Medical Groups Eye Winter Park’s Skycraft Site For New Office Development

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An iconic Winter Park property — that’s been targeted for redevelopment for months — may soon land a buyer.

“Several medical office groups have signed letters of intent to buy the Skycraft Parts & Surplus Inc. property at 2245 W. Fairbanks Ave.,” said Glen Jaffee, senior associate at Cushman & Wakefield, who is marketing the site.

A company was under contract to buy the site, but the deal fell through due to Covid-19. The property has been on the market for less than a year.The Skycraft building may be razed to make way for up to 25,000 square feet of office space on the site.

“No plans have been submitted to the city of Winter Park, but a company is expected to go under contract for the site in the next month,” Jaffee said. “Medical doesn’t go away. There’s always going to be an interest and a need for medical use.”

The site is attractive because it’s in the affluent city of Winter Park and it’s next to Interstate 4, which has 157,000 vehicles a day. That access to I-4 means people from all over the region may be more willing to drive to the site for medical services.

Skycraft Parts & Surplus Inc. currently owns the 0.76-acre property, which features a 6,492-square-foot commercial structure built in 1978, according to Orange County records. The property’s market value is $1.2 million, Orange County records showed.

It’s the latest redevelopment project either proposed or recently completed along Fairbanks Avenue, which is located in an in-demand Winter Park retail area. That’s because retail space on Fairbanks is a bit more affordable than along nearby U.S. 17-92.

“The Fairbanks corridor is going to continue to see a significant uptick in new development, repositions and re-skins,” said Matt Weinberger, vice president of office and industrial advisory services at Millenia Partners, who isn’t involved with the Skycraft property.

More Medical

There may be more medical space that rises nearby. In July, Winter Park-based Raja Investors LLC purchased 954 S. Orlando Ave. for $3.5 million, according to Orange County records. The entity is tied to medical company Orlando Neurosurgery at 1605 W. Fairbanks Ave., state records showed. One of the entity’s managers is Dr. Ravi Gandhi, a physician with Orlando Neurosurgery. Dr. Gandhi wasn’t available for comment. The property’s seller was Krlkm LLP, and the 0.84-acre property features roughly 16,800 square feet of commercial space.

It’s the latest investment for Gandhi whose Winter Park-based Verax Fairbanks LLC in May 2018 paid $3.5 million to buy a 1.6-acre, vacant city-owned site at 1111 W. Fairbanks Ave. A roughly two-story, 20,000-square-foot medical office building was built on the site, and Orlando Health Women’s Pavilion opened as a tenant in June 2020.

Retail Stats

The Winter Park/Maitland retail submarket is one of the most in-demand areas in Central Florida. The submarket features 1.5 million square feet of retail space and a 1.8% average vacancy rate, Colliers International Central Florida reported. That’s well below the Orlando area’s 5.8% average vacancy rate, showing demand for retail space. In addition, the submarket’s average retail rental rate of $36.41 per square foot is nearly double the Orlando-area average of $18.87 per square foot, showing big demand for retail.

 

Source: Orlando Business Journal

Mortenson Development, Seavest Healthcare Partner On Candelas MOB

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Mortenson Development Inc. and Seavest Healthcare Properties will joint venture on SCL Health’s new 43,732-square-foot Class A medical office building at the intersection of West 91st Place and Candelas Parkway within Candelas in Arvada. Mortenson’s construction arm will build the two-story facility, which was designed by Davis Partnership Architects.

Over the last decade, Mortenson has worked with SCL Health to deliver more than 40 projects. This marks the first project in which Mortenson will act as a developer/owner for the nonprofit health care organization.

“Access to quality health care has never been more important, and we’re proud to be working with SCL Health to bring this primary care facility to the Candelas community,” said Taber Sweet, director of real estate development with Mortenson Development Inc.

Mortenson was responsible for site planning and design services for the development, including managing all entitlements and city approvals.

Asked what patients and providers will most appreciate: “The continuity of design as it flows from the exterior to the interior, which is reflected in the use of warm wood tones and the linear patterns in the ceilings and floors,” said Wendi Ekborg, Davis Partnership principal. “For this growing community, having access to an outpatient clinic facility such as this will be more than just a convenience; it will continue to build community and home.”

