Outpatient Projects (May 2007)

Docs, developer plan San Jose hospital

SPECIALTY FACILITY WOULD PROVIDE OUTPATIENT TREATMENT AND DO RESEARCH

 

By John Mugford

 

A doctors’ group and Dallas-based Cirrus Group are planning a $50 million short-stay, specialty hospital and MOB next to the San Jose (Calif.) BioCenter.

Ground was expected to be broken this month on the 168,000 square foot facility, which would have eight operating suites and be called the California Center for Healthcare and Biomedical Technology. It would most likely focus on orthopedic, cardiovascular and oncology patients.

In addition, officials with the development firm and other proponents of the specialty hospital say the proposed facility would offer a unique twist on physician-owned specialty hospitals: Not only would it treat patients but it would have an independent research foundation affiliated with the hospital. The foundation would facilitate clinical trials for new drugs and medical devices. A separate company would run the foundation but the Cirrus Group would help with fundraising.

The project has attracted interest from medical equipment company Stryker Endoscopy – a unit of Stryker Corp. (NYSE: SYK) – which is located on the same street as the San Jose BioCenter. Also, other entities showing an interest about getting involved in one form or another include Kaiser Permanente, Stanford University, the University of California San Francisco, and other tenants in the BioCenter.

A Cirrus spokeswoman said in news reports that the development firm has secured the necessary financing and has lined up about 30 physicians to become partners. Cirrus says the hospital will be 80 percent physician-owned.

Pinnacle LLP of Columbus, Ohio, would manage the hospital. Pinnacle manages the New Albany Surgical Hospital in New Albany, Ohio, where there is also a foundation affiliated with the hospital.

Class A MOB in

Mississippi remains

without a tenant

HORN LAKE, Miss. – Not all healthcare projects are homeruns. An example can be found in Horn Lake, a town of about 22,000 people south of Memphis, Tenn. In fact, there was once great promise for a 30,000 square foot medical office building (MOB) that was built as part of a future 440-acre mixed-use project by Omaha, Neb.-based Dial Properties Co.

Prior to the development of DeSoto County Medical Office Building five years ago, developers hailed the future MOB as a potential medical magnet that could help draw other healthcare services, such as a major clinic or even a hospital, to the DeSoto Commons project.

But the $3.9 million Class A MOB completed in recent years has failed to draw any tenants and was foreclosed upon a year ago by First Tennessee Bank. Brown Properties of Southhaven, Miss., is now marketing the building for the bank.

Back when the building permit was pulled in spring 2002, the developers were talking about the potential need for a second building to handle the likely overflow of tenants. During the development stage, there were problems securing water and sewer hookups – but those problems paled in comparison to the lack of tenants. The MOB, which was developed by a limited liability corporation led by Dial Properties, is basically a shell, except for one suite that was completed for just more than $100,000.

Jim Brown, president of Brown Properties, recently told a local newspaper that the building has been getting some serious looks from potential tenants. The rental rate is $12 per square foot, which is based on a minimum lease of 5,000 square feet.

But Mr. Brown is no longer looking for only medical tenants – even though some have shown an interest. In addition to being marketed to potential tenants, the renamed DeSoto Professional Building is also listed for sale at LoopNet.com for an asking price of $3.2 million.

Atlanta MOB to help

Piedmont Hospital

with space crunch
ATLANTA – An old Holiday Inn at U.S. Interstate 75 in Atlanta was recently razed to make way for an eight-story, 256,000 square foot office building with medical office space near the campus of Piedmont Hospital.

The developer on the project is Atlanta-based Carter, a longstanding real estate firm concentrating on the Southeast. Piedmont Hospital officials say the new building is needed to alleviate a space crunch in the hospital – the hospital plans to lease about 75,000 square feet in the MOB for outpatient services.

The MOB, which is being built near a future Wal-mart, is slated for completion in late 2008.

Whittier, Calif., hospital

plans new MOB,

replacement building

WHITTIER, Calif. – As Presbyterian Intercommunity Hospital in Whittier continues working on plans to replace its current main hospital building with a new facility, it will kick off construction with the building of a $24 million, 105,000 square foot MOB. The five-story building is expected to be ready for doctors in 2008. The city of Whittier is in southeast Los Angeles County.

Presbyterian officials say the MOB will help the hospital attract and retain doctors as work continues on plans for a future $200 million, four-story hospital tower with about 106,000 square feet.

The MOB would provide a variety of outpatient services, such as breast cancer screening, diabetes education, oncology, physical rehabilitation and wound management.

The new hospital building is being designed to meet California’s strict seismic safety guidelines and is slated for completion by 2012 – just ahead of the state’s 2013 deadline to comply with the requirements. The project will entail tearing down about 100,000 square feet of existing acute-care space.
Medical offices planned

near two hospitals

in Colorado Springs
COLORADO SPRINGS, Colo. – Two hospitals are being built within a couple of miles of each other in Colorado Springs, prompting a number of developers to plan medical offices and commercial real estate developments nearby.

