Construction in the health care industry is booming throughout Colorado, and local construction companies, contractors and commercial real estate brokers are reaping the benefits. Those who work in the construction industry say the increase in building and expansion can be attributed to population growth and low interest rates.
Ted Link, a commercial real estate broker who works for the Cascade Commercial Group, said there is a tremendous need for medical office space. He said 50 percent of his business is related to leases or purchases of health care related space.
Link is working on leases for two 36,000-square-foot medical campuses off Tutt Boulevard, between Dublin and Stetson Hill boulevards. He has brokered leases with a dentist, a physician and an imaging and diagnostic office and said the space will be 75 percent leased within the next few months. He also is marketing five acres to the north of that facility for physicians to build on.
“The Tutt Boulevard location ties directly into the new 35.5-acre medical campus Penrose Hospital plans to build on property southwest of Powers Boulevard and Woodmen Road,” Link said. “That is why the medical offices nearby would appeal to those in the health care industry.”
Link is working on a medical project on land near Powers and Research boulevards, which is owned by Colorado Commercial Builders of Colorado Springs. Seventy-five thousand square feet will be available for lease. Another project with Colorado Commercial Builders at Rangewood Drive and Dublin Boulevard encompasses 15,000 square feet.
“There is a tremendous demand for medical office space,” he said. “When the Union Medical Campus was built recently, it was the first of its kind built in 12 years.”
Hospital expansion, renovation under way
Medical offices are only part of the increase in health care industry construction in Colorado. Hospital construction and renovation are under way along the Front Range, from Parker and Fort Morgan to Denver and Colorado Springs.
G.E. Johnson, a general contractor and construction manager, has been involved in many of the projects, which include:
* Penrose Main Hospital in Colorado Springs – $34 million expansion/addition to include six floors of a bed tower addition; a parking structure, a chapel and a medical office building.
* Southwest Memorial Hospital in Cortez – $7 million expansion/renovation.
* Montrose Memorial Hospital in Montrose – $18 million bed-tower addition.
* Colorado Plains Medical Center in Fort Morgan – $10 million medical office building.
* Porter Adventist Hospital in Denver – $55 million expansion/renovation.
* Parker Adventist Hospital in Parker – additional work to hospital.
* St. John’s Medical Center in Jackson Hole, Wyo. – $ 20 million intensive care unit expansion and medical office building.
* Gritman Medical Center in Moscow, Idaho – $11 million expansion/renovation.
Jeff Christmann, G.E. Johnson’s vice president, said health care construction made up 51 percent of the company’s work in 2003. He estimates it will make up 41 percent, or $220 million, of the company’s volume this year.
He said the jobs are challenging and complex.
“The staff of the hospital has to be interfaced with the construction workers in order to have a successful project,” Christmann said. “A hospital is a 24-hour operating facility, and has to maintain operations at all times. It involves more planning with managers and hospital staff and coordination during construction.”
Christmann said health care construction isn’t more profitable than building offices, but it is a specialized field.
“Where you differentiate yourself is when you’ve done a lot of health care facilities around the country and have a resume to prove yourself,” Christmann said. “The healthcare-related construction is simply lucrative because it’s specialized.”
Yet even more hospital construction
Gerald H. Phipps also has its pieces of the health care construction pie. Scott Peterson, the company’s business development manager, said health care construction has made up 75 percent of the company’s business for several years.
He said the construction boom can be attributed to population growth, aging baby boomers, low interest rates and tort reform.
“Because of the tort reform, doctors really like to practice medicine in Colorado,” Peterson said. “Plus, hospitals and physicians with a good credit rating can usually borrow at 3 or 4 percent interest, which is really low. Hospitals built many years ago are not big enough to serve our growing population. We have been underserved with beds for years, and now we’re playing catch up.”
Some of the projects Gerald H. Phipps has been or is involved in include:
* Exempla Lutheran Medical Center in Wheat Ridge – $15.5 million addition, new cardiology department, patient rooms, medical office building entrance and brick and glass exterior.
* Boulder Community Hospital Foothills Campus in Boulder – $52.2 million 60-bed hospital including emergency department, imaging department, labor-and-delivery rooms, operating rooms.
* Denver Health Medical – $47.5 million addition and expansion.
* The Children’s Hospital, Fitzsimmons Replacement Hospital in Aurora – $350 million 260-bed hospital, outpatient facility and administration facility.
* Rose Hospital in Denver – $1 million renovation.
* Craig Hospital in Englewood – $9 million housing project.
* Denver Health Center – $50 million expansion.
* Platte Valley Medical Center in Brighton – $60 million new hospital.
* Children’s Hospital in Denver – $5 million renovation.
* University Hospital (the former Fitzsimmons Army Base Hospital) – $2 million renovation.
Greg Collier, a project manager, said that 40 percent to 45 percent of the costs are usually related to mechanical and electrical work.
He said health care construction has 16 divisions or classes of work, which include: utilities, infection control, roofing, insulation, doors and windows, drywall, carpet, paint, equipment, furnishings, elevators, plumbing, sound, video, telecommunications and energy management control.
Collier said that 14 to 16 months can be spent in programming and conceptual design. Construction takes about 22 months, depending on the scope of each project.
Peterson said Colorado is growing into the leading health care research state in an area that includes New Mexico, Utah, Nevada and Wyoming. He said that because of low interest rates and a growing population, continued growth is expected for several years.