A gleaming new building now greets people at 13101 South Dixie Highway where the old Post Office used to stand. The four-story structure holds Baptist Health South Florida’s latest hub-based primary care facility. The building also hosts other medical practices and physicians, including South Florida ENT, HeartWell and Kings Bay Pediatrics.
Baptist’s Director of Physician Practice Operations Chris Grant explains, “In our world, a hub facility means we have multiple disciplines and specialties all designed to work together in one space. In this facility we have primary care, ambulatory spine medicine, sports medicine and endocrinology, all centered around the hub in their own pod workspaces.”
Chris Grant added, “This is our envisioned primary care redesign. We took all our knowledge from prior facilities and looked at best practices from around the globe to reach this suite design. You’ll see vast open spaces, no glass enclosures to separate you from the medical staff, collaborative spaces and plenty of windows. We also have passages designed to make it easy for staff to easily reach other team members.”
A tour of the facility showed the thought put into all aspects of the design. The discipline hubs flowed into each other yet functioned as independent operation centers. Exam rooms were roomy and equipped with computers that helped doctors stay in the room, rather than have to seek information and patient records elsewhere. There is on-site blood spinning and diagnostics. The facility also boasts state-of-the-art radiology equipment. Finally, the doctors work from desks in an open suite environment instead of in offices with doors.
Both Baptist’s hub facility and Kings Bay Pediatrics actually started operations on January 9, 2017 and it is expected that the entire building will be occupied by medical practitioners and fully operational by mid-June. On February 21, Baptist held a grand opening event for neighborhood VIPs to get a tour.
Besides the building’s attention to facility layout, the parking is also designed to be convenient. There is a huge, covered porte-cochere for drop off and hundreds of spaces, most of which are covered and conveniently located close to the entrances.
Grant concluded, “We are thrilled to be in Pinecrest and we believe our building enhances and reflects the community. In every respect, it has been a true partnership between Baptist Heal Primary Care and Pinecrest.”
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The experience a contractor gains from multitudes of projects with varying customers, settings and situations can be used to an owner’s benefit. The lessons learned from building others’ health care facilities, whether they are hospitals, imaging centers or veterinarian offices, can be applied when you decide to build. This is true regardless of your level of experience. If you are a seasoned purchaser with responsibilities for multiple facilities or a sole practitioner building your first dental office, you stand to benefit from your contractor’s gained knowledge.
Much of the success in your building project comes in the planning stages. If your contractor is at the table early, is focused on the end use and understands your business, the result will be a better facility. Probing and listening are key components to understanding your needs. A contractor who pushes you to think hard about what is important, what is necessary, your future plans, your patients’ needs and other significant aspects of your business will likely give you a better project at a better price.
Owners and purchasers often do not know what they do not know. A contractor’s collective knowledge can be applied, essentially learning from others’ experiences. The knowledge attained by building a palliative care facility and the nature of that type of room allows the contactor to suggest adjustments to benefit the patients. Applying experience with acoustical control can improve the quality of life in a shared living environment. Moving sinks out of exam rooms to a shared location can have a significant cost savings. A contractor who is willing to challenge an owner’s plans and ideas is likely to provide that owner with a better product at a lower price.
Health care providers can lean on the contractor to realize cost savings by getting them involved early in the process. When pricing is available as you are making design decisions, you can quickly make adjustments before the design is completed. If a nursing home believes it may need to add oxygen to patient rooms, this can be prepared now for future use, at a significant savings to renovations in the future. If a medical office building may require a future generator for emergency electric, a panel may be added now, preventing an overhaul of the electric system in the future. Understanding what it will cost to build in oxygen units early in the process can help a palliative care home decide that using mobile units is a better selection. Having a contractor probing, planning and providing real-time pricing is a significant benefit to health care providers.
Health care providers stand to benefit if they put their contactor to work intellectually. Contractors’ understanding of building options, costs and materials can become a significant value to an owner. The value is there if the contactor is at the table early and engaged throughout all phases of building process.
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The Costco Wholesale store just southwest of Miami International Airport could be replaced by a health care campus featuring medical offices and senior housing.
Miami-Dade County officials received a pre-application on Feb. 8 by 8300 Healthcare Partners, managed by Michael Wohl and Stephen A. Blumenthal, to building the project at 8300 Park Blvd. The 11.3-acre site is currently owned by Costco but it is under contract to the applicant, who would demolish the 146,599-square-foot store from 1989.
A pre-application is filed so a developer can discuss plans with county departments before submitting an official zoning application.
Blumenthal, who has developed numerous industrial parks and shopping centers in South Florida, said he heard that Costco will relocate this store to the Mall of the Americas, creating an opportunity to redevelop the site. This area has one of the highest concentrations of elderly residents in Miami-Dade, he said.