The more ambitious of the projects seems to be an 11-building, 340,000 square foot medical and professional office condo complex that would be built in two phases. The owner of the future business center campus is Harvey Salkow of Scottsdale, Ariz., a lead partner in the developer, Powers Group LLC.

The broker on the project, Bill Elder of Bennett Shellenberger Realty, told a local newspaper that the project would be the community’s first Class A office condo option. Costs for the condos are expected to be between $205 per square foot and $230 per square foot.

Mr. Salkow notes that the developer is prepared to finance a $5 million building, for example, with 10 percent down or up to $13 million with 20 percent down.

The project is in an area within a half mile of Memorial North Hospital and within two miles of St. Francis Healthcare Center.

The first building planned is a 24,000 square foot, three-story facility slated for completion later this year. The second building would be a 31,000 square foot building that could be ready for occupancy by early 2008. Bryan Construction of Colorado Springs is the general contractor.
Former N.M. hospital

being converted

into medical mall

ALBUQUERQUE, N.M. – A Pennsylvania-based developer has plans to turn the soon-to-be-decommissioned Lovelace Medical Center in Albuquerque into a medical mall.

Ashley Development Corp. of Bethlehem, Pa., currently controls the building and the 16.8-acre site and is planning to convert the 559,000 square foot facility into a mall with medical offices, dental clinics and providers offering behavioral health, long-term acute-care, skilled nursing and, perhaps, assisted-living services.

Lovelace Health System, the parent of Lovelace Medical Center, is expected to maintain a presence in the medical mall, possibly renting about 150,000 square feet for outpatient services, according to the developer. A hospice has also expressed interest in 14,000 square feet.

Ashley Development does not plan to tear down any portion of the former hospital, which was originally built in 1952 and expanded several times over the years.

Meanwhile, Lovelace is merging the decommissioned hospital’s operations into its downtown hospital, Albuquerque Regional Medical Center. The downtown hospital is undergoing a $60 million upgrade.

Ambulatory center

starts Kaiser campus

in Folsom, Calif.

FOLSOM, Calif. – Breaking ground on a $42 million, six-operating room ambulatory care center in Folsom is just the start of bigger things to come on a 50-acre site in the city. The outpatient facility is part of a future campus being developed by Oakland, Calif.-based Kaiser Permanente. The new ambulatory center would also include 24 pre-operation rooms and recovery bays.

Plans also call for the eventual building of a 224-bed, 450,000 square foot hospital on the campus, according to a Kaiser news release. The hospital is planned for delivery in 2015. In addition, the campus would include a 300,000 square foot MOB, which is slated for completion in 2014.

Kaiser has two existing MOBs in Folsom.

