A healthy market

Jacksonville is emerging as a major medical center in the Southeast. Mayo Clinic's satellite facility in Jacksonville opened in April 2008.

Economic indicators have reported that consumer confidence has fallen to an all-time low, home values have dropped nearly 20%, the unemployment rate is steadily increasing from 5.2% last year to 7.7%, capital markets have tightened their belts and most investors have taken a significant loss on their investment portfolios, particularly retirement accounts.

With so much negative news concerning the economy, many are tempted to think that the recession will never end. Despite economic uncertainty, the local population still continues to grow. Since 2000, Jacksonville has experienced a 9% growth in population, which is above the national growth average of 7%. The state of Florida experienced a 16% growth overall since 2000, as reported by Onboard Informatics.

Many baseline services are still needed to support population growth. Although not totally recession proof, it appears that the medical community is somewhat insulated from current economic conditions.

As the local economy attempts to regain its footing, the healthcare sector appears to be holding its own. New health care facilities and expansions and/or remodeling have kept the Jacksonville economic engine fueled.

Jacksonville is emerging as a major medical center in the Southeast. Mayo Clinic’s satellite facility in Jacksonville, along with a number of major regional hospitals, promises a greater need for medical office space. Health insurance companies are also continuing to benefit from the expansion of the medical community. Projects such as those listed below have a positive impact on reducing office vacancies and increasing rental rates.

Mayo Clinic, one three locations in the nation, has more than 320 physicians and scientists. A new 214- bed hospital at Mayo Clinic Jacksonville opened in April 2008.

St. Vincent’s Healthcare has the largest heart program between Orlando and Atlanta, and it serves the local community in other areas such as cancer treatment, neurosurgery and cardiovascular surgery. In April 2008, St. Vincent’s took over St. Lukes’s Hospital from the Mayo Clinic.

Baptist Health is the area’s most comprehensive health care provider. Its downtown campus is in the middle of the biggest expansion program in the hospital history- a $200 million project that will create a new 11-story, 300,000sf tower by the end of 2010.

Shands Jacksonville, an academic medical center affiliated with the University of Florida, became the city’s first officially designated primary stroke center. Shands is also home to the University of Florida Proton Therapy Institute, the fifth center nationwide, offering the newest cancer treatment program in the world.

Memorial Hospital is a 353-bed territory care hospital offering a breadth of services and numerous outpatient facilities throughout Jacksonville.

As Jacksonville’s hospitals grow in national and regional reputation, the need for additional medical office space for physicians and allied health professionals will grow in the coming years. Growth in the off-campus office environment is fueled by consumer demand for more medical services to be located closer to residential neighborhoods. As neighborhoods grow, these areas become the hot spots for future medical office development.

The Southside/Butler/Baymeadows corridor is a perfect example of this type of growth. With many new subdivisions along the vital Southside 9A/I-295 beltway, healthcare professionals have established many new medical office parks to serve the increased population. In addition to hospital expansions, two new surgical centers have been built in the area.

With the expanding population, commercial growth and development are continuing to shift toward the southern reaches of Duval County into St. Johns and Clay counties.

At the south-end of Duval County, Baptist South is constructing a new eight-story, 103-bed patient care tower, scheduled to open in June and adding to its existing 32-acre campus.

In northern St. Johns County, workers broke ground on Doctors Village, located on Race Track Road in Julington Creek. Plans call for six, 10,000sf medical office buildings along with a surgery center.

Fueling the growth in northern St. Johns County is Nocatee, a 900-acre mixed-use developing community that one-day will be home to 14,000 residents. Flagler Development Company has recently secured entitlement rights for a multibuilding office complex totaling 675,000sf.

This new growth has attracted several medical service technology companies to the area. Medical Development International has just relocated to its new three-story, 75,000sf headquarters in Nocatee. The company plans to eventually construct two adjacent buildings, of 50,000sf each, to accommodate its growing business.

For future population growth in St Johns County, Flagler Hospital has plans to build a 288-bed facility near the World Golf Village to serve the area’s growing population. A 10.35-acre site is currently being marketed for medical office development in the vicinity of the future hospital, on SR 16 and Pacetti Road.

In Clay County, St. Vincent’s Healthcare recently purchased a 37-acre site near Blanding Boulevard and Branan Field Road for a proposed 98-bed hospital. At the same time, Orange Park Medical Center is proposing to construct a 100-bed hospital between Fleming Island and Green Cove Springs.

Long-term prospects for the Jacksonville’s office market remain excellent. Outside of medical and population growth, Jacksonville is also preparing to become a global gateway for international trade and finance. Significant expansion of the city’s port through the end of 2012 is expected to create demand for additional office space as well.

On the financial front, Deutche Bank has chosen Jacksonville for its financial services division, expected to employ up to 1,000. Other companies bringing jobs to the area include Wells Fargo & Company, as part of its buyout of Wachovia Bank.

Office opportunities in the healthcare, financial and industrial markets are promising in the years ahead for Northeast Florida. Jacksonville’s location and diversified workforce, its anticipated port expansion, its increasing importance as a major medical center, and the overall strength of the local economy are producing the kind of business employment and population growth that create a favorable long-term advantage for the city’s office market.

Fran Pepis is a senior vice president with Colliers Dickinson in Jacksonville.