Outpatient Projects (August 2007)

South Texas Med Center keeps growing

OAKS DEVELOPMENT OF N.C. PLANS 105,000 SQUARE FOOT MOB IN SAN ANTONIO

 

By John Mugford

The growing South Texas Medical Center (STMC) in San Antonio, Texas, is attracting a new player: Cary, N.C.-based Oaks Development Group.

Oaks Development, which recently announced that it is planning a three-story, 105,000 square foot medical office building (MOB) in an emerging area of the STMC, which is home to nearly half of San Antonio’s 5.3 million square feet of MOB space.

Oaks Development plans to develop the future MOB in an expanding area on Floyd Curl Drive on a corridor that includes: a San Antonio Spurs practice facility; the 133,000 square foot Texas Center for Athletes; the Texas Cancer Clinic; and a new 62-bed long-term acute-care facility owned and operated by Plano, Texas-based LifeCare Hospitals.

According to Oaks Development officials, the firm plans to begin construction when 50 percent of the facility is pre-leased. Interest in the space is so high, the developer says, that construction could start as early as this coming fall. San Antonio-based MSL Investments is handling leasing for the facility.

While total development costs for the MOB have not been revealed, Oaks Development says its ownership structure provides investment opportunities for tenants. The company’s projects typically entail a 50:50 split in ownership between a limited liability corporation (LLC) composed of physician/tenants, Oaks Development and a pool of investors. Tenants who sign 10-year leases are involved in the LLC.

The base rental rate will be $21 per square foot, which is about average for new office properties in the STMC. The property is free from common deed restrictions that prohibit certain types of equipment, such as MRI machines, according to Oaks’ officials.

The company’s currently portfolio includes 42 properties and a total of 297 investors. The portfolio is about 88 percent occupied. Officials with Oaks Development say the company is typically a long-term investor in its properties.

The San Antonio Medical Foundation, a not-for-profit organization, was largely responsible for creating the STMC. It continues to control hundreds of acres in the area, including about 200 acres near the future Oaks Development project.

Health, fitness center

planned near Millcreek

hospital in Erie, Pa.

ERIE, Pa. – A former Honda dealership, gas station and office building have been removed near Millcreek Hospital in Erie to make way for a future $31.5 million health and fitness center. Land was recently cleared to make way for the Erie-based Millcreek Health System facility.

Construction recently began for the future LECOM Health and Fitness Center, which will combine medical offices and a “state-of-the-art” fitness center. Completion is scheduled for fall 2008 on a facility that will include a fitness center with a gymnasium, three swimming pools, two racquetball courts, six medical office suites, three conference rooms, a cafe, a gift shop and physical therapy areas.

Meanwhile, construction on an expansion at the nearby Millcreek Community Hospital, where a fifth floor is being added to accommodate a new behavioral health unit and a three-story, $11 million addition will add a 14-bed transitional unit, a medical library, conference rooms, offices and administrative suites.

Nearly empty office

to be razed for MOB

near Minneapolis

EDINA, Minn. – An emerging medical corridor in the Minneapolis suburb of Edina is getting a new MOB. A 20,000 square foot office building with just one tenant, which leases 1,500 square feet, will be razed to make way for a three-story, 42,000 square foot MOB.

The owner of the building and the developer on the project is Edina-based TE Miller Development LLC, which decided against trying to lease up the existing 1972 building in favor of redeveloping the 1.9-acre site. The future facility sits across the street from a 90,000 square foot outpatient facility called Centennial Lakes Medical Center. There are several other smaller MOBs in the area.

While the new MOB will be considered an off-campus medical building, the site is within a couple of miles of Fairview Southdale Hospital. The local office of Colliers Turley Martin Tucker will handle leasing on the project.

Sarasota Memorial

hopes to add MOB

space to its campus

SARASOTA, Fla. – Sarasota Memorial Hospital has asked the city of Sarasota to allow it to increase the amount of MOB space on its 24-acre campus. The hospital would like the city to designate its campus as a Regional Activity Center (RAC), which would allow the hospital to add 150,000 square feet of additional office space.

The designation would make it easier for the hospital to replace an aging MOB – the Doctors Gardens building. Even with the RAC designation, any proposed MOBs would still need to receive approval from the city. Currently, Sarasota Memorial is allowed up to 300,000 square feet of MOB space; the campus has a total of 242,000 square feet of office space.