For the Record

Charlotte, N.C.-based Cogdell Spencer Inc. (NYSE: CSA) and West Tennessee Healthcare are planning a new MOB in Jackson, Tenn. The five-story, 100,000 square foot MOB would be called the Medical Center Physicians Tower. It would be located across the street from West Tennessee Healthcare’s Jackson-Madison County General Hospital, a 612-bed not-for-profit hospital. A final cost has not been announced. Charlotte, N.C.-based RPA Design is the project architect… A proposed 122,000 square foot MOB with a helicopter landing pad and ambulance service has been approved in Brighton, Mich. The Brighton City Council recently gave the green light to the three-story MOB that would be part of the growing Brighton Towne Square mixed-use development. The developer is Mark Murphy, who reports that he is talking with three major medical providers about leasing space in the MOB… Cincinnati-based Equity recently announced that it is developing the Dayton Children’s Medical Center, a new MOB in Middletown, Ohio. The three-story, 30,000 square foot MOB is slated for land just off Ohio Highway 122. Equity is handling construction services and leasing. Completion is slated for December 2007… Construction started recently on the Wellness Center at Mayslake Village in the Chicago suburb of Westmont, Ill. Mayslake Village is a 45-acre federally funded senior housing development. The architect on the wellness center is Chicago-based OKW Architects; the general contractor is Chicago-based JJ Duffy Co…. Landstone Medical Properties of Memphis, Tenn., revealed plans for a two-story, 44,000 square foot MOB in an area near Methodist Le Bonheur Germantown Hospital and Baptist Memorial Hospital-Memphis. Construction is slated to begin this summer, with completion planned for April 2008. Landstone says a local medical group will be the main tenant in the building; it did not name the group. Landstone is working on the project with local development firm Hyneman-Bronze. The location of the future MOB – between East Memphis and Germantown, Tenn. – is becoming a prime medical corridor in the Memphis market… Construction is under way on a 32,000 square foot MOB in the 640-acre Coffee Creek Center mixed-use development in Chesterton, Ind. The MOB is one of the latest steps toward the building of a regional healthcare campus complete with a future acute-care hospital. The 114-acre campus, at Indiana Highway 49 and the Indiana Toll Road, already is home to Lakeshore Surgicare, an outpatient surgical center, and the Lakeshore Bone and Joint Institute. The developers of Coffee Creek told a local newspaper that a hospital deal is being pursued for the healthcare campus… Development partners in Greeley, Colo., are hoping to lure business and medical professionals to a new $22 million office park on 9 acres that would have 15 buildings. Jeff Perryman and partner Chris Pickett of Greeley-based Pickett Engineering are creating Pinnacle Park, which would have 100,000 square feet and be located next to Aims Community College. Construction on Pinnacle Park was scheduled to begin in early May. Total build-out is expected to take about four years… Dallas-based Methodist Health System and the Cirrus Group, also of Dallas, recently broke ground on a $4.3 million, 24,000 square foot outpatient medical facility in Cedar Hill, on the south side of the Dallas-Fort Worth Metroplex. Methodist Family Health Center plans to rent 6,000 square feet and will be the anchor tenant… Houston-based John J. Norkus & Associates is planning to acquire the former Tandy Wire Fabrication plant in Fort Worth, Texas, and build a two-story, 58,000 square foot MOB on the 6.39-acre site. The development firm reports that a physicians’ group has signed letters of intent to lease most of the planned space. The MOB is scheduled for completion in July 2008. Norkus is also considering redeveloping the 121,000 square foot plant with residences and retail shops. Norkus was represented in the transaction by Steve Reylea, a broker with William C. Jennings Co. The seller, RadioShack, was represented by George Curry and Todd Burnett, brokers with the Staubach Co.… Lawrence (Kan.) Memorial Hospital (LMH) recently announced that it is planning a $5.7 million, three-story MOB on its growing campus. The hospital recently started construction on a $44 million, 165,000 square foot expansion of its main hospital. The new MOB is slated for completion in about nine months. The hospital plans to finance construction of the new MOB and the purchase of an existing MOB, the Reed Building for $1.2 million, by using existing revenues and reserves. LMH reported a profit of $10.3 million last year, up 39 percent from the $7.4 million profit generated a year earlier… Sky Development of Aventura, Fla., recently announced that it is planning to build two four-story medical and professional office buildings in Pembroke Pines, Fla. The Park Plaza Executive Center would have about 160,000 square feet of office space and be located adjacent to Memorial Hospital Pembroke. The project would also have retail shops on the ground floors. Sky Development acquired the hospital in December for $32 million. Groundbreaking on the office buildings is scheduled for the end of the year with completed slated for December 2008… Ground was recently broken for Enchanted Hills Medical Plaza, a medical office complex in North Rio Rancho, N.M. The expected anchor tenant is Fresenius Medical Care, a national provider of kidney dialysis. Enchanted Hills Medical Plaza is the first phase of a new project called Enchanted Hills Professional Center, which will eventually have about 100,000 square feet of office space. The medical portion of the project would contain 56,600 square feet and is slated to open in September. The local real estate firm Maestas & Ward is marketing the property… Randolph Hospital in Asheboro, N.C., recently began construction on a $27 million, 58,000 square foot outpatient center and cancer center. The hospital demolished what was once a nurses’ dormitory to make room for the facility. Randolph plans to operate the facility in conjunction with Greensboro, N.C.-based Moses Cone Health System. Construction is expected to take about 18 months… Cleveland-based PolySteel is planning an 85,000 square foot, two-story MOB in Cranberry Township, Pa. The project cost is expected to exceed $32 million and could cost as much as $60 million. PolySteel, which specializes in constructing buildings using an insulated concrete form, has an option to acquire a 95-acre parcel located less than two miles from the University of Pittsburgh Medical Center (UPMC) Northwest Hospital. The medical complex is to be called Cornplanter Medical Center in tribute to Chief Cornplanter of the Seneca Indians… Inova Fair Oaks Hospital, in the northern Virginia city of Fairfax, recently announced plans for a $21 million, 107,000 square foot MOB on the campus of its 182-bed hospital. The MOB will also house the hospital’s first outpatient surgery center. In the fall, Inova Fair Oaks plans to begin construction on a 920-space, $17.3 million parking garage. Doctors will be given a chance to share in the ownership of the MOB, which is being developed by Chicago-based Lillibridge. The healthcare real estate firm will also be the property manager… Rey DevCo, the land development branch of Florida-based Rey Group, recently began construction on Rey Medical Center & Shoppes in Orlando, Fla. The 70,000 square foot, $20 million development is about a half-mile from Florida Hospital East Orlando. The project consists of a three-story, 50,000 square foot building with medical office condos and a two-story retail/office building. It is slated for completion in spring 2008… Denver-based NexCore Group recently broke ground on NorthBay Healthcare Administrative Services & Conference Center in Fairfield, Calif. The 69,000 square foot facility, which will be owned by an affiliate of NexCore, will house the corporate headquarters of NorthBay Healthcare. The project is being developed on a new satellite campus where plans include a 40,000 square foot MOB and an 80,000 square foot hospital. q