Denver developer expanding Springs presence

RICH LADEN Updated: March 13, 2013 at 12:00 am • Published: March 13, 2013

A Denver real estate investment, development and management firm that constructed a 72,000-square-foot medical office building on the Penrose Hospital campus is expanding its Colorado Springs presence in a big way.

Westfield Company Inc., whose projects include office buildings, apartments and retail centers in Colorado and Arizona, recently bought one local medical building and plans to construct three more, while also eyeing development of retail space, said Randy Schwartz, the company’s chief operating officer.

According to Schwartz, Westfield’s activity in the Springs includes:

• In 2012, Westfield completed construction of its Penrose Pavilion medical office building at 2312 N. Nevada Ave., next to Penrose Hospital. That building is now a little more than 90 percent occupied.

• In January, the company bought the 23,000-square-foot Rocky Mountain Cancer Center building and 10 acres northeast of Union Boulevard and North Circle Drive, in central Colorado Springs. Rocky Mountain Cancer Center has moved from that building to the Penrose Pavilion, while some Penrose Hospital services are moving to the former cancer center.

• Westfield plans to construct a 30,000- to 40,000-square-foot medical building west of the former Rocky Mountain Cancer Center building. The company hopes to begin construction in the second half of the year, with completion in 2014.

Westfield also plans construction of a pair of approximately 45,000-square-foot medical buildings on 6 acres it bought two years ago east of the St. Francis Medical Center, at Powers Boulevard and Woodmen Road on the city’s northeast side. Westfield hopes to start construction on one of the buildings this year but is aiming to have it 25 percent to 40 percent pre-leased before work begins.

The company is looking to spend upward of $28.6 million on the three buildings, based on its construction cost of about $220 per square foot.

• Westfield also is looking to develop 4 more acres near St. Francis Medical Center, facing Woodmen Road, as retail space. The company has sold a site to Abba Eye Care.

• In addition to construction, the company is continuing to look to acquire general office and medical space in the Springs.

Westfield believes Colorado Springs’ economy is improving and likes the potential for growth in medical services locally, in part, because of the partnership between University of Colorado Health and Memorial Hospital, Schwartz said.

While a Turner Commercial Research report shows the city had a nearly
15 percent medical building vacancy rate in the fourth quarter, Schwartz said that rate might be inflated by older and obsolete buildings.

Some tenants who need only a three- to five-year lease might be satisfied with older buildings, he said. But Westfield tries to look long term — hoping to capture growth companies, some of who are partnering with area hospitals and will want to locate in newer, state-of-the art facilities, he said.

Gary Hollenbeck, a principal with commercial brokerage Palmer McAllister who represented Westfield in its various deals, said the company is strategically locating its buildings near major medical centers, such as Penrose,
St. Francis and the Audubon Medical Campus southeast of Union and Circle.

“It really increases the productivity of the physician,” Hollenbeck said. “If they can walk across the street or walk on campus to the operating room or whatever, it really does increase their productivity.”

In addition to an improving economy and growth of medical users, Westfield also is expanding locally because it has had a good experience working with Springs city officials, Schwartz said.

“We’ve found with projects we’re doing, the city seems to be as proactive as they possibly can be,” he said.

Contact Rich Laden: 636-0228

 

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