Developers Push to Convert Non-Healthcare Buildings into Outpatient Centers

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PHOENIX—The need for healthcare services in areas where there is little to no inventory or land for outpatient centers continues to grow. In response, developers are converting non-healthcare buildings into suitable buildings. One example of this trend is Meridian, a Marcus and Millichap affiliate.

“We are heavily focused on purchasing properties and renovating them into mostly outpatient surgical centers,” says Sheila Schmidt, VP of Real Estate Development at Meridian, tells GlobeSt.com. “Sometimes we have to completely break down the property and do an extensive renovation and other times, we only need to perform partial renovations.”

With most of the redevelopment activity focused in the western United States in states such as California and Arizona, this conversion of properties is the most direct and creative way of getting a client into challenging areas. Outpatient centers allow the patients to go home within a few hours instead of paying for an in-hospital stay where procedure costs and copays are, on average, 42% to 58% higher.

Oftentimes Meridian will handle a client that needs help finding a property or a lot in an area where there are no healthcare buildings on the market.

“I love that challenge,” says Schmidt. “Our company handles zoning and entitlement issues in-house and so, if we aren’t currently zoned or titled somewhere, we can get those permits. Typically, we can also get the client into a price-point that is exceptionally attractive and competitive.”

If there is nothing available, Schmidt and her team start looking for sites that are off the market.

“Currently, I am looking for a site in an area where there is simply no availability. So, I will initially start an online search and if nothing still pops up, I will literally start driving the geographic area looking for off-market lots or non-maintained buildings,” she says.

When the site is found, Schmidt and her team bring the solution to the broker and the broker will present the deal to the client.

“We are an extension of the broker staff,” says Schmidt. “Finding that specific property or lot and seeing it redeveloped into an outpatient medical facility is both satisfying and fun.”