Current plans at the hospital call for the development of a new MOB complex, the Arlington Medical Tower, with a total of 125,000 square feet – a $25 million joint project proposed by University Park, Fla.-based Benderson Development Co. and Dr. Mark Kauffman. The two buildings, one of which will be 150 feet tall, are slated for completion by 2009 or 2010.

Hospital officials say the additional space is necessary to retain key physicians and provide them with quicker access to the hospital from their offices.
Former hospital

in Fresno, Calif.,

slated for conversion

FRESNO, Calif. – Newport Beach, Calif.-based Delamore Cos. has plans to redevelop a former county-owned hospital in Fresno into a medical mall with a variety of specialty physicians and services.

The Fresno County Board in recent months sent out requests for companies to lease the facility, but Delamore’s president, Paul Habeeb, recently told the board that his firm is more interested in acquiring the building than signing a master lease. Delamore was the only firm to submit a bid.

A portion of the building is occupied by Fresno-based Community Medical Centers, which until recently ran one of its hospitals, University Medical Center, in the facility. While Community has transferred most of its hospital services to its 457-bed Community Regional Medical Center, it continues to use about 160,000 square feet of the University Medical Center facility. Most of the space is used for the operation of its DeWitt Sub-acute and Skilled Nursing Center. Community pays annual rent of about $2 million, according to local news reports. At one time, Community leased about 416,440 square feet of space in the county-owned facility.

Mr. Habeeb told a local newspaper that Delamore hopes to retain Community as a tenant while adding a variety of others.

Earlier this year, Delamore Cos. made its first foray into medical real estate with the $47 million acquisition of the Elizabeth Place medical mall in Dayton, Ohio.

(Please see “Ohio medical mall fetches $47 million” in the April 2007 edition of Healthcare Real Estate Insights.)

At the time of the firm’s acquisition of Elizabeth Place, Mr. Habeeb told HREI: “We like medical, and if the right opportunity comes along we’d certainly consider other properties.”

Three-MOB complex

planned in area

near Dayton, Ohio

SUGARCREEK TOWNSHIP, Ohio – An 11-acre outpatient medical development is being proposed in Sugarcreek Township, Ohio, south of Dayton. The three-building complex will become an affiliate of Kettering, Ohio-based Kettering Health Network, which has three hospitals and other facilities in the Dayton, Ohio, area.

Site work is under way for the first of three buildings that will comprise the Sugarcreek Medical Arts Center in Sugarcreek Township. The first building is planned as a $6.36 million, three-story, 50,000 square foot building that will house obstetrics and gynecology services.

Each of the remaining two buildings will have two stories and 26,000 square feet, according to plans. Beavercreek, Ohio-based Synergy Building Systems, a division of Mills Development Cos., is the contractor on the project.

The area south of Dayton is growing and health systems are looking to gain footholds with new medical facilities. For example, Dayton-based Premier Health Partners is nearing completion of the Miami Valley Health Center in Centerville, Ohio.

Also, Kettering is planning a 25,000 square foot medical office complex in Lebanon, Ohio, which is located midway between Dayton and Cincinnati.

For the Record

Developers have plans to add two more MOBs to the Gateway Medical Campus inside the Gateway Corporate Park in Glastonbury, Conn. The Town of Glastonbury, just outside of Hartford, owns the 98-acre corporate park and is considering selling 13.29 acres to developers Bill Mogensen and David Sessions. The medical campus currently consists of three MOBs. The two developers have track records in Glastonbury, and Mr. Sessions developed a Hartford Hospital satellite facility in the town several years ago… Anne Arundel (Md.) Medical Center (AAMC) and Baltimore-based Johns Hopkins Medicine have plans for a 55,000 square foot urgent care facility in Chester, Md., along the state’s Eastern Shore. The facility, which is slated for completion in 2008, would house radiology services, a lab station for blood work, a walk-in medical clinic, and offices for primary care, pediatric, cardiology, and other services. Johns Hopkins Community Physicians is planning to provide medical services in the new facility. The joint venture is part of a partnership announced earlier this year between Anne Arundel Medical Center and Johns Hopkins. q

The full content of this article is only available to paid subscribers. If you are an active subscriber, please log in. To subscribe, please click here: SUBSCRIBE

Existing Users Log In
   

Comments are closed, but trackbacks and pingbacks are open.