Health Care, Biotech Sectors Are Fueling Economic, Job Growth in Hudson Valley

John Jordan | March 16, 2018

An aerial photo of the construction of the new $545-million patient pavilion at Vassar Brothers Medical Center in Poughkeepsie.

WHITE PLAINS—The health care industry and the burgeoning biotech sector are expected to be growth industries for the Hudson Valley region in the coming years. Despite and perhaps because of the volatility in both sectors, billions of dollars in capital investment have been initiated by health care and biotech concerns throughout the region in the past few years.

According to the New York State Department of Labor, for the 12-month period ended in January 2018, private sector employment in the Hudson Valley increased by 1,600 or 0.2% to 774,000. The top sector for job gains was in the education and health services fields, which added 5,500 positions, followed considerably behind by professional and business services that increased its workforce by 2,100 jobs.

The health care sector has seen expansion by New York City medical institutions such as Montefiore, Mount Sinai, Northwell Health, Touro College, New York Hospital for Special Surgery and Memorial Sloan Kettering. Combine that with the significant growth of medical service providers such as Westchester Medical Group, P.C. (WESTMED Medical Group), a multispecialty medical practice that employs 500 physicians and advanced care providers and more than 1,200 clinical employees, that has multiple locations in Westchester County, including two offices in Yonkers at Ridge Hill and the Boyce Thompson property, as well as in Manhattan and Fairfield County. Another medical practice that has expanded its operations at a rapid rate in the Hudson Valley is Crystal Run Healthcare, which has locations in Rockland, Orange, Sullivan and Ulster counties, as well as in Manhattan and Bergen County, NJ.

In addition to large lease deals, the health care and biotech sectors have infused significant capital investments in the region. Major hospital capital projects have been undertaken in the past few years by the likes of: Westchester Medical Center, White Plains Hospital, Vassar Brothers Medical Center, Nyack Hospital, Orange Regional Medical Center, the Hospital for Special Surgery, Memorial Sloan Kettering and others.

Commercial brokerage firm JLL estimated the health care sector captured 24% of the leasing demand or more than 500,000 square feet of space in Westchester County in 2017. In its fourth quarter report, JLL noted that the largest deal was Montefiore Medical Center’s 300,000-square-foot lease renewal at the South Westchester Executive Park in Yonkers. Other transactions of note included ENT & Allergy Associates relocation and expansion to more than 38,000 square feet of space at 660 White Plains Road in Tarrytown and 15,000 square feet at 222 Bloomingdale Road in White Plains. Burke Rehabilitation Hospital also opened a new 24,000-square-foot facility at 99 Business Park Drive in Armonk last year.

William Cuddy, executive vice president with commercial brokerage firm CBRE, told Real Estate In-Depth that health care and biotech have been and will continue to be key drivers for the commercial real estate industry and the overall economy in Westchester and the surrounding region.

Cuddy pointed to New York State Department of Labor Statistics that show the health care and biotech sectors or medical technology represent approximately 17% of Westchester County’s employment base. “That is a meaningful (economic) engine for the county,” he noted.

In terms of the region’s growing biotechnology sector, the leader by far is Regeneron Pharmaceuticals that in early 2017 acquired its 1.5-million-square-foot laboratory headquarters complex at the Landmark at Eastview for $720 million in Tarrytown. The biotech firm has also secured approvals from the Town of Greenburgh for more than 100 acres of land adjacent to the Landmark at Eastview that could accommodate another 1 million square feet of new expansion space for the company.

A project that could complement the region’s existing biomedical property portfolio that includes the former Pfizer complex in Pearl River, now owned by IRG, is the proposed Westchester BioScience & Technology Center to be developed by Fareri Associates of Greenwich, CT under a long-term lease deal with Westchester County. The estimated $1.2-billion bioscience park would be developed on mostly county-owned property in Valhalla adjacent to the Westchester Medical Center on the Grasslands campus.

The plan, which is now before the Town of Mount Pleasant, calls for approximately three million square feet of space to be built in phases. The total project site includes 60 acres of vacant county-owned land known as the “North 60” and an adjacent 20 acres of vacant property owned by Fareri. At full build-out, the project will entail more than 2.25 million square feet of biotech/research space, 400,000 square feet of medical office space, a 100-room hotel, 114,000 square feet of retail space and a 34,000-square-foot Children’s Living Science Center.

