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5 Of The 20 Largest Medical Office Deliveries Expected This Year Are In One City

A new report indicates Houston’s medical office market absorbed almost 40K SF in Q1, and more growth is coming, with the city poised to be home to five of the 20 largest medical office projects set to deliver this year across the nation.

Overall medical office leasing increased 26.4% year-over-year, according to JLL’s Medical Office Building Insight report that was just released. Additions to the market include the Hope Health Clinic’s 70K SF flagship location in Sugar Land and Orion Medical Group’s 47K SF building in Clear Lake.

Another 606K SF is under construction, according to the JLL report. Q2 is set to bring the delivery of the largest medical office building project in the country this year, per 42Floors.

A 400K SF, $1.3B project is the O’Quinn Medical Tower at the McNair Campus of Baylor St. Luke’s Medical CenterHouston Innovation Map reported. The 12-story building will include an ambulatory surgical center with 12 operating rooms and 10 endoscopy suites, an 80-bay setup for infusion therapy, more than 70 exam rooms and more than 850 parking spaces, the article states.

Four other Houston projects made 42Floor’s national top 20 list. Two of them are Kelsey-Seybold projects slated to deliver in Q3: a 158K SF center on the North Grand Parkway and a 116K SF ambulatory surgical center in Clear Lake. The other two projects listed are the 159K SF Houston Methodist Sugar Land Hospital Medical Office Building 4 and the 107K SF 1715 Project in Friendswood.

Houston offers the highest concentration of medical office building projects of any metro on the 42Floors list. That designation comes as healthcare systems like Houston Methodist and Memorial Hermann continue to expand their operations to match population increases, leading to sustained growth in the medical office market, JLL’s report states.

Other trends seen in Q1 include the popularity of Class-A medical office space, reflecting the flight to quality seen across the entire office sector. The absorption for Class-A medical office totaled about 50K SF while Class-B’s was -10K SF, balancing out to the nearly 40K SF total absorption.

Sugar Land and Clear Lake continue to show themselves as strong suburban markets for the medical office building market development, totaling over 2M SF and 1.75M SF of inventory, respectively.

The Woodlands, which is looking to become a hub for the life sciences industry, has 2.52M SF of medical office building inventory, according to the JLL report.

“Houston’s medical industry is propping up its potential to draw life sciences business,” Matt Gardner, leader of CBRE’s Americas life sciences advisory group, told Bisnow. “For decades, the pieces have been there. I think the sense around the world in the industry is that it’s starting to come together now. And it’s starting to show up for more of the growth that we’ve been hoping for for a long time.”

 

Source: Bisnow

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Medical Office Building Mergers, Acquisitions Up 14% In First Quarter 2023

Medical office building mergers and acquisitions were up 13.7 percent in the first quarter of 2023 and up 5 percent from the same period last year.

Medical office building spending increased by 21.3 percent over the last quarter, hitting $991 million in the first quarter, according to an April 14 press release.

The largest medical office building sale with a disclosed price in the first quarter was for $190 million.

Tennessee saw the highest number of mergers and acquisitions in quarter one with 11 deals, followed by California, Illinois, Florida and Texas.

Montecito Medical was the busiest acquirer in the market, obtaining 261,307 square feet of property across the country. The real estate investment firm’s most expensive transaction of the quarter reached $48 million.

 

Source: Becker’s ASC Review

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Growth Brings New Opportunities For Local Hospitals, Medical Centers In Dallas-Fort Worth

In February, work was completed at Methodist Southlake Medical Center, expanding the size of its emergency room to 10,000 square feet, providing a larger waiting room and enhanced diagnostic capabilities for patients.

Ground broke in November 2021 on the hospital expansion before opening its first phase in September 2022 and finishing renovations in February 2023. The expansion includes new capabilities to treat abdominal pain, chest pain and infection as well as enhance the stabilization of patients.

“The expansion of services is part of the hospital’s efforts in becoming a full-service, acute care hospital,” said Methodist Southlake President Benson Chacko. “Having the emergency room with our certified emergency physicians that can handle pediatric and adult care gives an opportunity for us to take care of our community.”

This change in care capabilities also comes as the Tarrant County area sees growth in its population. The county is expected to reach over 2.6 million residents in 2040—a 23% increase from 2020’s population, according to the Texas Demographic Center.