“People are living longer and hospital stays are getting shorter, and many times when people leave the hospital they still need care,” Blumenthal said.
The health care campus would have 790,982 square feet of new buildings, two parking garages with 400 and 385 spaces, and 130 surface parking spaces.
Wohl is an executive at Miami-based Pinnacle Housing Group, but he said this is not a Pinnacle project. Once the developers receive entitlements, which should take about a year, they plan to sell all or part of the property to an experienced health care operator, he said.
While the developer has yet to conduct a traffic study, Wohl said the health care campus should generate significantly less traffic than the busy Costco store.
The site plan by MSA Architects shows the following components of the campus:
Two independent living residence buildings with a combined 281 units in 444,100 square feet. One building would be eight stories and the other would be six stories.
-A five-story skilled nursing facility of 164,000 square feet with 240 beds.
-A four-story assisted living facility of 104,000 square feet with 80 beds.
-A two-story medical office building of 48,000 square feet.
-A 19,382-square-foot memory care residence with 36 beds.
-An 11,500-square-foot medical product retail/wellness building.
The site plan also shows a pool, several garden courtyards and an internal roundabout street.
“We have a continuum of care,” Wohl said. “People can start living here independently and as they grow older and ore infirm they can access the other housing and services on site, like assisted living and memory care.”
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As the 65-and-older age segment increases by 20 million individuals over the next 10 years, demand for healthcare services will rise, which attracts investors to the long-term growth potential of medical office real estate. Institutional funds and REITs are actively searching for larger healthcare deals and portfolios, and private capital is emerging as a major option in the $5 million to $20 million-price range and could begin to take a larger share of transactions this year, according to Marcus & Millichap’s National Medical Office Research report.
A rise in crossover capital is also increasing competition for medical office properties as single-tenant retail investors target similar investment opportunities in this segment for higher yields. For-sale inventory is limited as medical office assets are in high demand with cap rates compressing over the past several years.
On-campus medical office buildings command top cap rates, trading at sub-6 percent initial yields for single-tenant properties, while multi-tenant buildings draw first-year returns in the mid-6 to low-7 percent range, according to the report.
Off-campus medical office properties with strong tenancy, which often include a healthcare system and long remaining lease terms, are in high demand. These properties fetch initial returns in the mid-6 percent area.
Yields on other off-campus medical assets, including those in need of repositioning or located in secondary or tertiary markets, can trade up to 200 basis points higher. Factors such as quality, location, deferred maintenance and tenancy have an impact on returns for these assets.
Design, Building Amenities
The impact of an aging population and generational drivers on the design of medical office space has been realized in recent years as builders conform to the standards of a patient-centered approach to healthcare and advances in technology. Large healthcare providers are acquiring and expanding services off campus and closer to residential areas, providing patients easier access to care.
This has prompted the development of ambulatory surgery centers, standalone emergency rooms and large multi-tenant medical office buildings. As the way people seek medical care and how they approach changes, developers must keep up by offering flexible floorplates, convenient locations and amenities such as lean design, up-to-date technology and green building features.
Last year, medical office builders completed 7.5 million square feet of space, concentrating on markets located in the Southeast and West South Central regions, according to Marcus & Millichap. Approximately 50 percent of last year’s deliveries were located in the southern United States. The Marcus & Millichap report forecasts that more than 8.5 million square feet of completions are slated for 2017.
Absorption Concentrated in Newer Properties
The combination of reduced deliveries since the recession and strong demand from providers seeking space in recently completed medical office buildings has concentrated absorption in properties constructed since 2000. Vacancy at these properties has fallen more than 500 basis points since 2010, and constricting vacancy in these buildings will drive additional deliveries over the next several years.
With the majority of space demand channeling into newly built properties, older-vintage assets will bear the brunt of attrition as private physicians retire and private practices are acquired and consolidated into hospital systems preferring newer buildings.
Vacancy has been flat over the past few years for properties built before the 1980s, but a significant number of assets built during this time are trading as investors seek opportunities to create value. Updated buildings will attract tenants in search of more modern amenities in areas closer to hospitals or medical office campuses.
Strengthened demand for medical office space during 2016 pushed down vacancy 80 basis points, ending the year at 8.2 percent, the lowest rate in the past 10 years, according to Marcus & Millichap. The Central Plains region realized the strongest decline in vacancy, tumbling 150 basis points to 4.6 percent and boasting the tightest regional vacancy rate in the country.
Rent advances persist, but growth restrained by changes in healthcare landscape. Hospital acquisitions of private practices and the move of outpatient services away from campuses and closer to where patients live and work are placing major medical providers in control of a large share of leasing activity. As a result, overall rent gains are trekking along at a modest and steady pace.
