News Article on azcentral.com

Buildings near Mercy Gilbert slow to fill with tenants

by David van den Berg - May. 21, 2008 12:29 PM

The Arizona Republic

Economic conditions have slowed the filling of developments immediately around Mercy Gilbert Medical Center.

Buildings in The Medical Plaza at Spectrum across Mercy Drive from the hospital were finished in March 2007.

Four practices are operating there now, with three more slated to open within the month, said Jon Willis, senior associate with Willis Property Company, who is marketing the medical plaza development.

The complex is 80 percent sold out, he said. But, with the economic downturn and tightening in lending, filling the remainder of the development is proving to be difficult.

"Lately it's been really slow because the market's terrible," Willis said.

Pediatrics, orthopedic surgery, gastroenterology and ophthalmology practices are there now, with dentistry and dermatology and physical therapy practices and blood and prosthetics labs coming soon, Willis said.

The plaza is competing with several nearby projects for tenants.

Gilbert-based UTAZ Development Corp. has opened Mercy Point Medical Center south of the hospital on Val Vista Drive, and Logan Commercial Advisors is seeking office tenants to lease space in Copper Point immediately across Val Vista from the hospital.

Office vacancy around the medical plaza has forced the company to cut its prices $60 a square foot, Willis said.

While the medical plaza has been open for more than a year, construction is close to being done on most of Copper Point's offices. Work will conclude by mid-July on a spec office building.

. The development's retail building has signage for a Port of Subs eatery and a chiropractor's office.

"It's obviously slower than it has been in the past couple of years," said Phil Wurth, a vice president with Logan Commercial.

Corporate tenants seeking office 10,000-square-foot or larger spaces have expressed interest in the development, Wurth said. Most tenants talking about space in Copper Point are professional not medical offices, he said.

"We thought we'd see more medical," Wurth said. "I think a lot of the medical is there."

UTAZ has brought an insurance agent, obstetrics-gynecology group and a dentist to Mercy Point Medical Center. The development is about half filled, said Kyle LeSueur, a spokesman for the company.

Terri Tobey, the company's senior vice president of business development and community affairs, said he can't help but say the economy has had an impact on the development.

However, she said the company receives calls on a regular basis from doctors and businesses wanting to lease or purchase space.

"We've held off on reducing the prices at Mercy Point," she said. "We consider it one of our crown jewels, if not the crown jewel."