1. Redevelopment in an Environment of Uncertainty

2. Panelist
James (Jim) Venker AIA
Senior Director Facilities, Construction and Environmental Services
PREMIER, INC.
Jeffrey Kent
Managing Director, Facilities
NEMOURS

3. “Form Follows Function”
“No Margin, No Mission!”
Sister Irene Kraus
First President of the Daughters of Charity National Health System
Louis Henry Sullivan 
American architect and mentor to Frank Lloyd Wright

4. Merger & Acquisition Activity
AHA Trendwatch Chartbook 2016 Data

5. Real Estate Characteristics Mergers Bring to a Healthcare System
Diverse Portfolio of Buildings / Similar Issues
Acute
Non-Acute
Varying age of plant 
Varying degrees of deferred maintenance
Varying ability to house clinical programs
Facilities that are owned or leased
Varying lease structures
Varying operational support teams
Institutional infrastructure disruption
Supply chain disruption
Real Estate Characteristics Mergers Bring to a Healthcare System

6. Retail World: e-Commerce Driving Evolution of Consumer Needs
Online shopping makes up 20% of all retail apparel sales.
The US is home to 1,200 shopping malls and at least 240 of them (20%) will be repurposed over the next decade. Source: Cowan Research
Closures will be in –
“Lower class” areas
Rural and smaller communities
Suburban sites
April 15, 2017
All images are property of their respective owners.

7. The Retail Apocalypse Has Officially Descended on America
More than 3,500 stores are expected to close in the next couple of months.
- Hayley Peterson Business Insider, March 2017
Source: Business Insider

8. Dying Shopping Malls Are Wreaking Havoc On Suburban America
Shoppers are choosing experiences over stuff, and that’s bad news for retailers.
Malls and shopping centers are also moving to configure themselves for an experience-seeking consumer. 
- Sarah Halzack Washington Post January 2016
Source: Business Insider

9. Consumers – Strategic Imperatives
Growth of the Consumer-Driven Healthcare
Market is Accelerating
Consumers – Strategic Imperatives
Medical facilities are becoming more visible at retail centers.
- Donna Mitchell
National Real Estate Investor
June 13, 2016

10. Providers; Their Strategic Imperatives of Today
Margins are tight, so available capital is in short supply
Guidance needed on monetization strategies to convert owned buildings to long-term lease structures
Create medical destinations by combining multiple primary care and urgent care centers in various population centers, resulting in more cost-effective operations
Move diagnostic and therapeutic services out of the hospital and into communities for more cost effective care
Providers; Their Strategic Imperatives of Today

11. From boat dealerships, retail groceries, fitness centers, business offices and debilitated hospital campuses – the reuse and redevelopment of real estate assets into an environment of care has its own unique opportunities …

12. Previous Non-Healthcare Use
STAND ALONE BIG BOX
STRIP MALLS
CAR DEALERSHIPS
WAREHOUSES
OLD SCHOOLS
OFFICE BUILDINGS
What kinds of buildings have YOU seen redeveloped?
All images are property of their respective owners.

13. Goals Speed to market Location Simplicity to adapt Cost effective
PLANT THE FLAG Stake out market position in a new geographic location …
Speed to market
Location
Simplicity to adapt
Cost effective
Flexible space opportunities
Planning templates / facilities standards
Support urban renewal / county based facility

14. Potential Barriers Business occupancy Regulatory Licensure
Construction type
All images are property of their respective owners.

15. Possible Costs Ownership Models
$125-$200 psf upfit ambulatory care
~$300 psf licensed facilities occupancies
Leased
Purchased
Developed

16. Previous Healthcare Use
Renovation
Modernizes, upgrades or improves a property with the goal of reducing operating expenses / increasing occupancy and/or driving rates.
Renovation generally does not alter the square footage of the building or require a change in entitlements (zoning or parking).
Redevelopment
Generates new or additional NOI and requires a change in entitlements to allow for increased square footage / parking - or both.
Building expansions and parking decks would fall under this definition.
Repositioning
Changes a building to serve a different market segment (ie take a building from “Class B” to “Class A”) and serve higher- rent paying physicians or turn a single-tenant building into a multi-tenant building.
Redevelopments or renovations can result in repositioning.
Terminology – similar, but different

17. Potential Uses FREE STANDING EMERGENCY DEPARTMENTS Imaging
Laboratory Services
Aligned with Specialist Offices
Helicopter Access
23-Hour Beds
AMBULATORY CARE
Pediatric
Women’s Services
Family Practitioner
Internal Medicine
Community Health Services
Laboratory Services
Imaging Center -
Supports Urgent Care
CT, MRI, Mammography
SURGERY CENTERS
ENT
Ortho
Minor General
Mobile Technologies Hook-Up -
Lithotripsy
Cath Lab
All images are property of their respective owners.

18. Moorestown Cancer Center
2016: Rather than build a new stand-alone cancer center, Virtua chose to rezone and repurpose an existing 66,000 sf supermarket building. The design challenge came with reimaging a large box store to the appropriate healthcare scale, brand and setting. 
Francis Cauffman created a new exterior that has a strong translucent "white box" element as the main entrance to the cancer center. Representing the treatment element of cancer and the link between color and optimism, the exterior can be seen from adjacent  locations and will glow in low light. This glowing "white box" element is carried into the interior suite entrances for wayfinding and branding.
Moorestown Cancer Center
Moorestown, NJ
All images are property of their respective owners.

