Germantown, with its current expansion of treatment facilities, continues to build its reputation as a rapidly growing Memphis-area medical center.
Extending from Methodist Germantown to Baptist Memphis (formerly known as Baptist East), the Germantown Medical Corridor has undergone steady growth and development, especially along Wolf River Parkway.
Most recently, Cypress Realty Holdings Co. has begun construction on the second phase of its Medical Arts Complex. Its first project, Medical Arts I at 7550 Wolf River, was completed in July 2008 with 44,000 square feet and now boasts 100 percent occupancy.
Tenants include Trumbull Labs, Krause Internal Medicine, Results Physiotherapy, Mid-South Internal Medicine and Wells Fargo.
Steel is already in the ground next door, with completion of Medical Arts II expected next spring. Phase II is being built in the same two-story style using the same building materials utilized in Phase I. Proving there is a demand for such space, the new facility was already 45 percent leased before construction even began.
Addressing the financial confidence of the developers, Joe Jarratt, principal of Cypress Realty Holdings, said, “Land-wise, nothing is comparable to the space available in the Germantown Medical Corridor. There has been no new inventory added in the last few years, not in that corridor, not since the local economy took a downturn in 2008. We’ve held off developing our land since then, waiting on the market to improve, and we just broke ground in July for our new property.”
The stability of the market development is readily evident. Unlike the scenario in retail, medical-related occupancies never experienced much of a drop during the recent local economic downturn. Another factor contributing to the interest in the new construction is that older buildings are becoming outdated.
Jarratt added, “Regardless of the type of medical service being offered, lots of technological changes have been introduced. It is easier and more cost-efficient to integrate that technology into new construction than it is to retrofit it into older buildings. Almost all of our tenants in the Germantown Medical Corridor have local offices that they are expanding or consolidating.”
William Tuttle, vice president of Baptist Memorial, commented on the expansion saying, “The growth in this medical corridor is being spurred on by the general population growth’s moving eastward. Another factor that has impacted growth in this area is the support of elected governmental officials, especially in Germantown, who have been deliberately supportive of the expansion of medical services in their city planning processes. There’s now a nucleus of medical services and providers, whether it be hospital-based or physician practices, that offers a very broad and comprehensive grouping of medical services.”
So this building boom really does follow the logic of “If you build it, they will come…” Medical professionals are opting to upgrade from older buildings to new ones offering the benefit of new technology options and the quality of a Class A product. And some of those upgrades apply to both the medical professionals and their patients. Moving to an off-campus location offers increased visibility and ease of access.
For example, the Medical Arts buildings on Wolf River offer five parking spaces per 1,000 square feet, which is more than is usually available with on-campus parking. This translates to more available parking as well as shorter distances for patients to get to their care providers. This trend is being spurred on by another convenience factor, the access to both primary care and specialists in a centralized area.
Charles Lock, executive director of Sutherland Cardiology (which is now part of the Methodist Healthcare System), said his clinic looked at its space on Wolf River in 2005-2006 “and we saw it as a great opportunity to be part of that medical corridor. Although our patient base has expanded in other parts of the city as well, many of our patients already lived out east in the county. When we decided to move to Germantown years ago, it put us in closer proximity to a large number of our patients.”
Medical Arts II will offer 36,000 square feet to medical professionals and is being designed to include an imaging clinic, with care provided by West Tennessee Imaging and Mid-South Imaging and Therapeutic.
Rounding out the corridor are medical organizations Stern Cardiovascular, Sutherland Cardiology Clinic, Gastro One, The Light Clinic, Campbell Clinic, Baptist Oncology Campus, UT Medical Group and Baptist Rehabilitation Hospital (currently under construction). Not only does the list of tenants speak to the growing variety of medical services being offered in the Germantown Medical Corridor, but the occupancy rate of the medical buildings in that submarket is 95 percent, and is maxed out at 100 percent from Germantown Parkway west to Baptist Hospital.
By the Numbers
The Germantown Medical Corridor
More than 1 million square feet of rentable space in the East Memphis submarket
Approximately 20 percent of the market share of the Memphis Medical market
As of the end of 2013, vacancy rate of only 12.5 percent
Class A medical buildings have occupancy of nearly 95 percent
No new inventory (rentable office space) added for more than 5 years
Most vacancy in the marketplace is in older buildings (10 to 30 years old)
Our estimates show that potential demand in the sub market exceeds supply by more than 225,000 square feet
Medical Arts II location
Baptist memorial Hospital, Memphis – 2.5 miles
Methodist Le Bonheur Germantown Hospital – 2.4 miles
Campbell Clinic – 0.7 miles
Baptist Rehabilitation Hospital, Germantown – 2.4 miles
Sutherland Cardiology Clinic – 0.2 miles
Baptist Oncology Campus – 0.9 miles
UT Medical Group – 0.9 miles
Medical Arts I is 100 percent leased
All data from independent research done by Integra Realty Resources