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Medical offices on rise in area
Question of the Day
The graying of America is showing up in Washington area real estate as an increase in medical offices.
"The aging of the baby boom generation is the engine that is powering this," said Craig Smith, practice leader for Integra Realty Resources, a Sarasota, Fla., real estate appraisal firm.
Unlike most office tenants, doctors want assurances from landlords they can stay in one place for more than a decade, giving them time to build a professional reputation and avoiding the need to rip out expensive medical equipment.
As a result, real estate firms say they expect to see more office condominiums developed in the Washington area and elsewhere.
"Whereas a typical office user might spend $50 to $60 per square foot to build up their offices, medical offices will double that and more," said Geoff Kieffer, principal in Woodmark Commercial Services, a Georgetown commercial real estate agency. "When you have that big of an investment, you want to control it for the long term."
Woodmark is adding two stories to an eight-story downtown office building at 2021 L St. it plans to convert into office condominiums. As much as a third of the condo purchasers could be health care providers, Mr. Kieffer said.
Woodmark acquired the building this summer for just over $23 million from the National Football League Players Association. Work on the renovation is scheduled to begin around Sept. 1 and be completed by next August.
The office condos, near the Farragut West Metro station, would sell for $650 per square foot.
Like many developers that seek out medical office tenants or buyers, Woodmark hopes to get a sales boost from the building's location near a hospital, namely George Washington University Hospital.
CB Richard Ellis, the world's largest real estate firm, is using a similar strategy for medical offices it is developing and leasing in Northern Virginia.
"Most medical tenants need to be near a hospital," said Carter Byrnes, senior associate for CB Richard Ellis in its Tysons Corner office.
CB Richard Ellis and developer the Long Cos. plan to build a 220,000-square-foot, two-building medical complex in Merrifield, near Inova Fairfax Hospital.
Hospital operating companies Inova Health System and HCA Inc. are in a court battle over for a permit to build a hospital in Loudoun County along Route 50.
The winner would undoubtedly create demand for more medical offices, Mr. Byrnes said.
CB Richard Ellis has been hired as the leasing agent for a 285,000-square-foot medical office campus called the Loudoun Medical Center in Chantilly, across the street from the disputed site. Construction on the medical campus is scheduled to begin next month, with the first phase to be completed in late 2008.
The firm's efforts are helped by Northern Virginia's high-income and rapidly growing population, which combine to make the area attractive for health care providers, Mr. Byrnes said.
More projects are coming, he said. "We are in the process of looking for viable medical office development."
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By Robert N. Tracci
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