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Our extensive experience developing medical
office buildings helps us to understand
which details - target completion dates,
building layout, signage - will make the
building and hospital successful.
Steve Standifer, A.I.A.
Design
& Construction Services
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One of the more visible ways that Healthcare Realty Trust provides value
to health systems is through the design and construction of new medical
facilities. Our Design and Construction team has developed over 50 medical
office facilities across the country ranging in size from 50,000 to
250,000 square feet. With this experience we recognize the unique
qualities needed to develop a medical office building successfully -
location, flexible design, efficient layout, and quality finishes in
tenant suites and common areas. Working with national and local
architects and general contractors, we balance quality and cost
effectiveness to ensure that a building is both durable and affordable
to prospective tenants.
Our Design and Construction team often serves as the project manager on
developments. This group not only supervises and coordinates the efforts
of all professionals, consultants, and contractors but also monitors and
enforces the project schedule and budget. Throughout the entire
development process, our relationship with the hospital is collaborative
and transparent. Bi-weekly project meetings at the hospital form the
baseline for routinely sharing information and resolving critical
issues.
Because Healthcare Realty Trust is a long-term owner and operator of
real estate, we view the cost of development in light of the property's
entire life cycle. It has been our experience that investing additional
capital upfront (while still charging competitive, market lease rates)
is more cost-effective than initially cutting corners and being forced
to make sizeable repairs in mechanical and electrical systems soon after
the building opens. As an owner with at least a 30 to 40 year time
horizon, Healthcare Realty Trust strives to construct flexible buildings
(e.g., a high floor-to-ceiling height or oversized HVAC system) that can
adapt to new trends in the healthcare industry and prevent the building
from becoming functionally obsolete.
Healthcare Realty Trust's development budgets provide two tiers of
construction cost. The first amount typifies what a speculative real
estate developer - one who is looking to minimize initial construction
cost, lease the building, and then sell it - would invest for an
on-campus medical facility. While we could build this type of facility,
we have found that such a cheapened building does not wear well, nor
does it retain long-term physician interest. The second budget tier
includes enhancements, upgrades, and additional items that bring the
facility up to investment grade building standards. These enhancements
typically increase the initial construction cost by 10% to 20%, but the
increased tenant satisfaction and reduced maintenance costs over 40
years validate the additional investment.
Healthcare Realty has learned that development is a process in which
planning is essential. Only when a facility is constructed with detailed
attention to quality, cost and schedule can it then function well in
executing a health system's clinical mission.
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