Michael Israel, president of the Westchester Medical Center Health Network—parent company of Westchester Medical Center—detailed the hospital’s expansion plan at a meeting of the Westchester County LDC in 2016.

CBRE’s Cuddy said that health care and research and development space could be built a lot cheaper in Westchester and the Hudson Valley as compared to New York City. He estimated that building such space in perhaps a four or five-story building, whether it be at the proposed project at the Grasslands site or elsewhere in the Hudson Valley, would be in some cases three times less expensive than comparable space constructed as a high-rise in New York City.

The following is just a sample of some of the major health care projects that have broken ground or been completed in recent years in the Hudson Valley.

Westchester Medical Center: is currently building an estimated $230-million Ambulatory Care Pavilion adjacent to the existing Westchester Medical Center in Valhalla.

The eight-story steel and glass Ambulatory Care Pavilion, which received financing from the Westchester County Local Development Corp. in 2016, will feature 185,000 square feet of ambulatory care service space, including an Advanced Imaging Center, an Ambulatory Surgery Center and Heart and Vascular Institute, and a 20,000-square-foot private-room expansion for Westchester Medical Center, plus another 75,000 square feet for physician offices.

Vassar Brothers Medical Center: is constructing a 752,000-square-foot patient pavilion that is expected to cost approximately $545 million to complete. This project represents the most significant transformation of the Medical Center since its inception in 1887. The new facility will allow Vassar Brothers to replace its semi-private medical/surgical units with a patient pavilion that will house 264 private medical/surgical patient rooms.

The components of the new 752,000-square-foot building will include: four floors of spacious, all private inpatient rooms with bathrooms. Each room will be 330 square feet in size, compared to the 243 square feet found in the existing semi-private rooms. Each floor will house 66 rooms. The additional patient floor will be able to accommodate another 66 beds at a point in the not-too-distant future when increasing patient volume demands the floor be completed and opened. The facility will also include a 66-bay emergency room/trauma center with approximately 58,000 square feet of space—almost twice the size of the current emergency room that treats 70,000 patients annually. Other components include 15 operating suites, a 72,000-square-foot, 30-bed Intensive Care Unit that will be three times larger than the existing unit, as well as spacious visitor lounges, a 240-seat cafeteria, outside seating areas, and a 300-seat community conference center for staff and visitors.

A hospital spokesman said that the project is on scheduled and that a topping off ceremony is expected in July and project completion at the end of 2019.

Orange Regional Medical Center—After opening its $350-million new hospital on East Main Street in Middletown in 2011, ORMC completed a $99-million, 153,000 square foot, five-story medical office building and a 26,000 square foot, single-story cancer center at the hospital’s main campus in 2016.

White Plains Hospital—has embarked on a major capital improvement and expansion program. Since 2015, the hospital has renovated or added approximately 200,000 square feet of space. Late last year the hospital completed the addition to its Central Clinical Services operations totaling 20,300 square feet of space.

The new space at the center of the hospital, from floors three to six complements the hospital’s ongoing campus modernization and renovation, including the newly expanded Center for Cancer Care, completed in 2016, and the hospital’s new lobby, completed in 2015. The hospital is celebrating its 125th anniversary this year. The hospital recently secured approvals from the White Plains City Council to renovate a 16,000-square-foot four-story building on East Post Road. The hospital intends to relocate some professional offices to the property once renovations are complete.

Lawrence Hospital—The Bronxville based hospital, now affiliated with New York Presbyterian, opened a $65-million cancer center and surgical suite in 2016.

Nyack Hospital—broke ground in December 2016 on a $22-million project that when completed will expand its emergency department and create a medical village at the property. The capital project will not add any beds, but will add more than 16,000-square-feet to Nyack Hospital, which is affiliated with Montefiore Health System.

Hospital for Special Surgery— opened its 50,000-square foot state-of-the-art outpatient care center off I-287 in White Plains in October 2017.

HSS Westchester, located at 1133 Westchester Ave., a building owned by the RPW Group, features 20 exam rooms, three x-rays, and an MRI (magnetic resonance image) suite. It also offers a full spectrum of rehabilitation services including aquatics and concussion therapy and sports performance services such as motion analysis, return to play testing and training.

Memorial Sloan Kettering— Memorial Sloan Kettering expanded its New York metro suburban presence with its state-of-the-art facility—MSK West Harrison—on Westchester Avenue in Harrison. The new 116,00-square-foot cancer center opened for patients on Oct. 6, 2014.

John Jordan
Editor, Real Estate In-Depth