By Daniel Casciato
For years, Broward County’s medical office market expanded at a measured pace. Health systems renovated existing space, added smaller outpatient facilities, and selectively pursued new development. That has changed.
In just a few months, Broward Health has launched construction on two major medical office buildings totaling more than 315,000 square feet, while Trinity Health’s Holy Cross has broken ground on a new health center in Fort Lauderdale. Together, the projects have created Broward’s busiest ambulatory development pipeline in more than two decades.
The activity comes as healthcare providers increasingly compete on something beyond clinical quality: convenience. Patients still want excellent care, but they also want it close to home, easy to access, and delivered in modern facilities that bring multiple specialties together under one roof.
Christie Grays Chambers, Senior Vice President, Lead Healthcare Practice, Blanca Commercial Real Estate, says that shift is driving many of the investments taking shape across the county.
“Each hospital wants to remain relevant and retain market share. Therefore, opening first-class centers closer to where patients live gives greater opportunity for a facility in the ‘best’ or ‘easiest’ location to be selected. Whereas quality care is always desired, care closer to home is often the deciding factor when selecting where to go. For this reason, hospitals are making investments to be in prime locations with high visibility.”
Broward Health’s newest projects illustrate that strategy. The health system recently broke ground on a 127,033-square-foot, six-story medical office building in Deerfield Beach that will focus on cardiovascular, neuroscience, and orthopedic services. Earlier this year, it also began construction on a 188,000-square-foot outpatient building along Andrews Avenue that will house pulmonology, primary care, gastroenterology, women’s health, and other specialties.
Rather than simply adding square footage, the projects reflect a broader effort to modernize facilities while making outpatient care easier to navigate.
“They are replacing outdated buildings to stay relevant,” Chambers says. “Broward Health North’s current on-campus medical office building (MOB) is dated and somewhat hidden on the campus. Having a first-class, 6-story MOB fronting Sample Road is a win and revitalizes the look of the campus. The new buildings would support new technology and have a tenant mix so that patients can see multiple specialists in one building.”
She also believes the strategy allows hospitals to rethink how they use their campuses.
“Also, this could be about hospitals getting outpatient services out of the hospital to repurpose hospital space for other revenue-driven services.”
That evolution is happening across the country as advances in technology allow more procedures, diagnostics, and specialty care to move outside traditional hospital settings. Medical office buildings have become extensions of health systems rather than standalone physician offices, giving patients access to coordinated care in locations that are often easier to reach than a central hospital campus.
Even as new construction accelerates, Broward’s medical office market remains relatively balanced. Countywide occupancy measured 90.7% during the second quarter, while asking rents increased 3.1% from a year earlier.
Those figures might appear inconsistent, but Chambers says several forces are pushing rental rates upward regardless of modest changes in occupancy.
“In most cases, hospital-owned MOBs need to be at Fair Market Value, so as privately-owned or investor-owned MOB pricing goes up, so do the hospital-owned MOBs. Also, new construction pricing and interior buildout construction costs continue to go up, so this also impacts quoted rental rates. Also, property insurance costs have gone up over the past few years and that also impacts the overall rent costs.”
The economics behind today’s projects also differ from many traditional commercial real estate developments. Most of the new buildings are tied directly to hospital systems and specific clinical programs instead of speculative leasing, reducing financial uncertainty before construction is complete.
“Construction costs continue to rise, but hospitals also have aging buildings,” Chambers says. “Taking some outpatient services out of the hospitals and into the MOBs and outpatient buildings frees up space in the hospitals to repurpose for other revenue-driven uses. Also, knowing that a good percentage of the new development is already pre-leased or accounted for provides better financing.”
The broader South Florida market provides additional support for continued expansion. The region leads the nation in medical office space under construction while posting strong absorption across Miami-Dade, Broward, and Palm Beach counties. Broward alone expanded its construction pipeline to more than 508,000 square feet during the second quarter as the Broward Health and Holy Cross projects moved forward.
Chambers expects demand for outpatient facilities to remain strong because the factors fueling growth have not changed.
“‘Population growth’ and ‘shift toward outpatient care’ have been the buzzwords for many years,” she says. “The shift of outpatient care into centers within suburban/residential communities with good payor mixes has proven successful, so this shift continues. Hospitals continue to search for properties in prime locations to buy or lease to gain a larger market share.”
Looking ahead, she believes the competitive landscape will become even more crowded, particularly since Florida eliminated certificate-of-need requirements.
“Hospital systems will continue to set outpatient facilities near competitors,” Chambers says. “The elimination of certificate of need in Florida has hospital systems and their outpatient facilities within short distances from each other. Patients get to choose their preferred system while also choosing convenience. This is a win for the patients and hospitals are trying to win patients.”
For hospital executives, the current building boom is about more than adding clinical space. It reflects a long-term shift in where healthcare is delivered and how patients choose providers. As more services migrate into community-based outpatient centers, the organizations with the strongest local presence may also be the ones best positioned to compete in South Florida’s next phase of healthcare growth.
For more information, visit blancacre.com.
