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Houston’s Medical Construction Boom May Be Winding Down

HOUSTON – The healthcare construction boom in Houston’s suburbs is going to slow down somewhat as medical organizations’ building programs have caught up with city’s population expansion.

“I think construction is slowing,” says Marshall Heins, chief facilities service officer of Memorial Hermann Health System, which is building or has recently completed a number of major suburban hospitals. “We’re probably going to stand pat on building.”

Heins told the Texas Healthcare Real Estate 2015 Summit Tuesday that growth could continue to sustain some degree of future construction.

But it appears this wave of suburban medical construction is winding down. Some $3 billion of medical related construction is under construction in the Houston area, according to Colliers International.

“You will see a significant drop off in about 3 years when things that are under construction are finished,” says Sid Sanders, senior vice president, facilities and construction Houston Methodist Hospital.

Construction costs have been high, Heins says, because so many office buildings, apartments and other commercial projects have been built in Houston in recent years, which pushed up construction costs.

The expansion in Houston area petrochemical plants is significant and that trend may apply upward pressure on construction costs and provide economic stimulus that creates demand for medical facilities.

Tod Fetherling, founder Perception Health, a demographic and medical site selection consultant based in Nashville, says some submarkets in Houston offer opportunity for new medical development.

Three exceptionally promising zip codes are ZIP code 77073, west of Bush Airport; the Richmond area west of Houston and ZIP code 77007, west of downtown, Fetherling says.

But finding appropriate real estate in the right location is not an easy process because the space is not abundant, says Jill Pearsall, assistant vice president of facilities planning and development Texas Children’s Hospital.

Texas Children’s has considered build-to-suits and other structures to provide the right building in the right place.

The seminar, sponsored by and IFMA Health Care Institute, was held at the Houston Methodist Research Institute in Houston’s Texas Medical Center.

Oct. 6, 2015

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