CENTRAL FLORIDA MEDICAL OFFICE REPORT

CENTRAL FLORIDA MEDICAL OFFICE REPORT

Cushman & Wakefield Healthcare Practice Group

CUSHMAN & WAKEFIELD

Medical Office Report

Welcome to the fourth edition of Cushman & Wakefield's Central Florida Medical Office Report. This comprehensive report covers all space in the market dedicated to outpatient medical services, including owner-occupied and multi-tenant medical office buildings, community clinics, imaging centers, ambulatory surgery centers and specialized outpatient treatment facilities. If a property caters to both office and medical users, it must have at least half existing medical tenancy to be included in the inventory. This comprehensive report will be published annually, with a basic market update published quarterly. It is prepared by Anne Spencer and Cushman & Wakefield's Healthcare Practice Group. She brings over 10 years experience to the healthcare advisory platform. Cushman & Wakefield's Healthcare Practice Group is a national platform of real estate professionals with a focus on the sales, leasing, valuation, management and financing of healthcare properties around the US including: medical office, assisted living, skilled nursing and hospital facilities.

Anne Spencer Director, Healthcare Practice Group anne.spencer@ +1 407 541 4434

Cushman & Wakefield of Florida, Inc. 20 North Orange Avenue Suite 300 Orlando, FL 32801

Table of Contents

Market Commentary 2 Hospital Map 4

Hospital Clusters 6 Orlando Health 6

Adventist Health 12 Central Florida Health Alliance 21 St. Cloud Regional Medical Center 22

HCA 23 Medical City at Lake Nona 27

Cushman & Wakefield 1

MARKET COMMENTARY AND STATISTICS

HOSPITALS

Florida's fast growing population

completed its 60,000 SF

is fueling hospital expansions. As in past years, 2017 will see

STATS ON THE GO

1Q16

1Q17

12-MONTH MOB known as Summerport. FORECAST Physicians in the building

this trend continue with the

are now seeing patients and

"big three" healthcare systems competing for market share. Part of their growth stems from

Overall Vacancy

8.8%

6.0%

q

the building is almost fully occupied. In the Horizon's West development, Orlando Health is

the evolving way healthcare is

under construction on a 78,000

delivered to patients. The focus Direct Asking Rents is now on providing convenient (PSF/MO)

$17.12

$19.12

p

SF freestanding ED, a 2-story building with 10 patient beds

access as well as an attention

on the first floor and medical

on overall life improvement and

office space on the second.

wellness communities. These Net Absorption

68,218

100,190

Plans call for a full acute care

changes are reflective in the

hospital to be built in phase

new ways they are executing

two, although a timeline has not

their real estate strategies, including complex is under construction and slated been announced. In Ocoee, Health Central

the establishment of medical office to finish later this year.

hospital has completed its expansion

buildings (MOB).

of their emergency department and

Leesburg in Lake County will see the next additional patient tower, which added

Orlando Health

Health Pavilion at Blue Cedar. The 30,000 40 additional beds. SF facility will contain a freestanding

In Orange County, Orlando Health is emergency room (ER), outpatient imaging, In another bold move to increase market

showcasing moves toward wellness lab and medical offices and is scheduled to share, Orlando Health announced this

communities by developing a "Health open later this year. Also in Lake County, year an affiliation with Lakeland Regional

Pavilion" in the Dr Phillips area. It delivered Orlando Health broke ground on the Joe Medical Center, the 5th largest hospital in

in late 2016, with new tenants taking H. and Loretta Scott Health Pavilion at the state. The affiliation is slated to take

occupancy 1st quarter 2017. The Spring Southlake, located in the busy 4 Corners effect in the Fall of 2017.

Lake Health & Living Campus is a full area south of Orlando. These three health

service, outpatient facility with primary pavilions are the first of several Orlando Florida Hospital

care, specialists, imagining, laboratory Health is planning for future development.

services, pharmacy and a caf?, all housed in

Florida Hospital will focus in 2017 on the

a 60,000 square feet (SF) MOB. In addition, In West Orange County, Orlando Health very young and the very old. For seniors, two

an adjacent 180-bed senior housing is staking a big claim to the area, having assisted living projects are currently in the

SUBMARKET

TOTAL

TOTAL

INVENTORY (SF) VACANT (SF)

Central Orange 4,615,179

137,376

DIRECT VACANCY

3.0%

DIRECT NNN RENTAL RATE

$16.32

ABSORPTION 2016 (SF)

