Published on August 8th, 2015 |0
HealthAmerica plans $18M redevelopment of Northwest Medical Center
Although occupancy lately has dropped to about 30 percent, HealthAmerica execs say the project is due for a turnaround and it can eventually offer hospitals, physician groups and specialists a chance to rent relatively affordable office space in one of the Southeast’s most affluent neighborhoods.
HealthAmerica struck a deal with real estate capital firm Harrison Street Partners, which is contributing about $7.5 million toward the project. HealthAmerica is probably best known for managing and leasing its medical office portfolio across Georgia and Florida, but it always saw an opportunity to redevelop Northwest Medical Center.
“We haven’t really tried anything quite like this,” Thomas Tift, who founded HealthAmerica Realty Group in 1994, to the ABC.
The project comes as developers plan new medical office space across parts of Atlanta, including Peachtree Road near Piedmont Hospital.
The largest is Cornerstone Development Partners and Stein Investment Group, which for the past year has been trying to start a $65 million mixed-use medical project in south Buckhead across from Piedmont Hospital and at the Collier Road intersection with Peachtree Road.
“Everyone is going into each other’s backyard to increase patient volume and market share,” Tift said. “Patients want access and convenience.”
Investors are paying attention to demand within the medical office sector, a reason HealthAmerica was able to attract a strong capital partner. “There is so much money chasing medical office,” Tift said.
Gross rents for class A medical office buildings, or the newest properties close to the best amenities, are reaching at least $37 a foot. A new medical office building would rent for even more, the ABC report says.
But, it won’t always be easy for hospital systems or physician groups battling falling reimbursements to afford those higher rates, Tift told the ABC.
HealthAmerica believes its project on Howell Mill strikes a balance: it has a location amid Buckhead’s strong demographics but rents at significantly less than the newer class A medical office buildings around it.
Already, Tift said, his company has entered discussions with up to 50,000 square feet of tenants.