As the population grows along the Hwy. 114 corridor, Chacko said making sure the hospital has access points for existing and projected patients is important. Since being acquired by Methodist Health System in 2016, the hospital now has a cardiology program with the capability for inpatient cardiac procedures, and it has capabilities for nuclear medicine as well as obstetrics and gynecology care.

After the first phase of expansion in September, which increased the emergency department’s beds from three to eight, he said there has been “tremendous growth” in the number of patients coming in.

“As we continue to grow in the community, families are starting to see that Methodist Southlake is not the same hospital that it was just two years ago,” Chacko said. “It’s the real deal.”

As of February, the emergency department now has 12 beds, with 54 beds total available throughout the hospital.

New Opportunities For Care

The expansion of a private business, such as Methodist Southlake, will help serve the rising population, according to Southlake Chamber of Commerce CEO Mark Guilbert.

“As the area grows, additional services are needed,” Guilbert said. “For Methodist to bring them here is indicative of our thriving economy.”

Methodist Southlake has also provided a new option for residents when choosing medical care. Previously, he said residents would have to leave Southlake to go to an emergency room.

Increasing care capabilities is not only a focus for Methodist Southlake, but Baylor Scott & White Medical Center in Grapevine. Baylor Grapevine’s President Naman Mahajan said hospital expansions mean providing better access and availability of medical technology closer to home.

“It is important for patients to have access to technology, such as robot-assisted surgery, that was previously only available in medical centers in downtown Dallas or Fort Worth,” Mahajan said. “Over the next five years, we’re going to be dealing with a lot more individuals and community members that are over the age of 65. With that, it really comes down to two things—access and availability.”

He said Baylor Grapevine is aiming to become a tertiary level center, meaning it has a full component of services it can offer to the community. When a population is significantly growing, he said it is important to provide care for heart disease, stroke and neurological services.

“As the community grows, each health care system and entity is having to look at how they are going to best serve,” Mahajan said. “It is also a goal that community members should not have to leave our area to receive that world-class care.”

Bearing The Load

With an increase in patients, Chacko said Methodist Southlake has hired more medical personnel during the last 18 months. The hospital has brought in more nurses, respiratory therapists and different specialists. Despite bringing on more staff, there are still industry-wide staffing issues the hospital is facing.

“When the COVID-19 pandemic began,  several hospital members left and became agency employees through private companies or independent contractors,” Chacko said.

Baylor Grapevine also saw nurses leave when the pandemic began, but Mahajan said nurses are returning to the workforce in a more permanent way, rather than being travel nurses.

Texas is projected to face a shortage of nurses through 2030, according to a study by the Health Professions Resource Center and the Texas Center for Nursing Workforce. North Texas is expected to see the biggest shortage across the state with 15,688 registered nurses needed by 2030. The Gulf Coast follows in second with a projected shortage of 13,877.

East Texas, South Texas and West Texas are expected to be short 5,000 to 6,000 nurses in each region. Central Texas and the Rio Grande Valley are each projected to have shortages between 6,000 and 7,500. The Panhandle is expected to have the smallest shortage of 355 registered nurses, according to the study.

“Growth in the community is going to increase the workload of local hospitals,” said Jack Frazee, director of government affairs and general counsel for the Texas Nurses Association. “We don’t have the ability to move excess nurses from one part of the state to another. We’re always struggling to keep up with the demand, and population growth is a big part of that.”

Listening to nurses is one step for hospitals to retain their staff, Frazee said. Under state law, hospitals are required to set up a nurse staffing committee to ensure positive patient outcomes and nurse satisfaction. He said working with the committee and making sure the policies set in place by the hospital support nurses is “critical” for retention.

The Texas Legislature is aware of issues with staffing nurses, Frazee said. The problem is being addressed by proposed bills which will increase the funding for education. While this is a step in the right direction, Frazee said funding solutions take time.

“There’s going to be a big burden on the hospital management to make sure that they are doing what they need to do internally to retain nurses and make sure that we’re not losing qualified nurses,” Frazee said. “Without these reforms though, staffing nurses will remain difficult. Training new nurses will help meet the demand seen across the state.”

Promoting health care as a profession can also be done by local hospitals.

“Baylor Grapevine is helping by providing tuition assistance to nursing students and other efforts,” Mahajan said. “So while we do know our population is going to grow … we anticipate that, and we have several strategies underway that will allow us to continue to expand our workforce to meet the COVID-19 health care needs.”

 

Source: Dallas-Fort Worth Community Impact