38,714

East Orange

636,507

77,426

12.2%

$20.26

16,321

West Orange 1,481,890

57,015

3.8%

$18.50

153,111

Orange County 6,733,576

271,817

4.0%

$17.90

208,146

Seminole

2,299,437

185,462

8.1%

$16.32

14,120

Osceola

1,634,608

209,362

12.8%

$21.91

92,705

Lake

1,489,508

64,659

4.3%

$16.15

83,403

TOTAL

12,157,129

731,300

6.0%

$19.12

398,374

On Campus

4,424,030

258,031

5.8%

$17.72

70,248

Off Campus

7,733,099

473,269

6.1%

$19.89

328,126

TOTAL

12,157,129

731,300

6.0%

$19.12

398,374

2

Vacancy Vs. Absorption

600,000

12.0%

500,000

10.0%

400,000

8.0%

300,000

6.0%

200,000

4.0%

100,000

2.0%

0 2011

2012 2013 2014 2015 2016

Net Absorption

Vacancy

0.0%

Medical Office Inventory by Submarket

Osceola 11%

Lake 9%

Central Orange

42%

Seminole 20%

West Orange 12%

East Orange 6%

final planning stages and will be completed within the next twelve to eighteen months. In Apopka, a senior living community for 400 residents on the site of the old Apopka hospital campus is underway. In Celebration, Florida Hospital is constructing a 120-bed skilled nursing facility, known as the Adventist Care Center. The two-story, 85,000 SF facility is scheduled to open in April of 2018.

On the other end of the age spectrum, Florida Hospital is growing the network of neonatal intensive care units (NICU's) by expanding facilities for women and children in central Orlando, including adding new NICU's in both Celebration and Altamonte.

Florida Hospital's largest project is their new 120-bed hospital campus being built in Apopka. The new facility will be seven stories in 200,000 SF about three miles southwest of their current campus. It is scheduled to open this fall.

In Winter Garden, the system broke ground on a new, 72,000 SF MOB on the campus of their freestanding ER. The next phase will be a 7-story, 120-bed in-patient tower, which will break ground in 2018.

In Winter Park, Florida Hospital is partnering with the Winter Park Foundation to rebuild and expand the much-loved Crosby YMCA. The 80,000 SF facility will be called the Center for Health and Wellbeing. The Central Florida YMCA and Florida Hospital will partner in operating the facility, which will focus on combining wellness, fitness and medicine.

Florida Hospital continues to develop freestanding ER's with an 18,500 SF one expected to open in later 2017 in East Orlando, only 4.5 miles from their East campus.

HCA

HCA may still be the smallest of the three, but the hospital system is making bold and strategic moves in Central Florida. The biggest event is their partnership with the University of Central Florida (UCF). In 2016. UCF announced it chose HCA as their partner to build a 100-bed teaching hospital in Lake Nona. This won unanimous approval from the Florida Board of Governors. The new facility will be adjacent to UCF's college of medicine; delivery date has not yet been determined.

HCA is pushing into Volusia County with plans for a freestanding ER in Deltona. The facility is expected to complete at the end of 2017. Another area HCA is growing is their urgent care platform, Care Now. The first Care Now opened early 2017 in Winter Springs, with plans for a handful of additional locations over the next 12-18 months.

Physician Groups

Acquisition by hospital systems for physician groups will continue, although the trend appears to be slowing. Physicians who choose to remain independent are partnering with other like-minded groups, or working under larger, management umbrellas. These independent groups

many times choose to own or build their own facilities versus leasing. This may explain why the only MOB construction we continue to see is by either hospital systems (to house their employed physician groups) or by large, independent physician groups as owner-occupiers. This year should see an increase in new construction by both of these types of groups, many of which will have some type of specialty component, such as cancer or surgery centers.

The only non-hospital or physician related MOB under construction is a mixed use project that contains a mix of medical and professional office uses.

Investor Activity

Acquisition and interest by Real Estate Investment Trusts (REITs) in Central Florida for MOB's picked up over the past year, but was still low compared to nationwide statistics. In Central Florida, Healthcare Realty Trust was the most active REIT in the area, followed by Global Medical REIT and Mohawk Medical. Private investor activity has been more prevalent, but that's likely due to the ability to acquire smaller MOBs in the $3,000,000 and under range. REITs focused on larger more institutional assets over $5 million.

Cap rates continue to fall in the MOB sector, especially for hospital-credit tenants. Even with small assets (under 20,000 SF) that are off-campus, cap rates are pushing just below 7%.

