Looking to keep its current physicians and attract new ones in the nation”™s changing health care landscape, Sound Shore Medical Center has turned to a private partner to develop an approximately $35 million medical office building that would also house some hospital services on its New Rochelle campus.
Landmark Healthcare Facilities L.L.C., based in Milwaukee, plans to build, own and manage the class-A office building proposed to be built on existing hospital parking lot space. The facility would be connected to the main hospital building.
Physicians leasing space in the five-story, 100,000-square-foot building would be offered a share in a 30 percent ownership stake that Landmark provides staff physicians at no initial cost to the doctors. Anthony Lampasona, president of Landmark Healthcare, said the ownership interest is a financial incentive for doctors to lease space in the office building, lowering their occupancy costs by 25 to 30 percent. Physicians can choose to sell their ownership interest to Landmark or other tenants.
Landmark, which has developed about 25 outpatient buildings across the country, will put up $8.2 million in cash equity for the construction project. The developer also plans to build a 530-space parking structure on the campus at an estimated cost of $15 million to $16 million, Lampasona said. Annual parking revenue is projected to almost evenly match debt service on the hospital-owned structure, he said.
As a private, for-profit developer, Landmark will sign a ground lease for the building site and pay real estate taxes on what is now tax-exempt property.
Lampasona said his company hopes to begin construction by December after receiving required site plan and environmental approvals from city officials. “We”™re ready to roll up our sleeves and get working on this,” he said. Construction will be completed in one year.
Lampasona and John Spicer, president and CEO of Sound Shore Medical Center, heard a chorus of support for the project at a recent committee meeting of the New Rochelle City Council. Mayor Noam Bramson called it “a very positive proposal.” As recommended by the city”™s development commissioner, Michael W. Freimuth, the City Council is expected to create a local development corporation that would issue tax-exempt bonds to finance construction of the hospital”™s parking facility.
Councilman Albert Tarantino, co-owner of Talner Jewelers in New Rochelle, said the city has been looking for “an economic engine to turn around the downtown. A project like this could start that.”
Lampasona said the medical building will be a “one-stop health care destination for the community.” In addition to doctors”™ offices, about 50,000 square feet of space would be used by the medical center for diagnostic imaging services and as the new location of its inpatient maternity labor and delivery unit and birthing center.
Spicer said the office project is important “for the future of the institution and for the medical community in New Rochelle.” No class-A or class-B office space now is available for doctors in the immediate area around the hospital, he said.
Spicer and Landmark executives have been encouraged by the initial response from physicians interested in leasing space in the planned campus building. About 80 percent of the available space already is committed, they said.
Spicer said the office building optimally could accommodate 30 to 40 medical practices.
Sound Shore also expects to start an approximately $6 million renovation and expansion project in its emergency room in the next two months, Spicer said.
A likely competitor for outpatient business, Westmed Medical Group, Westchester County”™s second largest multispecialty physician group practice, this spring opened a 28,000-square-foot medical office and urgent care center in downtown New Rochelle. Spicer, though, said Westmed doctors could benefit Sound Shore by referring patients to the hospital.
“I think at the end of the day, having them here will probably help to some degree,” he said.
