The doctor’s office is in

By: Kevin McQuaid | Commercial Real Estate Editor @ Florida Business Observer

June 24, 2016

Medical office buildings and related facilities, like the 1250 Medical Plaza in Sarasota that was recently purchased for $16 million, have proven to be resilient and solid investments throughout Florida. Courtesy photo

Medical office buildings and related facilities, like the 1250 Medical Plaza in Sarasota that was recently purchased for $16 million, have proven to be resilient and solid investments throughout Florida. Courtesy photo

Demographic shifts and population influx have kept values for medical office buildings and related facilities up throughout Florida, even as office submarkets in some spots along the Gulf Coast appear to have peaked for this economic cycle.

The resilience of medical office as an asset class is also pushing new development statewide, at a time when other sectors — hospitality, residential towers and retail, among them — seem to be taking a pause after years of new construction and absorption.

“The demographics as they now exist and that are projected are very supportive of health care real estate in Florida,” says Patrick Marston, a partner in Optimal Outcomes, a St. Petersburg-based medical space developer. “Simply put, with the American age wave we’re experiencing, more people need access to medical facilities.”

But unlike in years past, health care-related spaces are now cauterizing with retail centers and other non-traditional locations as never before, to be closer to patients.

“Gone are the days when you’d have to go to a hospital campus to see a doctor or have a procedure or visit a lab,” adds Marston, whose firm is developing a 12-acre site adjacent to a new Martin Health System hospital in Port Saint Lucie.

Optimal Outcomes’ latest offering there, a three-story, 60,000-square-foot building, is slated for completion next year. Healthpark Two, as the building is called, is already two-thirds committed.

“Convenience for consumers and rising costs have brought tremendous change to health care development,” said Marston.

Such moves away from traditional health care settings, combined with a nationwide move toward wellness and preventative medicine, also are spurring investments.

Brian Waxman, a principal at AW Property Co. of Palm Beach Gardens, says macro-economic changes prompted, in part, his company’s recent acquisition of the 1250 Medical Plaza, in Sarasota.

“There’s been a huge shift to outpatient visits,” says Waxman, whose company spent $16.1 million to acquire the four-story, 48,200-square-foot building near the Sarasota Memorial Hospital.

“But overall there’s also increased spending on health care, brought about in part by the Affordable Care Act, and aging, especially among baby boomers who are going to require more patient visits,” Waxman says.

The surge in interest in medical offices, meanwhile, comes as the office market overall is showing signs of slowing nationwide.

The National Association of Industrial and Office Properties’ Research Foundation predicts that total office absorption nationwide will drop by more than 40% in 2016, amid tepid gross domestic product growth.

A new NAIOP study, compiled in part by University of Central Florida professor Joshua Harris, concludes that absorption will fall to 34.6 million square feet this year — down from 62.1 million in 2015.

“Medical office is a stable asset class, whereas the rest of the office market can fluctuate,” Waxman says.

Health care-related spending, conversely, is slated to rise 5.8% through 2024, a year when health care spending in the U.S. will amount to nearly 20% of the nation’s GDP, according to Health Affairs, an industry publication.

That spending appears to be spread out throughout the health care industry, from dental practices to outpatient surgery centers. In turn, the boost is fueling interior construction improvements, new development and investor acquisitions.

Revista, an Annapolis, Md.-based medical real estate research firm, contends Florida ranks third nationwide for health care-related development, with $5.5 billion underway, behind only California and Texas.

“During the last economic recession, people weren’t spending a lot of money on dental work if they could avoid it,” says Daniel Gerdes, president and CEO of Gerdes Construction Inc., which has established a niche business doing tenant improvement projects for more than a dozen dental offices throughout the Gulf Coast.

“So practices didn’t reinvest in their offices or new practices didn’t open,” he adds. “Now that the economy is better, practices are remodeling or rebuilding, in many instances simply to keep up with technology.”

In 2013, for instance, Gerdes’ Sarasota-based firm did about $600,000 in dental tenant work. Last year, that number had jumped to $2 million.

But even with the improvements and new space, little has been built along the Gulf Coast to date — a phenomenon that has pushed rents up in existing space. That’s because medical office buildings, which often contain specialized plumbing, air conditioning and upgraded finishes, are more expensive to develop.

While a typical Class A suburban office building might cost roughly $200 per square foot to build, a similarly located medical office can cost between $350 and $380 per square foot to develop.

Still, demand and abundant investor capital are now driving investment and construction throughout the Gulf Coast.

In Naples, a new 26,000-square-foot medical office building is being constructed adjacent to Landmark Hospital of Southwest Florida that will house endoscopy, orthopedics, physical therapy and other services. Stevens Construction, which is building the new offices, expects to deliver the project by the end of this year.

“There’s a lot of medical space coming out of the ground in Lee and Collier counties,” says Jay Crandall, whose Crandall Commercial Group LLC in Bonita Springs specializes in medical offices.

“We’ve seen a lot of existing space get absorbed. Some places now that had been asking rents of $12 to $15 per square foot on a triple net basis are now asking as much as $23 per square foot triple net — a huge increase in a relatively short period of time. But demand is still there, and developers are trying to lock into low interest rates and equity capital is abundant, so the growth will continue.”

Optimal Outcomes’ Marston agrees. With Healthpark Two nearly fully committed, the company already is making plans for the remaining 3.5 acres it owns at Tradition Health Park.

