Leaders from Ross Perot Jr. to Elon Musk have warned of the real estate recession and the challenges of financing new projects. The evolution of remote work has left millions of square feet of unused office space sitting idle, and loans on those properties coming due.
But up and down Harry Hines Boulevard, between Medical District Drive and Mockingbird Lane, there are faint whispers of the real estate challenges facing this country. North Texas' population and business growth provide a bulwark against real estate headwinds, and health care tends to be a recession-proof real estate investment, but it's often expensive.
Several important projects are underway and many more are on the way. The effect? Combining value and synergistic collaboration. “I think there will be continued growth.” [in the Medical District]” said Lance Hardenberg, CEO and managing partner of Dallas-based Caddis Healthcare Real Estate. “There is vacant land, and it is likely that redevelopment will continue in the future.”
Two sizable new hospitals are already under construction, with a total development cost of approximately $3 billion. Children's Health and the University of Texas Southwestern are building a new pediatric campus through a joint venture. The project was initially estimated to cost $2.5 billion and would include 532 beds and a new delivery unit, which Dallas Children's Medical Center currently does not have, according to offering documents. The hospital is scheduled to be built from 2024 to 2028, and UTSW President Dr. Daniel Podolsky said preparations have already begun for demolition of the building that will occupy the space where the new hospital will be built.
Texas is building a $482.5 million state psychiatric hospital across the street from the existing Children's Health Campus, according to the Texas Department of Health and Human Services. UTSW and Children's Health will provide mental health services at UT Southwestern's 296-bed hospital, called the Texas Behavioral Health Center. Construction has begun and is expected to be completed in 2025.
Meanwhile, Dallas County is planning a $52 million development of the Department of Health and Human Services' public health laboratory. The 75,000 square foot life sciences building will be a major upgrade from the current labs in the basement. It not only studies infectious agents, but also tests and monitors infectious diseases. “It's great to have all our health and healthcare resources concentrated so close together,” said Dallas County Medical Director Dr. Philip Huang. “These are world-class facilities and institutions, so we expect many synergies with the development of this center.”
Additionally, UTSW and Dallas ISD are partnering on an elementary school that completed its first year in May. The school, led by Colombian family physician Dr. Roberto Gonzalez, has received more than 500 applications for just a few dozen spots next year, and construction on its new campus is underway. The new elementary school building will be located directly behind the new pediatric campus, providing ample opportunities for future collaboration. The campus will cost about $25 million and will surround and be adjacent to the existing school building, according to Construction Journal. It is scheduled to open by 2025. It’s completely different than when I first saw it,” Gonzalez says.
Much of the health care is state-funded, so that support plays a big role in investing in the city's health district. “The city of Dallas is very intentionally pushing for the development of this medical corridor,” Hardenberg said. “Private developers will be involved, but the development will depend in part on the support and active backing of the city.”
Among the private developers investing in the region is Alexandria Real Estate Equities, one of the largest life sciences REITs in the United States. The company has purchased and is rezoning 16 acres of land at Harry Hines Boulevard and Mockingbird Lane. Despite low real estate prices in other parts of Texas, Mr. Cadiz is also eyeing the area for medical clinics, drawn by the abundance of development.
Despite the country's trends, experts don't expect activity to slow down anytime soon. “You'll never feel as if the development is happening on an island,” Hardenberg says.
author
Will is a senior editor at D CEO Editor of the magazine “D CEO Healthcare”. He writes about healthcare…
