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Demand for Freestanding Emergency Rooms, Cold Storage Facilities Surges in RGV

Neighbors Emergency Room in McAllen, which opened in April 2016, measures approximately 8,000 square feet.

Neighbors Emergency Room in McAllen, which opened in April 2016, measures approximately 8,000 square feet.

South Texas is in the midst of a growth spurt in the commercial real estate industry. Within the area’s retail sector, demand for freestanding emergency rooms and cold storage facilities is growing rapidly. Though atypical, requests for such spaces are becoming increasingly common in the Rio Grande Valley (RGV).

An estimated 1.3 million people call the RGV home. Both Hidalgo and Cameron counties are equipped with multiple hospitals to meet the healthcare needs of residents. There are three freestanding emergency rooms in Hidalgo County and two in Cameron County, with several more currently in the pipeline.

Claudia Ayarzagoitia, Retail Source Real Estate

Claudia Ayarzagoitia, Retail Source Real Estate

Three of the larger healthcare providers within the RGV — Doctor’s Hospital at Renaissance in Edinburg (the largest hospital in the area), South Texas Health System, which has five hospitals in cities McAllen and Edinburg and HCA Hospital in McAllen — all have plenty of emergency rooms to cover the cities they serve.

Between Harlingen and Brownsville, both the longstanding Valley Baptist Health System and the newer Harlingen Medical Center have plenty of emergency rooms to handle residents’ healthcare needs.

Despite having this many established players in the market, new operators of healthcare real estate like Neighbors Health System, which owns and operates Neighbors Emergency Center in McAllen, Harlingen and Brownsville, are now attracting more healthcare providers to the market in search of retail sites to build additional freestanding emergency rooms. This is creating demand for a special line of healthcare provider that until recently has not been seen in the RGV.

According to sources within local health systems such as Harlingen Medical Center and South Texas Health System, construction of a standard freestanding emergency room requires a minimum of 10,000 square feet. In the RGV, such a property would be considered average for a freestanding emergency room and could cost as much as $10 million to build and furnish, depending on location.

In addition, some South Texas residents argue that demand for freestanding emergency rooms is rising due to the perceived “long-waits” patients face at some hospitals. This is a fairly common complaint many amongst patients across the country in terms of dealing with emergency rooms situated within hospitals. The freestanding emergency room is designed to be able to expedite the time it takes to register and process patients, as well to limit waiting times for treatment.

In addition to this healthcare property type, demand for cold storage facilities is also on the rise in the RGV.

Most recently, Ci Logistics Co. completed a 134,000-square-foot cold storage facility. The space in its entirety will be utilized for the pasteurization of cold produce, a product that has come to represent a strong driver of both commercial and industrial activity within the region.

With its proximity to Reynosa, Mexico, the RGV has a wealth of industrial warehouse space that is especially concentrated within McAllen, Edinburg and Brownsville. On average, these properties measure about 42,000 square feet and house everything from construction supplies to furniture for commercial and residential buildings to general clothing and equipment for retail operations. Searches for these types of properties, in terms of both investment and leasing activity, are quickly becoming standard for commercial brokers and agents throughout the RGV.

Nonetheless, the need for cold storage spaces has skyrocketed over the last four years as the volume of imported produce from Mexico into the RGV continues to grow. As such, cold storage facilities have come to symbolize the growth of the agriculture-based business and commerce that continues to draw new industrial investors to the market.

These properties and their rampant growth represent the RGV’s successful evolution and ability to mold its retail real estate sector into an increasingly diverse marketplace.

— By Claudia Ayarzagoitia, owner, Retail Source Real Estate. This article first appeared in the August 2017 issue of Texas Real Estate Business magazine. 

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