Dallas Is Nation’s Second Most Active Medical Office Building Construction Market

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Dallas-Fort Worth has the second-most medical office building construction nationwide, accounting for nearly 1.5 million square feet and behind only New York City.

Medical office buildings are getting larger, farther away from hospital campuses, and remain profitable and well-occupied in the region, according to Revista data shared by Mike Hargrave at the North Texas Hospital, Outpatient Facilities, and Medical Office Buildings Summit. Private equity is an growing influence in health care transactions, and Dallas leads major Texas markets in average rent and rent growth for medical office buildings as well.

Dallas has 14 projects under construction in the medical office building space valued at $503 million and is second only to New York’s more than 2 million square feet worth over $1.3 billion. Houston is a close third, with 15 projects accounting for 1.2 million square feet and $344 million.

Since the 1980s, medical office buildings have moved from around 1.5 miles from the nearest hospital to often nearing three miles today. Building peaked around 2009 with nearly 35 million square feet built that year to around 21 million this year.

Meanwhile, individual projects are getting bigger. Most projects were less than 40,000 square feet prior to 2005, but since 2009, the average square foot for medical office building are closer to 60,000 square feet.

Healthcare practices are growing as well. Between 1981 and 2007, most practices were less than 8,000 square feet, but today the median size is 12,000 square feet.

Occupancy of investor owned outpatient buildings has remained fairly consistent since 2009, hovering between 90 and 92 percent. Relative to Austin, San Antonio, and Houston, Dallas has nearly as much as Houston in terms of inventory with 34.2 million square feet, but is on top of the heap in occupancy at 89.8 percent. Its $22.53 per square foot is also tops in Texas, as well as its year over year rent growth at 2.9 percent.

Nationwide for the last four years, healthcare real estate transactions remain strong, hovering between $15 and $20 billion for combined hospital and medical office building deals. Private equity’s influence on those deals is growing, as 2014 saw 27 percent of transactions grow to 61 percent by 2018. REIT has seen a sharp decline, from 53 percent of deals in 2014 to just 16 percent last year.

Across the US, there are 439 medical office buildings and 491 general hospitals under construction, accounting for 108.3 million square feet and $67.2 billion. The median size of a medical office building is 50,000 square feet and median value is $17 million. Median hospital size is 95,5000 square feet worth $50 million.

 

Source: D CEO Healthcare

Flagler Health+ Pens Deal For 40 Acres In Durbin Park In St. John’s County, Florida

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Flagler Health+ announced it has entered into an agreement with Gate Lands, the real estate subsidiary of Gate Petroleum Company, to purchase 40 acres within the company’s Durbin Park development.

The Durbin Park Development

The property, located between Interstate 95 and State Road 9B, is anticipated to be developed in three phases: Phase one of this project will introduce a Flagler Health+ Village that incorporates family practice, women’s care, pediatrics, urgent care, imaging and laboratory services. The health village will also include dedicated green space for healthy lifestyle programming, arts activities and community engagement.

“As St. Johns County’s leading healthcare provider for more than 130 years, Flagler Health+ is committed to furthering a sense of connectedness and community throughout all areas of this very special region, including the northernmost sector of our county,” said President & CEO Jason Barrett. “We are focused on building meaningful, seamless relationships along the journey of life and look forward to serving the growing needs of area residents.”

Longer term plans for the 40-acre health and wellness campus include a hospital, outpatient surgical services and cancer care, among others. Additional offerings will be further refined in partnership with area residents through a dedicated Durbin Park Health Advisory Council.

“We are excited that Flagler Health+ has chosen to create its Flagler Health+ Village in Durbin Park,” said Drew Frick, president of Gate Lands. “Our goal with Durbin Park is to create a distinct destination where individuals and families can live, work, shop and be entertained. The community health approach that Flagler Health+ brings to this project will further this goal by creating jobs and expanding the amenities and services available to one of the fastest growing areas in the state.”

St. Johns County’s Director of Economic Development Melissa Glasgow and St. Johns County Commissioner, James Johns also support the project.

“We are thrilled to see a full-service, state-of-the art health and wellness campus included in the plans for Durbin Park,” stated Glasgow. “As one of St. Johns County’s largest employers, we are pleased that Flagler Health+ continues to invest significant resources to support our growing community and bolster our status as Florida’s Healthiest County.”

“I am supportive of this endeavor, which will employ our residents, reduce commute times for critical services and blend well with surrounding developments,” added Johns, who represents Durbin Park’s district. Construction is anticipated to begin in 2020.

 

Source: JBJ

Adding Healthcare To Retail Areas Is A Big Trend. But What About Adding Retail To Healthcare?

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The “retailization” of healthcare is a well-documented, recent and successful trend in the country’s medical delivery model.

But what about the “healthcare-ization” of retail?

Northwestern Memorial HealthCare, a 10-hospital system in Greater Chicago, has flipped the script by strategically incorporating innovative retail and food outlets in its healthcare facilities – and it’s working. Gina Weldy, the system’s senior VP, administration, discussed the strategy during a presentation at the International Council of Shopping Centers (ICSC) RECon global convention held May 19-22 at the Las Vegas Convention Center.

“We often go into retail settings as a healthcare provider, but today I’m going to spend some time talking about how we actually deploy retail into our hospital pavilions and our medical office buildings,” Ms. Weldy told the capacity crowd during a presentation titled “How to Add Mixed-Use to a Healthcare Facility” during the Health & Wellness portion of the RECon event. “We have hospitals in the suburban markets and our core academic medical center is a block off Michigan Avenue (home to the well-known shopping district known as the Magnificent Mile), So, we by nature, have a unique retail opportunity, and I think we’ve finally learned how to leverage that.”

Ms. Weldy wasn’t talking about beefing up old-school hospital cafeterias or tired gift shops stocked only with balloons, flowers, cards and stuffed animals. No, she was talking about Northwestern Memorial’s success with bringing in hip, new and attractive restaurant operators and retailers – 36 different lessees in all – into its hospitals and outpatient pavilion settings, with a big focus on Chicago-area food and beverage operations at its massive, main hospital campus just a block off Michigan Avenue near the Streeterville neighborhood just north of the Chicago Loop.

Ever since the health system started working with a retail consultant in recent years to help it determine a retail strategy and to advise it in how to work with retailers and restaurant operators, sales have tripled in its retail spaces.

 

Source: HREI