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Promises by Bon Secours for new medical office buildings go unfulfilled

9/2/2021, 6 p.m.
Bon Secours is still struggling to build long-awaited medical office buildings that collectively would create at least 175 new jobs …
Dr. Jones

Bon Secours is still struggling to build long-awaited medical office buildings that collectively would create at least 175 new jobs in Church Hill and at the Westhampton School property the health care organization controls in the West End.

The Catholic hospital and health system continues to vow action at both sites before the December 2022 deadline under an agreement with the city, but the organization has moved far faster in developing new free-standing emergency rooms in Chesterfield County and other locations outside the city limits.

City officials also have reported that Bon Secours is making progress on the two developments in a bid to counter public criticism.

However, it is not clear the construction will take place given the changes the pandemic has made to the medical field — particularly the reported financial damage COVID-19 inflicted on independent private practices that saw patient visits wither during 2020.

Those medical practices often turned to computer visits with patients — telehealth or telemedicine visits—in a bid to avoid closure.

Nationally, demand for medical office space is reported to be rebounding, but there are fewer signs that is happening within the city limits. Amid a resurgence of the virus, it is still murky as to how many physicians have an appetite for securing satellite offices or opening new ones.

Tucker Dowdy, first vice president of Commonwealth Commercial Partners, which brokers office, retail and other commercial space, said the strongest demand for medical office space is in the Short Pump area and in Western Chesterfield County.

But in the city, not so much, he said.

He said demand remains strong but noted that cost constricts the amount of space that will be developed. Medical office space costs $150 more per square foot to develop than ordinary office space, Mr. Dowdy said, and for many physicians, that can push the price of a yearly lease above the level their practices can handle.

If Bon Secours develops its buildings, that would be among the largest investments in new medical office space in the Richmond area in recent years outside of the new offices that the VCU Health Center has developed.

Among those disappointed in the lack of progress at the two sites is former Mayor Dwight C. Jones, who in 2012 cut the deal for the two buildings with Peter Bernard, then chief executive officer of Bon Secours’ Virginia operations. In the former mayor’s view, Bon Secours has “broken its promise” to invest and create new jobs in the medical field for the city. He said he is most concerned that the Church Hill portion of the agreement has not happened because it was to create 75 much-needed jobs for that area.

As part of gaining naming rights and use of the Washington pro football team’s training center when the team was not in town, Bon Secours received a low-priced lease on the vacant Westhampton School property on Patterson Avenue as a site for its nursing school.

Bon Secours also agreed to invest $8.5 million in a new medical office building on nearly an acre of Church Hill land in the 2600 block of Nine Mile Road. The site is next door to the Bon Secours Richmond Community Hospital.

Under the deal, Bon Secours agreed that a minimum of 75 new, good-paying jobs would be created through the practices that would locate at the East End space.

City Hall initially contributed to delaying development of that site through its own slow-moving processes. It took until 2015, three years after the deal was made and two years after City Council ratified it, for the land to be acquired, cleared of former buildings, properly zoned and transferred to Bon Secours.

The property, which once held at least 11 houses, is part of an urban renewal project that the Richmond Redevelopment and Housing Authority under- took in this area for the city.

In the years since, the triangular property has been landscaped as a community park. It sits across Nine Mile Road from the Bon Secours Sarah Garland Jones Wellness Center, a much smaller health and community space that Bon Secours developed and opened four years ago in a former gas station that was revamped.

Under the agreement, Bon Secours must pay $2.5 million over 10 years to compensate the city for the cost of acquisi- tion of the office building site if the office building does not go up by the deadline.

Emma Swann, a spokeswoman for Bon Secours Mercy Health’s operations in this area, stated in an email response: “Our health system’s leaders are committed to the construction schedule, as shared with the City and its Economic Development Authority, which will allow (the East End medical office) to be built by the current deadline of Dec. 31, 2022.”

“The capital investment contemplated by the performance agreement of $8.5 million, which will be exceeded, has been approved and is being spent,” she continued.

But based on discussions with commercial real estate experts like Mr. Dowdy, it is unclear that physician demand for new space exists at the level needed to fill the offices.

Ms. Swann noted that Bon Secours already has made significant investments in the East End since purchasing the once Black physician-owned Richmond Community Hospital 26 years ago. She stated those investments far exceed the $8.5 million investment promised in the 2012 agreement.

Ms. Swann stated that Bon Secours has invested more than $9.8 million in improvements to the hospital’s campus since 2013. The hospital system, she stated, also has distributed $26 million in the Richmond area in the past seven years to nonprofits and to support health initiatives.

“Of the ($26 million), $12 million has been invested in the city’s East End, including $778,750” that went to 36 fledgling businesses that have created numerous jobs as well, she stated.

As for the Westhampton medical building, Bon Secours has gone through multiple changes in that proposed development as well, including dropping the plan for a nursing school.

In 2019, the health system, with city Planning Commission and City Council approval, brought in Thalhimer Realty Partners to redevelop the site into apartments and offices.

That projected $53 million project is well underway on the old school site. A parking deck is done, and 128 apartments are mostly complete.

Also done is the conversion of the 1917 portion of the school into office space. The investment and the jobs exceed the 2012 promise Bon Secours made.

The missing piece: The medical office building that Bon Secours two years ago stated it would develop with VCU’s Children’s Hospital of Richmond, whose satellite locations include services at Bon Secours’nearby St. Mary’s Hospital.

For now, the most successful part of the deal as far as medical operations go is Bon Secours’ use of the $11 million training center on Leigh Street for medical offices and other health care operations.