News

Posted: Monday, July 21, 2008

High Demand- But High Cost- for Medical Office Construction

Medical office space may be a hot item these days, but developing it is not for the faint of heart.

Just consider the need for doctors to wash their hands before seeing each patient. It prevents the spread of germs, but installing a sink with hot and cold water into virtually every room of a medical office building adds hundreds of thousands of dollars in up-front plumbing costs.

It’s also one reason why medical office buildings – though not as expensive as hospitals – cost about twice as much on average to build than conventional office buildings: about $80 to $90 per square foot, compared with $40 per square foot.

Besides sinks in every room, medical office buildings often need thicker walls for shielding if there’s radiation imaging equipment, more complex wiring to handle all the advanced electronic and diagnostic equipment, backup power supplies and generators, more complex air circulation systems, and a whole host of other features and special layouts.

“Depending on the specific medical uses and procedures that are going to be done in the building, the construction costs could go much higher than $90 per square foot,” said Steve Salas, vice president of Madison Partners in Brentwood, which manages more than 1 million square feet of medical office space in Southern California.

But by far the most costly difference between medical and conventional office buildings is not directly tied to the practice of medicine: it’s parking.

Because medical offices usually receive high volumes of visits from patients, who often are unable to walk long distances to their cars, medical office buildings are required to have many more parking spaces than their conventional counterparts.

In the cities of Los Angeles, Santa Monica and Beverly Hills, medical office space requires five parking spaces per thousand square feet, compared with two or three parking spaces per thousand square feet for general office buildings. In dense urban areas where there’s no available adjacent space, that can mean adding another level of underground parking. At $30,000 per parking stall, the costs multiply rapidly.

In one recent case in Manhattan Beach, a physician group that was considering converting an existing office building into medical office space dropped its plan after calculating parking costs. “They just saw it didn’t pencil out anymore,” said Jim Jandro, senior vice president with Grubb & Ellis Co.

After parking, the biggest construction costs associated specifically with medical office buildings are frequently extra-thick walls, often required by state building codes. Rooms with X-ray machines require leaded walls.

Also, some of the floors need to be thicker to accommodate the weight of magnetic resonance imaging or other diagnostic machines. Many medical office buildings also need increased ventilation to meet state codes, boosting the costs of heating and air conditioning systems.

Artile By: Howard Fine of Los Angeles Business Journal


Back to Top
Back to News

News