19. North Shore Medical Group
Crain’s Chicago Business, Jan-2012: The owner of a shuttered north suburban Borders Books & Music store has looked beyond retail for his property's next chapter, signing a medical practice to breathe new life back into the building.
NorthShore University HealthSystem signed a 15-year lease at the 24,500 sf former bookstore at Lake Cook and Waukegan roads in Deerfield, resuscitating a two-story building that stopped generating income last spring. The health system can exercise three successive five-year options to extend the lease, property records show.
“That's a phenomenal rebound, to re-lease to medical use,” says Todd Cabanban, principal of Chicago-based retail brokerage Cabanban Rubin & Mayberry Commercial Realty. “They would be hard-pressed to find another retailer looking for two-level space.”
Big, vacant (Borders) spaces continue to drag down shopping centers across the country more than a year after the bookstore chain Borders Group Inc. collapsed, even bringing some local landlords to the brink of foreclosure.
Deerfield, IL
North Shore Medical Group
All images are property of their respective owners.

20. Vanderbilt Health One Hundred Oaks
The mall was Nashville's second enclosed shopping area, originally opening in It closed in 1983.
The mall fully reopened in 1989 but began declining again soon afterward. In 1995 it opened as an outlet mall.
Following an extensive renovation in 2008, the bottom floor of the mall remains open for retail, with major tenants including Kirkland's, Electronic Express, and PetSmart.
The upper floor and office building are now used for medical clinics and administrative offices operated by Vanderbilt University Medical Center.
Nashville, TN
All images are property of their respective owners.

21. Maryland Vascular Specialists
Vacated Blockbuster -
“One of the things the doctors loved was all the windows around the building, especially the visibility they would get,” says Barbara Portnoy, CID, IIDA, LEED AP, Principal with PLDA Interiors, which performed the interiors and architecture work on the 5,000 sf project.
“However, when they moved in they realized everyone could see into their space. They felt vulnerable, given that someone driving right up to the front door at 10p was just steps away from their computers and medical equipment. That would not be a concern in a medical office building.”
Glen Burnie, MD
DAVID BARISTA, EDITOR-IN-CHIEF
SEPTEMBER 21, 2014
All images are property of their respective owners.

22. University Commons Medical Plaza Allied Physicians
In 2010, Allied Physicians of Michiana, IN began a $15M renovation project of a 100,000 sf strip mall which culminated in a state-of-the-art medical plaza.
“Probably the biggest obstacle was that we were not building from a grain field. We took an existing structure and completely redesigned it within the framework,” says Sherry Purkeypile, CEO of the physicians group.
Today, University Commons Medical Plaza consists of three buildings (a main structure and a wing on either side) and has 99% occupancy. The first practice moved in May 2011.
Michiana, IN
“Trust your vision and instincts.” - Sherry Purkeypile, CEO
All images are property of their respective owners.

23. Jackson Medical Mall Thad Cochran Center
Jackson Mall opened in 1969 with three anchors: JC Penney, Gayfers and Wolcott.
In 2001, the Mall became the Jackson Medical Mall Thad Cochran Center and continues to have a reputation for innovative management, efficiency of operations, and financial stability.
The mission, to provide healthcare for the underserved and to promote economic and community development, was made possible through strategic partnerships with UMMC, Jackson State University and Tougaloo College. .
Jackson, MS
All images are property of their respective owners.

24. Top 25
“Watch-Outs”!

25. Site 1. Does the site have ample parking?
2. Will the existing traffic flow pattern work for the healthcare client?
3. Is the site ADA-compliant?
4. Can it accommodate patient drop- off and pickup? What about delivery of medical supplies, food, linen, cleaning supplies, etc.?
5. Are there potential security risks due to the location, building orientation, or site configuration?
6. Are there opportunities for signage and other branding components?
7. Will neighboring tenants pose potential noise or traffic issues?
8. Are there any special regulatory requirements or local development ordinances that apply to the property?

26. Core and Shell Are the floors completely level?
Is the building ADA-compliant? 
What changes are required to meet the code for outpatient care? 
Is the building sprinklered? 
Does it have ample ceiling heights?
Are the dimensions of the structural grid consistent throughout the building? 
Can the elevators accommodate bulky or heavy medical equipment? 
Are the elevators and fire stairs in the proper locations? 
Does the structure meet vibration and strength standards for healthcare?
Are the floors completely level? 
What is the condition of the building envelope? 
Does the building provide sufficient daylight? If not, can windows and skylights be added easily?
Can the roof structure accommodate additional mechanical and emergency power systems? 
Is the loading dock adequate for frequent deliveries? 
Can the building and site accommodate future expansion?

27. Building Systems Sources - Compiled by BD+C with help from – AECOM
Does the domestic water pressure meet the needs of the outpatient tenant?
Will the existing plumbing infrastructure accommodate heavy water use?
Can any portion of the MEP / FP systems be reused?
Sources -
Compiled by BD+C with help from –
AECOM
Gresham, Smith and Partners
Perkins Eastman
PLDA Interiors
Turner Construction

28. Questions / Discussion