While the healthcare industry’s expansion and development continue to be a vital piece of the Memphis-area real estate picture, the focus has clearly shifted from the eastern portion of Shelby County to the areas in and near downtown Memphis.
During the next three years, Methodist Le Bonheur Healthcare, Regional One Health, St. Jude Children’s Research Hospital and the University of Tennessee Health Science Center will implement a number of long-term capital investment projects in an area that includes the medical district, the Crosstown Concourse and a portion of downtown Memphis. The construction projects include a variety of other medical and wellness tenants.
“Most medical development right now is driven by large healthcare organizations, and the focus is centered on downtown and the medical district,” said Kelly Truitt, vice president of CB Richard Ellis Memphis. “Downtown has been a desirable area for medical growth because it’s traditionally the center for medical activity. We are continuing to see that commitment with the implementation of many capital projects.”
According to Dave Rosenbaum, vice president of facilities management for Methodist Le Bonheur Healthcare, the organization is renovating and expanding its facilities at its Methodist South Hospital, Methodist University Hospital campus and Le Bonheur Children’s Medical Hospital.
Expanding and renovating the emergency department at Methodist South Hospital currently is underway. Rosenbaum said the emergency department will remain open during the construction phase, so the new addition is being built first before the existing space is renovated. The entire emergency department will be 22,720 square feet upon completion.
Additionally, Rosenbaum said Methodist will renovate 9,950 square feet of its intensive care unit at Methodist South.
“We are close to submitting the construction plans to the state for review and approval," he said. “The entire renovation will take 12 to 14 months, and we expect the entire project to be complete by the summer of next year.”
Methodist has started construction on a $280 million expansion to its Methodist University Hospital on Union Avenue. The project consists of a 750-car parking deck, which will add 100 parking spaces to the campus, and a 430,000-square-foot tower and outpatient building. The tower will house 204 patient rooms, 20 new operating rooms and surgical suites and an imaging center.
A new outpatient services building, which will be connected to the tower, will be used for oncology and transplant purposes. The entire project, including the renovation of several support services’ areas in the existing hospital, will be completed by 2019, Rosenbaum said.
Two other projects in Methodist’s pipeline are a $55 million and 40,000-square-foot expansion to Le Bonheur Children’s Medical Hospital and 115,000-square-foot administration relocation to Crosstown Concourse. According to Rosenbaum, 20 hospital beds will be added to Le Bonheur in its cardiovascular intensive care unit, and the current outpatient surgical area will be moved to the first floor.
“Moving the surgical area is a matter of convenience for families, and it frees up the operating room on the second floor,” Rosenbaum said. “We will select a design team in the next 6o days, and the project is expected to be completed in the fall of 2018.”
Additionally, he said, Methodist plans to start construction on the sixth floor of Crosstown Concourse this month. Methodist will relocate various administrative offices to Crosstown when it opens in February next year.
Methodist’s expansion and renovation plans mirror a current trend in medical development, which could lead to future expansion and relocation, according to CB Richard Ellis' Truitt.
“We are seeing some hospitals modernize, update and expand their facilities,” she said. “There are in-fill areas around major campuses where primary care facilities could emerge in the future. Larger capital investments on campuses may spin off smaller in-fill projects such as medical offices, laboratories and ancillary services, but it’s too soon to tell. The locations are convenient and easily accessible and are within close proximity to healthcare systems.”
Additional expansion in the medical district consists of the University of Tennessee Health Science Center’s Interprofessional Simulation and Patient Safety Center. Students from six colleges will train in simulation settings in the new building to develop skills in team-based healthcare using high-tech mannequins and actors who portray patients with a variety of conditions. According to university officials, the $36.7 million project will be completed in the fall of 2017.
Also, the Memphis Medical District Collaborative, which consists of several key officials from various medical institutions in the medical district, is working on commercial and residential development in the area surrounding the Memphis Medical Center. In addition to redevelopment efforts in the area, the collaborative’s focus is on maintaining and improving the public realm, increasing safety and security, programming and marketing of the district and community development.
St. Jude officials announced last year a $9 billion strategic development plan, which includes the St. Jude Graduate School of Biomedical Sciences, new in-patient units for the hospital, a new data center, outpatient facilities, a clinical office building, a new research building and new housing for patients.
According to news reports, Rick Shadyac, president and CEO of ALSAC, says the strategic plan will increase the number of new cancer patients treated on the St. Jude campus by 20 percent when completed.
Crosstown Concourse, a $200 million, 1.1 million-square-foot, mixed-used development that will house numerous wellness tenants in North Memphis, is on schedule for commercial tenants to occupy the building in February next year, says Todd Richardson, co-leader of Crosstown Concourse.
“Tenants are beginning to do their internal build out,” Richardson said. “The Church Health Center has started construction already, and other tenants are in late design stages.”
According to Ann Langston, senior director of strategic relationships and opportunities for the Church Health Center, which will occupy 150,000 square feet of Crosstown, the Church Health Center plans to move into Crosstown in January.
“It will be a phased move because we don’t want to shut down operations such as our medical, dental and eye clinics,” she said.
Currently, these are the medical and wellness tenants scheduled to occupy Crosstown Concourse:
- Church Health Center
- Methodist Le Bonheur Healthcare
- St. Jude/ALSAC
- Southern College of Optometry
- Crosstown Back Institute
- Various clinics (including a dermatologist and dental office)
Additionally, Langston said Crosstown will change the landscape of North Memphis.
“It’s important for the Church Health Center to be very engaged in the neighborhood and surrounding areas of need, “Langston said. “We want to make a footprint in North Memphis and meet with residents about their healthcare needs.”
The commercial growth is spearheading a growing demand for residential properties near Crosstown, according to one local real estate expert.
“We are seeing a growing demand for homes in the area surrounding Crosstown, even for homes that are not in the best condition,” said Kay Aerts-Miller, a realtor at Kaizen Realty. “I’m already seeing evidence of an increase in the value of homes. There are medical professionals who work in the area and want to live there, and they are willing to pay more to be in the area and don’t mind updating the homes.”
Richardson says residents are seeing physical evidence of a plan that has been six years in the making.
“The Crosstown building is beautiful and trees are up on site,” he said. “We have noticed a positive impact on the residential side, and now we hope to see more commercial impact in the area.”
Scott Vogel, executive director of the Regional One Health Center for Innovation, says there isn’t just physical building development occurring downtown, but also a development of ideas.
Regional One Health Center for Innovation is a gateway for medical entrepreneurs who complete accelerator programs, such as the Zeroto510 program through the Memphis Bioworks Foundation, and want to test their products. Additionally, Regional One Health employees and physicians can submit innovative ideas to reduce costs, improve efficiency, improve health outcomes and engage patients.
“It’s an exciting time in the medical community in Memphis with the physical expansion of St. Jude and Methodist,” Vogel said. “This type of innovation is good for both the medical community and entrepreneurial community in Memphis.”
RELATED LINKS:
Methodist Le Bonheur Healthcare
St. Jude Children's Research Hospital
University of Tennessee Health Science Center
