CityBusiness Interviews Louisiana Commercial Realty On Hospital Ancillary Development

By: Andrew Valenti, Reporter May 17, 2019

Specialty clinics and medical office buildings dot the landscape along Houma Boulevard near East Jefferson General Hospital in Metairie.

And along Interstate 10 around the Galleria office building, LCMC Health Ridgelake Health Center, Crescent City Surgical Care and Galleria Medical have opened within the last three years.

But while there has been construction related to multifamily housing, extended-stay hotels and retail near the $1 billion University Medical Center and $1.1 billion Veterans Affairs Hospital closer to downtown New Orleans, development of medical office buildings, which can include private practices or research labs, have been scarce.

Current numbers for the amount of square footage for these types of projects were not available. But a report in 2010 by engineering consulting firm AECOM anticipated 175,000 square feet of this secondary development within the five years of the institutions opening, 625,000 square feet in 10 years and 800,000 square feet of space in 20 years.

Commercial broker Robert Hand, president of Louisiana Commercial Realty, said there is no demand for this type of commercial space in that area. Hand said the lack of demand stems from the doctors at UMC and the VA being employees of the hospital rather than being affiliated with the institution and having their own practice and patient base. He noted the physicians at the VA Hospital are employees of the federal government and have no need for their own building and practice.

“I never got any interest from the medical community for my listings on (Tulane Avenue),” he said. “And this was before and after the Veterans Affairs Hospital was completed.”

Hand said the lack of financing in New Orleans also plays a role. In larger markets, speculators acquire the land, then develop a medical office building and wait for the physicians to come in and rent out space. That’s not the case in New Orleans, as banks in the area are very conservative and will not lend for that type of construction, Hand said. He believes this has to do with the Federal Reserve tightening restrictions after the 2008 recession as well as the 2017 collapse of New Orleans-based First NBC Bank, the largest bank failure in the last decade.


For more information, read the Louisiana Commercial Realty article “Why There Will Be No Medical Office Buildings On Tulane Avenue“.