July 12, 2016

Memphis Healthcare Construction Trends

By David Yawn
– Memphis Medical News –

The Memphis medical community has witnessed an interesting phenomena that reflects a general eastern migration across the city in everything from the placement of medical offices to large-scale clinics.

The overall bright development is that construction overall is burgeoning in enviable proportions versus other conventional real estate property types. Not only that, much of the new construction and expansion continues in the traditional Midtown corridor as well.

With the wholesale relocation of many services of Baptist Memorial Hospital from its longstanding, monolithic main campus at the Midtown Medical Center to Baptist East, there is a traceable form of migration by several prominent medical facilities to the eastern part of the city. In addition, hospitals that already had a presence out east have expanded the scope of their existing facilities in East Memphis and Germantown.

“Eastward Ho!” has progressively been an unspoken byword in Memphis hospital construction circles. Testimony of this is evident in expansions at Baptist Memphis Hospital’s campus at Walnut Grove and Humphreys Boulevard, the myriad of clinics clustering around that location, the continued buildup at Methodist LeBonheur Healthcare – Germantown Hospital and the vibrant activity at St. Francis Hospital, among other indicators. Large clinics such as Semmes-Murphey Clinic, Campbell Clinic, West Clinic and others have in very recent years located freestanding facilities out east.

Baptist Memphis Hospital – Memphis (formerly Baptist East) is one of the most evident lighthouses of this effect. It has launched waves of expansions over the last few years. Among these are the following: an expanded parking garage, a new patient-bed tower of five stories and 166 rooms, the Baptist Memorial Hospital for Women (188,000 SF) and 140 beds, an 80,000 square-foot physician office building, the Baptist Heart Institute (165,000 SF) in three stories containing Baptist Ambulatory Centre with eight operating suites; the 6029 Walnut Grove physician office building (125,000 SF in five stories), housing the Plaza Diagnostic Pavilion; and a new corporate building (186,000 ST) at 350 N. Humphreys Blvd.

Developer Boyle Investment Co. has helped orchestrate a flurry of medical center development activity at that vicinity. Mark Halperin, executive vice president at Boyle, says that the buildings in the development were conceptually planned and program-designed. Over time, the connection with Baptist became stronger and stronger. Its first building for medical office use was the building called 80 Humphreys, a joint venture with many occupying doctor-tenants. It was almost leased by the time it was completed.

Since then, the Baptist Wellness Center, East Memphis Surgery Center, Stern Cardiovascular Center, and Cardiology Specialists were among clinics settling around Humphreys Center.

Baptist Hospital bought some of its surplus land for the building of Baptist Women’s Hospital and an adjacent office building, “We have two sites in the north section of Humphreys Center where we could place more buildings of the size of West Clinic and Semmes-Murphey,” Halperin adds.

Construction activity in medical real estate has been the bright spot for commercial real estate in a time when conventional office development has been flat, says Stephen Bowie, senior vice president with Commercial Tennessee, a business real estate firm. Strategic repositioning and expansion among several practices has resulted in a surge of build-to-suits in the Wolf River medical corridor. Following the lead of Campbell Clinic’s facility on Germantown Parkway at Wolf River Boulevard and the West Clinic at Humphreys Center, other major developments include Wolf River Medical Building/Mid-South Heart Institute (48,000 SF), Stern Cardiovascular Center (55,000 SF), Boston Baskin Cancer Group (97,000 SF), and a 12,000 square-foot ambulatory surgery center addition for Campbell Clinic, Bowie chronicles.

Fleming/Associate/Architects P.C.’s practice has been busy with a multitude of projects. It recently designed many area medical facilities, including Diagnostic Imaging PC, UT Eye Institute (in joint venture with TRO), West Clinic and Semmes-Murphey Clinic (with an Atlanta consultant), Baptist Minor Medical Clinic, Urology Center of the Mid-South, Clinic of Plastic and Reconstructive Surgery and about a dozen others.

Loeb Professional Center boasts over 10 medical practices including the Urology Ambulatory Surgery Center (40,000 SF). Commercial Tennessee provided strategic representation for Campbell Clinic in a build-to-suit (22,000 SF) in nearby De Soto County. The firm is also brokering medical office leases for Boston Baskin in midtown Memphis (120,000 SF), DeSoto County, Bartlett, Raleigh, and at Baptist East.

“Although many of the larger firms are now positioned in east Memphis, we expect the trend toward freestanding facilities to continue, alongside of the historically viable alternative of medical office building space adjacent to major hospitals,” Bowie says.

In the north and northeast, expect to see continued development and repositioning of satellite medical offices (such as Boston Baskin’s 10,000 SF office) as the new St. Francis Hospital – Bartlett comes on line. Bowie’s group is working with Memphis Orthopedic group to reposition its largest office in Raleigh, one of 14,000 square feet.

“Medical use has unique requirements,” Halperin of Boyle says. “There is much front-end planning with utilities, electrical, plumbing and parking, for instance. It generates a lot more visits per day than regular office space. You often have more extended hours of operation, too.

Meanwhile, not every hospital expansion is welcomed with open arms. Olive Branch, Miss., neighboring Memphis, has been opposing Baptist Memorial Hospital – Desoto’s application for state approval of a planned $175 million expansion. Some city leaders there think that if the facility is nearby Southaven is allowed to add a 400,000 square foot, 10 story tower and more than 100 beds, that Olive Branch’s chances at getting its own hospital may be more remote. Baptist won zoning approval for it in October.