Heading into July, a developer announced that a new 60-floor tower in Manhattan would be tenanted entirely by medical suppliers.
In Westchester County, physician clinics have supplied no small dose of action themselves in the commercial real estate sector.
Two of Westchester”™s top four real estate transactions in the second quarter involved medical office leases, according to data maintained by CB Richard Ellis, a commercial brokerage company. In May, Northern Westchester Hospital leased 35,000 square feet of space at Chappaqua Crossing, the former Reader”™s Digest campus at 400 Bedford Road in Chappaqua. The same month, the Westchester Medical Group took more than 31,000 square feet at 2700 Westchester Ave. in Purchase.
As first reported by the Westchester County Business Journal on June 25, Sloan Kettering Institute appeared to be finalizing the purchase of a onetime Verizon Communications Inc. building at 500 Westchester Ave. in West Harrison. The New York City-based hospital has yet to confirm plans to establish a satellite office there.
As doctor”™s office leases come up with renewal, many tenants have their tape measures out to assess whether their facilities are in compliance with Article 28, a New York law that was updated in 2007 to reflect new physical requirements on office space.
“In Westchester County, we are seeing a lot of traditional office buildings at a minimum convert the ground floor to medical,” said Al Gutierrez, a broker with CB Richard Ellis. “Medical has been filling voids in our leasing activity in the recession.”
That has been the trend nationally, in fact ”“ while hospitals have curtailed many capital projects, the medical office market has not sagged to the same degree as the commercial and industrial markets. In Westchester, overall office availability rates held steady in the second quarter at 17 percent, according to CB Richard Ellis.
With long-term growth predicted for the medical sector, Grubb & Ellis is raising funds for a real estate investment trust (REIT) that will focus on purchasing stakes in health care facilities.
New York regulations combined with suddenly stabilized lease rates have provided an opportunity for clinics to get themselves into new digs as they look to win new customers while complying with new regulations.
Whatever the impact of Article 28, hospitals in Westchester and Fairfield County, Conn., have been pushing administrative functions and ancillary medical services off the main campus to conserve space for high-margin specialty services, according to Christian Bangert, a broker with the commercial brokerage company First Service Williams. The pressures were great enough for Greenwich Hospital that it established satellite offices a few miles up the street and across the New York border in Port Chester.
Northern Westchester Hospital also attributed its decision to take space at Chappaqua Crossing to the need to relocate outpatient services to accommodate an upgrade of its emergency department, along with a new parking garage. Mount Kisco Medical Group also is a tenant at the office park.
