Turner Commences Work on $291M Medical Facility in Buffalo

February 16, 2010
By Barbra Murray, Contributing Editor

Signs that the healthcare real estate sector is still alive and relatively well continue to materialize. Acting on behalf of Kaleida Health, New York City-based Turner Construction Co. has begun construction activity for a $291 million medical care and research facility at the Buffalo Niagara Medical Campus in Buffalo, N.Y.

Turner’s contract, valued at $165.5 million, calls for the company to take on both pre-construction and construction responsibilities for the 480,000-square-foot building. Turner will also complete the interior fit-out of the six floors that will house the medical operations. The remaining four floors of the 10-story facility will encompass research space. Turner continues to hold the title of the largest healthcare facilities builder in the U.S.

As has been the case with all other sectors of the real estate industry during the economic downturn, health care facilities have taken their hits, too. “We not only saw the credit-crunch effect, we also saw healthcare reform provide instability in reimbursements, which slowed the market,” James A. Brownrigg, vice president and director of healthcare for Turner, told CPE.

While there has been a slowdown in hospital construction, the drop hasn’t been nearly as steep as it has been in other areas. There is no such condition as “recession-proof” in the real estate industry, but healthcare facilities are at the top of the list of those sectors that have suffered the least. And the future for these properties is relatively bright. According to the American Institute of Architects’ Consensus Construction Forecast for 2010, activity in the healthcare market will likely decline just 0.3 percent in 2010, while it is expected to increase 2.5 percent in 2011.

Brownrigg agrees that healthcare development is heading for an upswing. “The last eight weeks have produced a great deal of opportunity and activity in the market,” he said. “Construction will start to pick up in 2011, and I’m more optimistic about the 2010 outlook now than I was eight weeks ago.”

A bevy of new hospital projects have come to the fore over the last couple of months. Among them, the $72 million, 100,000-square-foot expansion of St. David’s South Austin Hospital in Austin, Tex., scheduled to commence this April; Columbus, Ohio-based Nationwide Children’s Hospital’s $93 million, 225,000-square-foot Research Institute building, which is to break ground soon; and Seattle Children’s Hospital’s planned $1 billion growth spurt, which is in the final approvals stage.