As the medical industry weathers the recession better than restaurants, retailers and banks, health care businesses are now steadily buying and leasing vacant space designed for other types of tenants.
Plastic surgeon Christian Drehsen bought McNulty Station at 240 First Ave. S in St. Petersburg for $1.8 million last month. He plans to invest more than $1 million in renovations for a medical spa and surgical center where a bank used to do business. Jeffrey Seymour of Tampa is opening Northeast Orthodontics at 4301 Fourth St. N in half of a former Blockbuster Video. Dawson Academy, which provides continuing education for dentists, paid $1.3 million to move into the former Tourtelot Brothers real estate offices at 414 Fourth Ave. N late last year.
The list goes on. Exceptional Dental paid $650,000 for the building at 3238 Fourth St. N, formerly City's Café. In September, Rose Radiology opened a St. Petersburg facility at 4551 Fourth St. N in a building it constructed after razing a former St. Petersburg Times distribution center it bought for $540,000. All Florida Orthopaedic purchased the former Ponderosa Steakhouse at 4526 Fourth St. N last year for $1.2 million.
"We're working now on a building on Central Avenue with a medical group that would be a 5,000- to 10,000-square-foot user in a nontraditional type of space," said Ann Walters of Osprey Real Estate services. She also leased the Blockbuster space to Northeast Orthodontics and handled the sale of the City's Café building to Patrick Sexton, the dentist with Exceptional Dental.
"At one time it was restaurants (buying and leasing) and then it was banks," she said. "We went through that whole bank phase when there was a bank on every block. Now it's medical and dental."
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Doctors' offices don't have to huddle around a hospital. In fact, high traffic and visibility are often better for business than being part of a medical complex. With low lease prices, high-exposure retail sites are no longer much pricier than those in a medical park. Along Fourth Street in St. Petersburg, for example, rates are between $12 and $24 a square foot. Four years ago, space went for $18 to $35 a square foot.
"In orthodontics, location really is everything. It has to be convenient to people," said Seymour, who is opening his orthodontist office in the former Blockbuster Video next to Chick-fil-A. "There are so many cars in that Chick-fil-A at all times. At some point everybody who lives around there goes there."
The practice will open March 1 with a game room featuring three to five Wii consoles. "It's a customer service ploy, I would say," Seymour said with a laugh. He has another practice in Wesley Chapel. With the economy improving, he is seeing pent-up demand for orthodontics and decided to expand to St. Petersburg.
"The people who put it off two years ago are now back in the market because they adjusted their finances or rearranged things to make it work," he said. "It seemed like the time is here (to open a St. Petersburg office) with all the activity happening in downtown."
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Another doctor feels the same way. "I decided to come from the boonies and come back to town. I love the fact that St. Petersburg is moving ahead right now," said Drehsen, who has been operating Clinique of Plastic Surgery in Feather Sound for about 10 years. "There's a proximity of restaurants, people can walk to the place. I think the large population who live and work there will find it quite convenient."
Drehsen has practiced in the area for more than 20 years and specializes in the face. He has created procedures that work with the patient's stem cells to aid in rejuvenation. The medical spa, which should open around June, will be on the first floor and offer noninvasive procedures like Botox and laser treatments. The surgical center will open in about eight to 10 months.
"Attorneys, dentists and doctors are the ones who are buying and it makes sense for them," said Mike Heretick, the sales associate with the Vector Cos. who handled the deals with Drehsen and Dawson Academy.
All Florida Orthopaedic bought the Ponderosa Steakhouse across the street from its facility with an eye toward expansion as well.
"I think they bought it as an investment thinking if they ever want to expand, they should control this building," said local developer Jay Miller, vice president of Equity Inc. "One of the few uses the banks are willing to lend for is medical. It's stable whether the economy is good or bad."
Another reason banks are lending to medical businesses purchasing or leasing real estate is because they are often owner operated.
George Rahdert, the lawyer and developer who sold a former St. Petersburg Times distribution center to Rose Radiology, said banks would much rather loan to an operating business needing real estate than a real estate investor.
"Right now real estate is a dirty word in banking," said Rahdert, who represents the Times. "It's like a cat. If they sit on a hot stove they never sit on a stove anymore, whether it's hot or cold."
Katherine Snow Smith can be reached at (727) 893-8785 or firstname.lastname@example.org.