Despite space demand funneling into newer-vintage buildings, advances in marketed rent for these properties has ticked up just 0.6 percent since 2010.
Rent for buildings constructed prior to 2000 has produced the strongest gains, rising nearly 3.5 percent over the past six years.
Overall, medical office rental rates advanced 0.4 percent during 2016, reaching $22.74 per square foot at the end of the year, according to the report. The strongest increases recorded during the annual time frame occurred in the California and Mountain regions, advancing 1.3 percent and 1.2 percent, respectively. Just two regions, the Pacific Northwest and West South Central, realized declines over the 12-month period.
Health care facilities can be stressful places for patients and visitors, with depressing waiting rooms, rows of uncomfortable seating, a blaring television. But designers of some medical spaces are remedying the situation.
A more holistic approach includes mood-elevating colors and artwork. Chairs are angled to look out the window. Screens offer calming nature scenes instead of newsfeeds. There’s softer overhead lighting and skylights. Sometimes, diffusers even waft a gentle breeze of lavender or citrus to mask the harsh scents of disinfectants and medicines.
Sheila Semrou, a Milwaukee-based design consultant who has worked on numerous health-care facilities, says she takes inspiration from local scenery and geography. Think big windows, natural light and a palette that reflects outside vistas.
“The results can be supportive spaces that nurture occupants and provide comfort,” she says.
New research is showing that a lot of clinical design norms are hard on patients, she says. Bright, polished floors can be slippery, and create glare. Bland color schemes aren’t so much soothing as uninspiring.
“Studies suggest that some of the best environments for health and healing incorporate a variety of hues, use both warm and cool tones, and vary color saturation,” Semrou says.
At the Diane L. Max Health Center in New York City, a project by Stephen Yablon Architecture, upbeat primary and neon colors were used on midcentury-style seating, facades and to define different areas of the building.
On the other hand, in the reception area of Memorial Sloan Kettering in West Harrison, New York, blonde terrazzo floors, rift white oak and chic, light blue chairs clad in walnut veneer create a serene space, designed by EwingCole.
In colder climes, a fireplace can add a welcoming feel at little cost, says Carolyn BaRoss, who leads a health-care interior design division at the New York firm Perkins and Will.
“A number of our projects in Canada and the northwestern U.S. have included fireplaces as part of the waiting areas and other lounges,” she says. “We try to specify ones that look the most realistic and surround them with interesting materials. We’ve used both electric and gas fireplaces. They provide a source of warmth, but are fitted with a protective enclosure for safety.”
BaRoss says an Orlando, Florida, project, Nemours Children’s Hospital, has a “hospital in a garden” theme, with nature elements, daylight and views woven into the design. There are small “picnic blanket” designs in the flooring pattern, and child-size play areas, as well as “ceiling elements like the large flower in the dining area.”
Treatment areas are also benefiting from this kind of patient-focused design. The Florida Hospital for Children in Orlando and the Women and Children’s Hospital in Adelaide, Australia, are among facilities offering the “Philips’ Ambient Experience” in MRI suites. Patients select a lighting color, as well as audiovisual projections like nature scenes, to help ease anxiety during the procedures.
At Mercy St. John’s Hospital in St. Louis, an enormous vibrant butterfly greets visitors in the lobby, while patient floors are decorated with laser-cut images of animals.
BaRoss says new LED technology allows for more dimmable, flattering lighting, which can also be used to help patients find their way in a new facility.
At the Colorado Center for Reproductive Medicine in New York City, designed by Perkins and Will, chairs face out onto the cityscape. Look out the window, and you’ll also see Robert Indiana’s large “Hope” sculpture on the street below.
“The waiting room is typically where a patient will spend the most time. With that in mind, we took care to design an environment that’s low-stress and soothing,” says Dr. Brian Levine, the practice’s director.
“We took advantage of the views by placing our waiting room in the brightest and most visually stimulating aspect of our floor plan. We chose light-colored wall coverings, flooring, and furniture to help reflect and carry the light throughout the room, so no patient would ever feel like they’re in a ‘dark corner,’” he says.
Melissa Thompson, a health-care industry strategist from Westport, Connecticut, developed breast cancer shortly after giving birth to her daughter in 2015, and began a long treatment journey. The experience got her thinking about how important physical environment was to her comfort and, she believes, even her recovery.
She didn’t stay long at the first hospital she went to: “It smelled bad — like an old cafeteria full of chemicals.”
But Greenwich Hospital in Connecticut and Memorial Sloan Kettering in New York City were a different story. Rooms were oases of natural woods and light. Both hospitals had lounge areas where patients could relax outside of their rooms in a warm, comfortable atmosphere.
“I was noticeably happier, and discharged sooner,” she says.
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