And Waxman is putting together a $50 million fund — AW Property’s third — to acquire health care-related facilities throughout Florida. He plans to launch it in September.

“From an investment activity standpoint in the sector, I don’t see anything stopping the momentum in the short term,” says Ken Hughes, president of CNK Realty, a Bradenton brokerage firm that specializes in medical facilities. “Demand will keep going up as population increases.”

– K.L. McQuaid

The link below is to the original article:

June 22, 2016 Press Release


(SARASOTA, FL) — Gerdes Construction, Inc., a southwest Florida leader in high-end commercial, residential and dental/medical office construction, has hired John Brasgalla as a project manager.

Brasgalla has been involved in luxury commercial and residential construction in southwest Florida since 1991 and has worked as project manager on a number of the region’s most Johnnotable developments, including The Ritz-Carlton in Sarasota. He has also worked as a project manager on national and regional construction projects for Capital One and Discover Card, and on a number of other healthcare and high-end residential projects. In addition to a bachelor’s of science degree in building and construction management from the University of Florida, he holds a Class A General Contractor’s license.

“We are thrilled to have someone with John’s experience and background join our team,” said Gerdes Construction owner, Dan Gerdes, about Brasgalla’s hiring. “His knowledge about all facets of the construction industry will help us to continue to grow and strengthen our position as a quality leader in commercial and residential construction throughout southwest Florida.”


June 14, 2016 Press Release


(SARASOTA, FL) — Gerdes Construction, Inc., a southwest Florida leader in high-end commercial and residential construction, including dental and medical office new construction and remodeling, recently completed two major remodels in the Sarasota area.

14th1For Freeman Orthodontics, Gerdes finished a complete remodel of 2,500 square-foot of interior space for the dental practice’s new location at 2050 Proctor Road, Suite A. Situated near the corner of U.S. 41 and Proctor Road, the site was previously home to The Life of Riley Foundation. Freeman Orthodontics specializes in comprehensive orthodontic care for children, teens and adults and was previously located at 3300 S. Tamiami Trail, Suite 8, in Sarasota.


Gerdes also finished a complete remodel of 2,200 square-foot of interior office space for Bhanot Facial Plastic Surgery for their new location at 2038 Bee Ridge Road in Sarasota, a site formerly occupied by Voigt Law Group. One of Sarasota’s leading plastic surgery practices, Bhanot Facial Plastic Surgery was previously part of Florida Ear & Sinus Center.

Based in Sarasota, Gerdes Construction, Inc. is a LEED AP certified construction company with more than 20 years’ experience serving southwest Florida from Naples to Tampa. The company specializes in high-end commercial and multi-family residential construction, as well as dental and medical office remodeling and new construction.


October 12, 2015 Press Release

Gerdes Construction Breaks Ground On $3 Million Siesta Key Project

(SARASOTA, FL) — Buyers interested in a single family residential that overlooks the Gulf of oct121Mexico and is only steps away from world famous Siesta Key Beach are in luck. Gerdes Construction this past week broke ground on a new, three-story modern that when finished will combine more than 3,000 square feet of indoor living space with an additional 1,100 square feet of rooftop, outdoor living area that offers commanding views of the Gulf.


Designed by leading Sarasota architect Leonardo Lunardi and featuring interior design by Cheryl Gaddie of CG Interior Design, the property, located at 641 Beach Road, occupies one of the last remaining parcels currently available on Beach Road. It is also one of the only remaining properties along Beach Road currently available for single-family use. Rave Investments has the property listed for $3 million.

oct122Among the amenities included are 4 bedrooms, including a spacious 3rd-floor master suite, a complete chef’s kitchen, 4 full bathrooms plus 2 additional ½-bathrooms, a 2-car garage, a swimming pool, and a spacious rooftop deck with a covered outdoor kitchen. Elevator access is provided to all floors including the rooftop deck. Large windows and open air patios on the 2nd and 3rd floors offer premium views of the Gulf as well.

“The opportunities to build a single-family home along Beach Road are incredibly limited these days,” says Gerdes Construction President Daniel Gerdes, whose company has established itself as one of the area’s premier high-end residential and commercial builders. “So we wanted to make sure this was going to be something really special. From the ground up, this property is a showpiece and something more contemporary than Siesta Key has seen in quite some time. We are proud of that, and we think buyers will be as well.”

For more information, contact Rave Investments, Inc. at 941.400.0580 or email

September 22, 2015 Press Release

Rick Liska Joins Gerdes Construction As Superintendent

(SARASOTA, FL) — Gerdes Construction, Inc., a southwest Florida leader in high-end commercial, residential and dental/medical office construction, has hired Rick Liska as the newest member of its fast growing team.

RickBlogLiska, who will serve as a superintendent and project manager for Gerdes, has more than 35 years of experience in the construction industry, mostly in high-end residential remodeling and historic preservation in Michigan. Among the high profile projects he has supervised are the restoration of the historic Mission Point Resort on Mackinac Island, MI, and restoration of Ann Arbor’s Michigan Theater, which dates back to the vaudeville era.

As a superintendent for Gerdes, Liska will be responsible for project site management, scheduling, worker and trade supervision, budgeting and code compliance. His hiring marks the fourth top-level hire for Gerdes since early March, a sign of the company’s fast growing strength in the region’s construction industry.