When Holladay Properties set out in August to bring medical services back to a long-closed behavioral health hospital as part of an extensive redevelopment project, the team envisioned multiple tenants one day moving into the space off Turkey Lake Road.
Instead, Pennsylvania-based Select Medical —a publicly-traded company and one of the largest providers of post-acute care in the country — saw a different vision for the property.
It wanted to use all of the 72,000-square-foot building.
“They’ve signed a lease for the entire building,” said Brian Wilcox, the director of brokerage services with Indiana-based Holladay Properties. “We were building it out for multi-tenant (use) and obviously we have now pivoted to work with the tenant’s construction team because now it will be a single-tenant specialty hospital.”
Holladay Properties stated in a news release that Select Medical has signed a long-term lease to use the building as a 63-bed specialty hospital that will serve both critical illness recovery and inpatient rehabilitative care.
Expected to open in late 2024, once redevelopment work is complete, the new Select Specialty Hospital will serve patients recovering from chronic, medically complex conditions and debilitating illnesses, as well as injuries including stroke and other neurological disorders, brain injury, spinal cord injury, amputation, and other orthopedic conditions, the news release says.
Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States based on number of facilities, according to the company’s website.
Select Medical’s reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, the outpatient rehabilitation segment, and the Concentra segment. Nationally, Select Medical has operations in 46 states and the District of Columbia including 103 critical illness recovery hospitals, 31 rehabilitation hospitals, 1,928 outpatient rehabilitation clinics and 540 Concentra occupational health centers.
Select Medical currently operates two critical illness recovery hospitals (licensed as long-term acute care) in Orlando as well as 11 additional critical illness recovery hospitals and three inpatient rehabilitation hospitals and units throughout the state of Florida.
Tom Mullin, executive vice president of hospital operations at Select Medical, said in a prepared statement that Central Florida’s population growth triggered a need for more post-ICU and inpatient rehabilitative care options.
“Florida’s population grew faster than anywhere else in the country in 2022, and more than 20 percent of the state’s population is over 65,” he said. “With that comes a demand for access to world-class post-acute care to help patients heal and recover from chronic, critical illness or catastrophic injury so they may return to quality of life and back to the community.”
The lease agreement came as Holliday was working to redevelop a former hospital that hasn’t served patients in three decades.
It was an opportunity the team had been waiting for since available land for healthcare development is so scarce in this prime area next to Orlando Health’s Dr. Phillips Hospital, near Sea World and the Orange County Convention Center.
The building, located at 7450 Sand Lake Commons Blvd next to Orlando Health’s Dr. Phillips Hospital, operated from 1986 to 1994 as one of four substance abuse hospitals in Florida owned by Glenbeigh, Inc. It closed after Glenbeigh went bankrupt.
Following the bankruptcy, Central Florida Investments Inc., the parent company of Westgate Resorts, took over the deed for $2.2 million.
Westgate used the space for training and administrative purposes up until Holladay Properties bought it for $11 million in August.
The old hospital needed a makeover before it could once again provide health services.
“The building was kind of a mid-80’s vintage,” Wilcox told GrowthSpotter after the purchase “Its original purpose was the behavioral health hospital and really, even after Westgate took control of it, the layout hasn’t changed a lot. The bones of it are still very much an impatient behavioral health hospital. And really, for our purposes, the configuration of the inside needed to change.”
Wilcox said the completely redeveloped building would feature a new exterior facade including new windows, brand-new interior finishes throughout, a new roof, and brand-new mechanical systems.
“A lot of it was not in a good shape,” Wilcox said. “A lot of it had reached the end of its usable life and for us to invest and turn it into a Class A opportunity, we needed to upgrade. We are looking at this from a long-term investment perspective and really wanted to essentially bring the building up to the current age.”
At the onset, the team at Holladay was planning to capture multiple tenants. A listing of the property on LoopNet in December showed that five suites would be available for lease, ranging in size from 3,119 square feet to 16,515 square feet.
Wilcox said that not only is single-tenant the direction now, but the design of the building will also have to accommodate in-patient care.
“That’s certainly a change from the (original) design perspective,” he said, adding that Select Medical requires the addition of another elevator. Windows will also need to be enhanced to withstand hurricane-force winds.
“Obviously there are some additional costs we have to incur to make this deal happen,” Wilcox said. ” “But this is a deal that made sense to us as owners and developers.”
He called it a “win-win” for Holliday Properties and Select Medical.
“It’s great,” he said. “Their speed to market is much quicker by taking over an existing renovation versus trying to build something from the ground up. They will be able to get to the market and begin serving patients much faster than if they had started from scratch.”
This area along Sand Lake Commons Boulevard — next to Orlando Health’s Dr. Phillips Hospital, near Sea World and the Orange County Convention Center — has seen the emergence of several health-related development projects lately.
In October, Upshot Capital Advisors purchased a 5.5-acre parcel to the northeast for $7.5 million with plans to build a standalone long-term acute care hospital.
The company has not disclosed which healthcare provider would be taking over the building once the project is complete.
Property to the west of the Upshot Capital site is also being eyed for a new medical opportunity.
Sand Lake Surgery Center, located at 7477 Sand Lake Commons Blvd, is considering buying an 11-acre piece for a two-story, 30,000-square-foot medical office. That land is currently owned by Westgate Resorts and has been used as overflow parking for a nearby hotel.
Have a tip about Central Florida development? Contact me at (407)-800-1161 or dwyatt@GrowthSpotter.com. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.
