, Texas-based C.F. Jordan. According to PMRG, the building was 60 percent pre-leased by late January. Lake Pointe Medical Center is the lead tenant in the future facility. The project is slated for completion in July 2007… McShane Construction Corp. of Rosemount, Ill., was recently selected by Suburban Gastroenterology to construct a 13,000 square foot medical facility in Naperville, Ill., near Chicago. The single-story building will include an ambulatory surgery center with two operating rooms, pre- and post-operative care stations, consultation rooms, eight examination rooms, laboratory facilities, doctors’ offices, and other services. Denver-based Marasco & Associates provided the original facility design, while the architect of record is Cedar Rapids, Iowa-based Shive-Hattery Inc. RMK Design Associates of Colorado Springs, Colo., is providing interior design for the project. Completion is slated for May 2007… McShane, which also has an office in Phoenix, also announced that it will develop two 74,556 square foot medical office buildings (MOBs) within the Algodón Medical Office Park in Phoenix. The project architect is Phoenix-based Orcutt/Winslow Partnership. Completion of the first building is slated for the first quarter (Q1) of 2008… Southern Regional Health System of Riverdale, Ga., has announced plans for two outpatient facilities that would cost an estimated $22.7 million. A two-story ambulatory surgery center and a three-story MOB would be built in a mixed-use project on 92 acres near Jonesboro, Ga. The facilities would have a digital diagnostic center and a digital outpatient breast imaging center. Atlanta-based Meadows and Ohly LLC Spivey Station is the developer of the medical buildings… Citing a growing population and capacity limitations, NorthEast Medical Center of Concord, N.C., has announced plans for a $23.1 million, 23,689 square foot, 24-hour outpatient emergency care facility in nearby Harrisburg, N.C. The proposal calls for NorthEast at Harrisburg to offer additional services as well, including diagnostic imaging services, CT scans, ultrasounds, radiography and mammography. NorthEast is in the process of acquiring a 31-acre site near U.S. Interstate 485. The project needs Certificate of Need (CON) approval from the North Carolina Division of Facility Services of the state’s Department of Health and Human Services… Irvine, Calif.-based Omni West Group is partnering with Sunbelt Properties Management on the development of a 66,000 square foot medical and professional office condominium complex in Lake Elsinore, Calif. The two-building project, which is to be called the Plaza at Lakeview, is slated for 5 acres in a master-planned community called Canyon Estates. Construction is scheduled to begin during Q2 2007 with completion slated for Q4 2007… Paul Hemmer Cos. of Fort Mitchell, Ky., has plans to develop Chancellor Commons Building C, an $8 million, 45,000 square foot Class A medical and professional building in Crestview, Ky. Construction is scheduled to being in spring 2007… Westmont, Ill.-based Morgan/Harbour Construction Co. has completed Provena Mercy Medical Center Health and Wellness Club, a 63,600 square foot facility in Aurora, Ill. The two-story building features two swimming pools, a spa, a basketball court, and full-service locker rooms with sauna and steam areas. The architect was Studio 23. The wellness center is a subsidiary of Mokena, Ill.-based Provena Health… Morris (Ill.) Hospital plans to construct a $16.5 million 57,000 square foot MOB. The hospital is currently still seeking permission from state authorities… Leopardo Construction of Hoffman Estates, Ill., broke ground on DuPage Medical Group’s 92,000 square foot $23.5 million MOB. The project will be completed in June 2008…. Danbury (Conn.) Hospital has begun construction on its $44 million, 60,00square foot, three-story Outpatient Diagnostic Building… M.D. Anderson Cancer Center of Houston is helping develop a treatment clinic in Albuquerque, N.M., with Albuquerque-based Presbyterian Kaseman Hospital… San Diego-based Pacific Cornerstone Architects designed a six-story $30 million 150,677 square foot MOB as part of the Innovation Corporate Center, a more than 600,000 square foot office campus. Scripps Health will occupy the building and plans to move in during late 2008…St. David’s Medical Center plans to expand its 51-year-old campus in Austin, Texas. The hospital is hoping to construct a 120-foot-high MOB, which would be twice as tall as its highest current building, on the southeastern corner of its campus. The building could add as much as 455,200 square feet by 2025… Columbus-based OhioHealth Corp. plans to build a three-story, $35 million outpatient health center on 42 acres in Columbus. Construction will begin early next year and will include in its first phase a 40,000 square foot MOB and a 116,000 square foot surgery and health center. A second phase is also planned, but a date for construction has not been set… Icon Development Corp. of Atlanta, Ga. plans to raze a former car dealership to build a 125,000 square foot MOB in Wauwatosa, Wis. Construction will begin this fall on the structure… Willow Street, Pa.-based Willow Valley Associates has proposed a $10 million, 72,000 square foot MOB in Willow Street that is likely to be 100 percent pre-leased before construction starts. As of recent weeks, the developer was preparing to submit documents to West Lampeter Township for the proposed two-story building. According to the developer, demand is extremely high for MOB space in the area of Lancaster, Pa. The architect is Lancaster-based Cornerstone Design Architects; the general contractor is York, Pa.-based Hogg Construction. q