PROJECT OVERVIEW
Silver Cross Hospital selected NexCore Group in a national, competitive process to develop the six-level, 182,000 GSF outpatient medical services building, Pavilion A. The building is part of Silver Cross’ $400 million, 76-acre replacement hospital campus that was recently completed in the Village of New Lenox, IL, a fast growing suburb of Chicago. Pavilion A houses 106,000 RSF of physician office space and 68,000 RSF of hospital outpatient services.
COST-SAVING METHODS
During development of Pavilion A, NexCore employed various design and construction measures to manage and reduce the cost of the project. Practices during the design phase included a design/build process for the mechanical, electrical, and plumbing (MEP) disciplines. This approach realized an approximate savings of 50% in the MEP design services, reduced the exposure and potential change order costs from misinterpreting the design intent and construction documents of a traditional third-party design, and allowed early identification of equipment manufacturers and lock-in of pricing.
Furthermore, the design phase included use of Revit software which allowed the design documents to be converted to use in Building Information Modeling (BIM) and direct conversion to shop drawings by the sub-trades. Direct conversion reduces the chance of error in translation of information and potential of cost-incurring mistakes as well as introducing an opportunity to reduce shop drawing and submittal delivery times. Use of BIM allows implementation of clash detection of building systems, primarily structural components occupying the same space as utility and communication runs, including duct work, piping, cable trays, and pneumatic tube systems. The detection of interferences in the design phase significantly reduces costly changes post-fabrication and in the field.
Significant cost savings were also gained in the Silver Cross Pavilion A project simply through constructing the building in a reduced time frame. The six-level, 182,000 SF building was constructed in 12 1/2 months in lieu of a 16-month duration, saving nearly $2/SF in construction costs and significantly more in construction period interest.
TARGET MARKET
Silver Cross is a suburban hospital in a growing submarket southwest of Chicago. Physicians are attracted to this hospital campus because of a strong payor mix, less competition (as compared to the metro area), and a reputable hospital and executive team. Most physicians are splitters on staff at two or three hospitals. The focus was on relocating all physicians at the existing hospital campus to the new campus and attracting new physicians, especially those specialties identified as deficits by the Medical Staff Development Plan.
LEASING STRATEGY
NexCore devised a pre-leasing incentive for physicians at the existing campus, given that these physicians were “loyalists” and were required to move. Physicians in this group who committed early during the pre-leasing phase were offered an investment opportunity with a higher preferred return.
In addition, NexCore presented an aggressive economic offer, which included tiered-rent structure and creative tenant improvement packages. Building design and connectivity created a few areas with compromised views, which provided an opportunity for differentiated rents. NexCore’s strategy appealed to the specialists seeking prime space and willing to pay top dollar, yet accommodated physicians seeking lower priced space.
NexCore was able to demonstrate the quality of the new building and the benefits of alignment with a winning system in a strong location.
RESULTS
NexCore has recruited 178 physicians to Pavilion A, 102 of which are new to the Silver Cross campus. According to Ruth Colby, Chief Strategy Officer for Silver Cross, the hospital’s outpatient volumes increased 6.5% one year after Pavilion A opened its doors.
