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Mountainside Medical Center Starts Construction on Medical-Office Site Designed to Lure Physicians
Designed by NK Architects, the Hampshire Cos.' new Bay Avenue medical-office building has been preleased by Mountainside Medical Center.
Mountainside Medical Center officials say their planned medical-office building, replacing a former nursing school, is designed to help draw top physicians to practice at the facility’s campus on the border of Montclair and Glen Ridge in New Jersey.
At a groundbreaking ceremony against a backdrop of piles of brick from the start of the nursing school’s demolition, executives from the hospital’s ownership and the project’s developer, Hampshire Cos. of Morristown, New Jersey, portrayed the construction of the three-story, 45,735-square-foot medical-office building as a crucial part of the future of Mountainside.
The redevelopment reflects the changing face of healthcare, with hospitals competing to attract the best talent and struggling to cut costs by providing more outpatient care.
"So why all this fuss about another office building?" Mountainside Chief Executive John Fromhold told a crowd of several dozen people at the event. "Because this one is directly linked to Mountainside’s vitality and our ability to hold a 127-year tradition to providing high-quality health care that keeps pace with changing local needs. There have been a lot of changes in the healthcare industry since Mountainside opened its doors in 1891."
The new Bay Avenue medical-office building, which is expected to accommodate about 45 physicians and 17 physician assistants, gives the hospital a convenient location to offer more outpatient treatment, according to Fromhold.
"The caliber of care we provide is driven by the caliber of the physicians we attract," Fromhold said. "It’s a very competitive market for the best doctors, and they want first-class, state-of-the-art office space in convenient proximity to the hospital for themselves and their patients."
The new building will allow Mountainside Medical to "attract and retain leading primary care physicians and specialists," he added, while enabling it to optimize space by replacing an antiquated building.
Mountainside’s now-closed nursing school trained more than 4,000 registered nurses during its 120-year run, he said. The new Class A medical-office building is fully pre-leased to Mountainside, which is owned by hospital chains Hackensack Meridian Health and Ardent Health Services. Construction is expected to be completed in the first quarter of 2020, according to officials.
Designed by NK Architects, it will "include highly flexible and adaptable medical office units to provide physicians and specialists with spaces that can be conformed to their exact needs," according to a hospital press release.
Jon F. Hanson, Hampshire’s founder and chairman, told the crowd that about 25 year ago he first became involved in medical-office building development as volunteer chairman of the real estate committee of Hackensack Medical Center, which is now part of Hackensack Meridian Health. Now Hampshire owns or has investments in about 50 medical-office buildings around the country, according to Hanson.
The medical-office building that sprung up around Hackensack Medical Center’s "jumpstarted" the development of the hospital’s campus in the city of Hackensack, and Mountainside’s new building will do the same in Montclair and Glen Ridge, Hanson said.
There are currently 2,146 medical buildings in Northern New Jersey, totaling 31.9 million square feet, according to a 2018 first-quarter report on the sector by NAI James E. Hanson, a Hackensack, NJ, real estate firm.
Circle Squared Alternative Investments is the investment adviser on the Mountainside project. The company finds alternative market investments, primarily private equity real estate deals, for high-net worth investors.
In addition to help draw and retain top physicians, the new medical offices will also be a venue for Mountainside Medical Center to provide more outpatient care, which is far less costly than hospitalization, officials said.
"We all know ... that more and more health care is being delivered outside of the four walls of a hospital," said Robert Garrett, co-chief executive of Hackensack Meridian Health. "So we’re going to need -- as part of a growing healthcare network -- more ambulatory care centers, more medical office buildings that are very convenient, very accessible for patients and their families, but also ones that make healthcare more affordable because ultimately, that’s a very big issue in health care today."
The nation’s population is getting older, needing more medical care, and the drive to lower healthcare costs -- trends that show no signs of abating -- are driving the demand for this commercial real estate sector, according to a recent CBRE report.
"The medical-office market has performed well in recent years, registering a lower peak vacancy rate than traditional office properties during the 2008 recession and showing a steady decline in vacancy since that time," the CBRE report said. "Net absorption has outpaced new supply in 24 of the past 29 quarters, with particularly large imbalances since 2015."
Overall, CBRE forecast that the demand for medical-office buildings will continue to grow, "fueled by continued health care job growth, the aging population, tight market conditions and the relative recession-resistance of these properties."
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