 

“The design inspiration pays tribute to the open fields of northwest Arvada through the notion of two overlapping branches laying in prairie grass,” said Davis Partnership’s Cody Weaver, AIA, NCARB, LEED Green Associate. “The gray panel used at the screen wall, entry and stair reflects the texture of bark that wraps the branch with adjacent warm tone panels echoing the wood core of the branch creating openings in the façade for connection from the exterior to interior. The irregular window patterning is much like the voids within grass allowing light to pass through the dense prairie. The brick masonry color represents the hues found in prairie grass while the brick banding reflects the setting sun,” he said.

Associated Bank provided the construction financing loan totaling approximately $9.6 million. The project team anticipates completion next summer.

 

Source:  CREJ

Report: MOB Sector Boosted By Demand And Capital

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The medical office sector was firing on all cylinders before the arrival of COVID-19, and it appears to be well-positioned for a robust rebound post-pandemic, according to a special report by Marcus & Millichap.

In the third quarter forecast titled Beyond the Health Crisis: National Medical Office Outlook, the company notes that the adaptation of patient care and the ongoing rise in health-care needs will buoy demand for medical office buildings despite the disruption brought on by the coronavirus.

“The medical office sector is being tested as operators navigate new challenges created by COVID-19. Medical office was once perceived to be a more resil­ient asset class during a downturn, but the unique uphill battle faced by health-care providers due to the pandemic has choked revenue streams and considerably shrunk margins,” according to the Marcus & Millichap report.

The national vacancy rate rose to 8.9 percent, marking an increase of 40 basis points from the second quarter of 2019. Project abandonment and delays caused construction activity to drop 1 million square feet year-over-year. Additional projects will be postponed or canceled in the upcoming months; however, this will help stave off any threats of overdevelopment in the sector.

Other fundamentals, such as rental rate trends, serve as indicators of strong performance ahead. Most REITs reported a solid level of rent collections even though many tenants pursued deferrals and rent relief. Additionally, rent growth continued its pre-pandemic upswing, climbing to an average of $25.22 per square foot.

A New Age In Health Care

Well in advance of the appearance of the coronavirus, the U.S. health-care industry had begun to decentralize, providing more medical care in outpatient facilities instead of hospitals.

“Excluding some major surgeries, off-campus properties now offer the highest quality of care and complex procedures, driven by the need to provide equal levels of service across a metro,” according to the Marcus & Millichap report. “New hospital and expansion projects continue to target suburban areas as a demographic shift has caught the attention of health systems, placing more modern facilities and specialized care closer to patients’ homes. As these medical districts expand, the need for nearby outpatient clinics and supportive services generates demand for medical office space.”

Telehealth, via phone or online video, increased dramatically as a result of social distancing, and while experts expect the use of virtual care options to continue to rise in the post-pandemic environment, they do not expect it to result in a reduction in the need for medical office buildings. According to the report, the need for certain in-person visits will remain, as will the need for labs and imaging, all of which will translate into continued demand for medical office accommodations.

Finally, the coronavirus has not changed the fact that the considerable Baby Boomer population continues to age, and it’s doing so in an era when medical technology and advancements are supporting longer lifespans. As Marcus & Millichap notes in the report, the population of citizens aged 65 and older will expand by 30 percent over the next 10 years.

And with age comes more visits to the physician’s office. Individuals in the 55-64 age range make an average of 4 physician visits annually, but the number of yearly visits rises to 5.9 for those in the 65-74 age range and jumps to 7.6 for those 75 and older.

“Despite the short-term costs, the health-care industry will be one of the quickest to bounce back from the pandemic since the care needs of a growing and aging population continue to increase,” Marcus & Millichap asserts in the report. “Medical services are returning as states move through reopening phases, and pent-up demand from postponed procedures and office visits provide a positive outlook.”

Read the full report on Marcus & Millichap’s website.

 

Source: Commercial Property Executive