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NORFOLK, VA-Amid a slowing of office building construction that has prompted many developers to delay, scale down or suspend a host of projects throughout the country, a $70 million medical office building here, plus four new projects in Texas, attest to the resilience of health care real estate despite the downturn. The projects, details of which were revealed last week, include the 195,890-square-foot Fort Norfolk Plaza plus two medical office buildings and two hospitals near Waco, TX.

Tag Birge, senior vice president for healthcare at Indianapolis-based Lauth, explains that Fort Norfolk Plaza “seemed like a long shot” for a time because no new commercial medical office buildings had been built in the Downtown Norfolk medical district in nearly 40 years and efforts to develop a new MOB near the Eastern Virginia Medical Center campus appeared stalled as recently as last year. But Lauth has now joint-ventured with local cardiologist Dr. Keith H. Newby Sr. to develop the nine-story Fort Norfolk Plaza on a 2.8-acre infill site across Brambleton Avenue from the city’s medical district.

Following the recent close of financing for the $70 million project, Lauth has started construction of the MOB and its connected 904-space parking deck. The project was announced nearly three years ago but had been delayed by a slowing economy and other factors.

Lauth worked with Newby and city officials to qualify the project for the federal New Markets Tax Credit (NMTC) Program, which is used by communities to attract equity investors to public-interest projects. Lauth rounded out the financing for the public-private partnership by securing debt financing through Bank of America and SunTrust.

To qualify for financing, Lauth needed to prelease at least 55% of the space, according to Andrew Lawler, Lauth’s vice president of healthcare for the Eastern Region. Lawler says that the new project is filling a need for more medical office space in the healthcare district, which includes the 555-bed Sentara Norfolk General Hospital, 720-student Eastern Virginia Medical School and 161-bed Children’s Hospital of the King’s Daughters.

In the case of the Texas projects, the two new MOBs and two hospitals will be part of a 50-acre replacement campus development by Chicago-based Lillibridge, which is working with Seavest Inc. of White Plains, NY to develop the facilities at a site two miles from Hillcrest Community Hospital and Hillcrest Women’s & Children’s Hospital in Waco. One of the MOBs will be the new three-story, 107,000-square-foot Hillcrest Community Medical Office Building, which will connect to the adjacent Community Hospital. The other will be a two-story, 59,000-square-foot medical office building that will connect with the Women’s & Children’s Hospital.

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