COLORADO SPRINGS, CO-In Colorado and Arizona, Denver-based Westfield Co. Inc. is well known as a rather prolific developer of office buildings, apartments and retail centers. In 2010, the company completed the largest building added to the Denver skyline in 25 years: the 22-story, 500,000-square-foot 1800 Larimer building.
And even though Westfield’s website does not list healthcare among the commercial real estate sectors with which it’s involved, the firm has become quite active in the medical real estate market in Colorado Springs, about 50 miles south of Denver.
There, despite reports that the medical office building vacancy rate sits at about 15%, Westfield is bullish on the healthcare market in the city of about 430,000 residents. Last year, the company completed a $15 million MOB with four floors and 72,000 square feet called Penrose Pavilion; it’s located next to Penrose Hospital, part of the merged Penrose-St. Francis Health Services system. In January of this year, Westfield acquired a 23,000-square-foot medical facility that had been home to the Rocky Mountain Cancer Center, which has since moved into Penrose Pavilion.
In addition, because the site of the former cancer center has plenty of open space on its 10-acre parcel, Westfield is planning to start construction later this year on a 30,000- to 40,000-square-foot MOB. Completion is scheduled for 2014. In the meantime, some Penrose-St. Francis services have moved into the former cancer center building.
In addition, Westfield has plans for a pair of 45,000-square-foot MOBs on six acres acquired two years ago just east of St. Francis Medical Center – the other hospital in Penrose-St. Francis system – in northeast Colorado Springs.
In local reports, Randy Schwartz, Westfield’s chief operating officer, noted that the company would like to start construction on one of the building in late 2013. However, it also prefers to have the building at least 25% to 40% percent pre-leased before work begins.
Westfield also is looking to develop four acres it owns near St. Francis Medical Center as retail space. The company has sold one parcel to an eye care clinic.
It looks as if Colorado Springs, with the recession in the rearview mirror, is indeed an emerging medical market. It looks as if the Penrose-St. Francis system, which Westfield has forged a relationship with, continues to grow. Also, another local hospital and its parent company, Memorial Health System, has joined the University of Colorado Health.
As for the aforementioned 15% MOB vacancy rate during Q42012 (asdreported by Turner Commercial Research), Schwartz told a local newspaper the figure was most likely inflated by the inclusion of older and obsolete buildings with lower occupancies.
John B. Mugford is the Editor of Healthcare Real Estate Insights™, the nation’s first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.