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VOL. 36 | NO. 40 | Friday, October 5, 2012

Midstate sees medical building boom

By Linda Bryant

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The new TriStar ER Spring Hill, a $15 million, 50,000-square-foot medical office building and emergency facility, is scheduled to open in early 2013.

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The phones started to ring soon after Solomon Builders announced plans in June for the second phase of Hendersonville’s New Island Centre medical and retail office building.

‘’We were bombarded with inquiries,” says Gregg Turner, Solomon Builders’ principal. “It was as if somebody turned on a switch. There’s been a very high level of interest a wide range of potential tenants, from pediatric groups to dentists to physical therapy to orthopedic practices.”

Solomon Builders is not alone. The market for medical office space is hot in many suburban and outlying counties in Middle Tennessee. The growth is a spurred by a combination of factors from both the consumer and business side, says Fred Gage, senior vice president of ProVenture, a Brentwood-based commercial real estate firm.

“One type of provider in a suburban location is looking to be get close to their paying patient base,” Gage adds. “They may have an elective element to their business, which means visibility and convenience are important. They are serving a patient who has choices and is busier than ever.

“Larger medical practices often want a presence in an outlying community so they can employ a ‘hub and spoke’ business model. The outlying office sees and treats new patients, which results in referrals of more complex cases back to a larger facility (in Nashville).”

Gage, who also is the leasing agent for New Island Centre, say the hottest areas for medical office expansion are Hendersonville, Franklin, Spring Hill, Mt. Juliet, Nolensville, Clarksville and Lebanon.

Large hospitals are a second major type of medical provider expanding to ring counties. Middle Tennessee’s largest hospital systems – Vanderbilt University Medical Center, Saint Thomas Health and TriStar Centennial Medical Center – are advancing to outlying areas.

Hospital-backed projects currently under construction include TriStar Centennial’s $15 million, 50,000-square-foot medical office building and emergency room in Spring Hill and Maury Regional Hospital’s $7.9 million, 62,365-square-foot medical office complex on Port Royal Road and Reserve Boulevard in Spring Hill.

Hendersonville’s New Island Centre medical and retail office building is one of many new medical building being constructed in Middle Tennessee.

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Saint Thomas Health recently announcing a Capella Healthcare facility that expands cardiac, neuroscience and other specialty services in White, Smith and Cannon counties.

The Maury Regional facility includes space for a pediatric clinic, outpatient surgery center and specialty and physical therapy clinics. Vanderbilt University Medical Center is collaborating with the hospital to house a radiation oncology center at the new medical office building, and likely will be involved in future joint ventures, says John Howser, assistant vice chancellor of medical center news and communications at VUMC.

“The overall trend is to bring care closer to home,” Howser says. “People are asking for it; it’s a model we are definitely pursuing.”

“VUMC is planning more satellite medical offices, clinics and partnerships in Robertson, Sumner and Wilson counties and already has 16 clinic or specialty practice sites in Williamson County. On Oct. 1 VUMC announced a joint agreement with Williamson Medical Center to expand the Franklin-based hospital to include a three-story pediatrics tower. Hospital expansions often lead to subsequent growth in space for medical offices,” says J.T. Martin, vice president at the Nashville office of CBRE.

“We’ve seen this trend for the past few years, and we expect it to remain a growing market” Martin adds. “We’re seeing (need for) a lot of multispecialty practices, urgent care and specialty suites.”

Anticipating the growing need for medical office space, Solomon Builders built the original New Island Centre in 2007. That 50,000-square-foot building, directly across from Hendersonville Hospital, has an average occupancy rate of 95 percent. Turner says he decided to build the second phase of New Island Centre because the trend of providers getting as close as possible to suburban and outlying residents is in full swing.

“You’re seeing more and more demand,” Turner says. “One of the reasons the market is getting stronger is because the needs are greater. The baby boomers are getting older and demanding more services and there are also many young families who need services in the suburbs.”

The 20,000-square-foot Phase II expansion of New Island Center is more than half leased and slated for completion in spring of 2013. Turner predicts 100 percent occupancy before the doors open.

“We’ve been very pleased with the high level of interest,” Turner says.

Turner says the demographics of Hendersonville area, which include an average household income of over $70,000 and a population of about 100,000 within a five mile radius of the hospital, paint the picture of customers with the mobility and income to support a proliferation of medical choices. Another positive factor: Hendersonville is a retail destination.

“It really helps when patients already frequent an area,” adds Gage of ProVenture “They can do other things like eat or shop before or after an appointment. It also helps when the provider is in a growing area because it’s more visible to the potential patient. They see your sign and are more likely to call you in the future.”

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