By Dennis Quick
Senior Staff Writer

Charleston dermatologist Dr. Marianne Rosen has injected a change of scenery into her practice. On Feb. 21, Rosen moved her office from Gadsden Street downtown to newly built Ellis Oak Medical Park on James Island.

The reason for Rosen’s relocation was twofold. First, Gadsden Street often flooded after a heavy rain, sometimes causing patients to cancel their appointments. Second, Rosen rented her Gadsden Street office space, which prevented her from expanding her practice, explains Niketa Thakkar, Rosen’s office manager.

So Rosen left downtown for an area more convenient to her patients and more conducive to her dream of buying new office space for her growing practice.  

Rosen is part of a wave of Lowcountry doctors who are moving out of rented office space and into offices they have purchased. The trend of buying rather than renting—a trend fueled in part by low interest rates and a desire for solid real estate investments—is driving medical office construction.

Between 2003 and 2004, the Lowcountry’s medical office space inventory increased by more than 90,130 square feet and now stands at more than 1.8 million square feet, according to a report from commercial real estate firm Colliers Keenan.

Most of the new medical offices are being built in West Ashley, North Charleston and Mount Pleasant, the report notes. The majority of the space is being built for sale, but even space built for leasing can be purchased. In some cases, doctors are developing the property while in others commercial developers are constructing medical buildings on spec and then selling the space to doctors. Although 10,000 square feet of medical offices are slated for a new facility to be built on Rutledge Avenue and Doughty Street and the old Charleston High School on Rutledge Avenue is being transformed into 80,000 square feet of offices for the Medical University of South Carolina, new medical office construction in downtown Charleston is limited due to lack of room.

Population growth is another factor driving the medical office market’s rise, says Colliers Keenan broker Mark Mattison, adding that wherever new residential neighborhoods spring up, doctors’ offices usually follow.

Doctors are finding that owning their office space adds more economic value to their practice, due to the equity the property generates, Mattison says. Also, when doctors unite to form a private practice group, a new doctor can enter the group by buying the interest in the property from a doctor leaving the group.

“As reimbursements or opportunities to make more money shrink, doctors are looking to buy property for the return on their investment,” says Jason Hinkel, senior project manager for Cogdell Spencer Advisors, a health care real estate firm. He adds that many doctors are releasing a “pent up” desire to buy office property now that the economy has improved and are doing so in locales having strong clusters of health care services.

West Ashley, with growing medical office clusters along Charlie Hall Boulevard, Ashley Crossing and near Bon Secours St. Francis Hospital, is one such location. Construction on the proposed 30,000-square-foot Ashley Crossing Professional Center might begin this year while six more medical office buildings have been proposed for Essex Medical Park on Charlie Hall Boulevard. More than 77,000 square feet of additional medical office space has been proposed for West Ashley, Colliers Keenan reports. 

In Mount Pleasant, a 70,000-square-foot medical office building has been proposed for Wingo Way on the Cooper River and a 38,000-square-foot medical facility will be built on Johnnie Dodds Boulevard near Interstate 526. Three more 9,000-square-foot medical office buildings have been proposed for Daniel Island. The East Cooper market has a total of 136,000 square feet of proposed medical offices, more than any other Lowcountry market.

North Charleston has 79,000 square feet of proposed medical office space, including a 39,000-square-foot building near Trident Medical Center. Construction will begin on the building at the end of this year. Construction is already underway on a 6,000-square-foot building near the Medical Center. At Lenhart Professional Park on Dorchester Road, the first of 12 medical office buildings, ranging from 4,000 to 8,000 square feet, has been completed.

Although he sees minimal growth of medical office construction in downtown Charleston, Colliers Keenan’s Mattison believes the Lowcountry’s medical office market will remain healthy at least through 2006.

“West Ashley will keep growing and North Charleston will grow steadily,” Mattison forecasts. He adds that medical office construction in Mount Pleasant will slow down after the projects on Wingo Way and at the I-526 and Highway 17 junction are completed. But they most likely will pick up once construction on the 1,700-acre Carolina Park mixed used development and the 75-acre office and retail tract at Oakland Plantation get underway.

Dennis Quick covers health and wellness for the Business Journal. E-mail him at dquick@crbj.com.

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