Site Repurposing Challenges for Healthcare Properties
Many developers have turned to repurposing old sites to build new healthcare projects. But even this solution comes with challenges.
This topic was tackled in a session at the recent GlobeSt. Healthcare Real Estate conference here in Scottsdale, AZ.
Demand is clearly there for product. When asked by moderator Julie Johnson, EVP of Colliers about underserved markets, panelist Steven Stubbs, regional director of Adventist Health, explained that there are many such areas in California. “There is a need to build freestanding EDs to serve certain populations.”
Sheila Schmidt, VP of real estate development at Meridian, also talked about California, but noted that getting in that sweet spot where a client wants to be can be a bit more challenging than in other parts of the country. For Meridian, the company has been successful in taking non-medical facilities and making them medical. For example, Schmidt said that they recently closed on a facility that was a culinary arts school and brought it spec. “You need to look at things beyond face value in order to repurpose them. It is a creative way to get clients in the markets faster and be able to offer locations that are easily identified.”
Johnson also noted that her company is working on selling a former Walgreens to a surgery center group.
One drawback, though, is that 15,000-square-foot footprints are hard to find, said Vince Femiano, SVP of Healthcare Advisory Services at Transwestern. “I see micro-hospitals being the true benefit,” he said. “It is a cheaper avenue to get those dollars back to the door.”
According to Schmidt, when looking at surgery centers, for example, the repurposed buildings you should be looking at are data centers, which already have some of the existing components you might need, like generator space etc.