Medical real estate in recent years has been dominated by the push of health care providers to expand geographically, often by putting new clinics in untraditional settings like former strip malls.

That trend, in turn, has meant that much of the real estate action has been away from hospital campuses. This is especially true in the Twin Cities, where most of the metro-area hospital campuses have been completely built out.

But a new medical office building project announced this month bucks both trends: the 80,000-square-foot Hazelwood Medical Commons will go up on 9 acres of vacant land in Maplewood right next to the St. John’s Hospital campus. With its decision to become the main tenant, St. John’s owner HealthEast is moving to shore up a longtime customer base rather than conquer new territories.

The developer and owner of the upcoming building is the Davis Group, a Minneapolis firm that specializes in medical real estate and has a record of sensing market directions and responding with high-quality products. Some of principal Mark Davis’ most recent efforts have been redevelopment-type projects, such as the rehabilitation and expansion of an older clinic in Plymouth. But his firm is best known for its new buildings located near suburban traffic centers.

While smart developers can enjoy success with these kinds of suburban projects, they are riskier than building on or near hospital campuses — their patient traffic is not built-in as at an on-campus setting. When Davis had the rare opportunity to obtain a big “greenfield” parcel practically on top of a major hospital, he jumped at the chance, he said.

“If you think of all the hospital campuses around town, in the metro area, there isn’t any other that has as much as 9 acres of available land,” he said. “The connection point in this case with St. John’s Hospital is like it’s an actual extension of their campus.”

The parcel was originally platted during the first build-out of the St. John’s campus in the 1990s. Its owner, the Schreier family, developed the corner nearest the intersection of Hazelwood Street and Beam Avenue with a small commercial node including a gas station and a community bank. Now the remaining acreage has been split off and sold by the family. Davis’ plans call for an initial 80,000-square-foot office building, a potential second-phase expansion of 60,000 square feet, and possibly a small retail building near Beam Avenue.

The proposal will likely come before the Maplewood City Council in June, and assuming its approval, Davis expects a groundbreaking in July and completion by fall 2017.

HealthEast’s decision to use the coming of Hazelwood Medical Commons for a new, 60,000-square-foot Maplewood-area primary care clinic is part of a strategy of reinvesting in the neighborhoods it has served for many years, according to Eric Nelson, HealthEast’s vice president for ambulatory care and medical services.

“The question we have been asking ourselves is, ‘How do we locate and align primary care services so they feel seamless across the organization to our patients and also better serve the communities we’re already in?’ ” he said. “That’s what was really fundamental in our thinking when this new opportunity came up.”

HealthEast already has a primary care clinic in Maplewood, but it is housed in a much smaller building farther away from the St. John’s campus and will “likely be affected” by the coming of the new facility, which gives the provider a chance to design a new clinic from the ground up.

Nelson said that means its layout will be able to accommodate HealthEast’s emerging emphasis on medical collaborations in primary care, in which doctors work in teams with nurses, pharmacists, mental health specialists and others to anticipate patient needs and address them more efficiently. That team approach requires an architectural emphasis on larger collaborative spaces — something in very short supply in traditional clinic settings.

 

Don Jacobson is a freelance writer based in St. Paul. He is the former editor of the Minneapolis/St. Paul Real Estate Journal.