CUSHMAN & WAKEFIELD 3

FLORIDA COUNTYWIDE HOSPITAL LOCATOR MAP

Arnold Palmer Hospital for 1 Children & Women 2 Orlando Regional Medical Center 3 Winnie Palmer Hospital for

Women & Babies 4 UF Health Cancer Center Orlando 5 Dr. P. Phillips Hospital 6 South Seminole Hospital 7 South Lake Hospital 8 Health Central Hospital A Health Pavillion at Blue Cedar ER

Joe H. and Loretta Scott Health B Pavilion at Southlake ER

Medical City

1 Florida Hospital Orlando

1 Central Florida Regional Hospital 1 UCF Health Sciences Campus

2 Florida Hospital Altamonte 3 Florida Hospital Apopka

2 Osceola Regional Medical Center 3 Poinciana Medical Center

2

Burnett Biomedical Sciences Campus

4 Florida Hospital Celebration Health 4 Hunter's Creek ERC

3 Sanford-Burnham at LaNona

5 Florida Hospital East Orlando

5 Oviedo ERC

4 Nemours

6 Florida Hospital Kissimmee 7 Florida Hospital Waterman

E Hunter's Creek ER

5

UF Research & Academic Center

8 Winter Park Memorial Hospital 9 Florida Hospital Winter Garden

6 VA Medical Center

7

MD Anderson Orlando Cancer Research Institute

C Florida Hospital Waterford Lakes ER

1

St. Cloud Regional Medical Center

D Florida Hospital Lake Mary ER

1

Leesburg Regional Medical Center

44 1

Leesburg

48

A

Cushman & Wakefield 4

50

7

LAKE COUNTY

91

7

27

441

3

4

51

D

Lake Mary

17 92

TOLL 417

4

6 2

TOLL 429

B

4

TOLL 429

8 9

WEST ORANGE SUBMARKET

TOLL 414

FLORIDA'S TURNPIKE

441

TOLL 408

4

CENTRAL ORANGE SUBMARKET

8

4

50

1

Orlando

TOLL

5 408

42 31

17

ORANGE COUNTY

TOLL 528

SEMINOLE COUNTY

C

EAST ORANGE SUBMARKET

5

TOLL 528

92

E

4

TOLL

417

4

5

3

7 1

6 2

4

192

6

4

OSCEOLA

Kissimmee

2

COUNTY

92 17

1 441

Cushman & Wakefield 5

3

570

600

Anne Spencer Director, Healthcare Practice Group anne.spencer@ +1 407 541 4413

91 Cushman & Wakefield of Florida, Inc. 20 North Orange Avenue Suite 300 Orlando, FL 32801

1 | ORLANDO HEALTHE. Gore Street

ORMC | UF HEALTH CANCER CENTER

3

W. Columbia Street

5

11 7

12

9

4

6 4

10

1

Orange Avenue Division Avenue

2 8

ORMC - Orlando

1414 Kuhl Avenue Orlando, FL 32806

? 808 beds

Kaley Street

? Full service medical/surgical facility

? Orlando Health hospital system

? Private, non-profit, community-based health system

? Central Florida's only level one trauma center

orlandoregionalmedicalcenter

UF Health Cancer Center

1400 S. Orange Avenue, Orlando, FL 32806

? 60 beds

? 10-story comprehensive multidisciplinary cancer center

mdanderson

Arnold Palmer Hospital For Children

92 W. Miller Street, Orlando, FL 32806 ? 158 Beds ? Pediatrics hospital ? Orlando Health hospital system ? Only Central Florida hospital with a dedicated pediatric emergency and trauma department ? Home of Congenital Heart Institute

arnoldpalmerhospital

Winnie Palmer Hospital Women & Babies

83 W. Miller Street, Orlando, FL 32806 ? 285 beds ? Third largest birthing center in the U.S. ? Complete ob/gyn care ? Fourth largest level IV NICU in the US

winniepalmerhospital

6

ON CAMPUS MEDICAL OFFICE BUILDINGS

1. Orlando Medical Plaza - Building 1000 1405 S. Orange Ave., Orlando, FL 32806

Total SF % Leased Asking Rent Notes

38,715 74.40% $16.00 NNN Up to 6,600 SF available; RJ King is the listing agent.

2. Orlando Professional Center - Building 2 22 W. Lake Beauty Dr., Orlando, FL 32806

Total SF % Leased Asking Rent Notes

30,427 90.60% $22.00 MG Three suites available; Holladay Properties is the listing agent.

# BUILDING NAME

BUILDING ADDRESS

SF

OCCUPANCY RATE

3 93 W. Columbia St. 93 W. Columbia St., Orlando, FL 52,908

100.00%

NA

4 1315 S. Orange Ave. 1315 S. Orange Ave., Orlando, FL 30,000

5

Columbia Street Medical Center

21 W. Columbia St., Orlando ,FL

32,665

6 89 Copeland Dr.

89 Copeland Dr., Orlando, FL

28,804

7

Underwood 77 Medical Building

77 W. Underwood St., Orlando, FL 18,500

8

Orlando Professional Center - Building 1

1720 S. Orange Ave., Orlando, FL

18,297

9 1300 S. Kuhl Ave.

1300 S. Kuhl Ave., Orlando, FL

14,469

100.00% 100.00% 100.00% 100.00% 78.60% 100.00%

NA NA NA NA $22 MG NA

10 Thorsen Building

1414 Kuhl Ave. Orlando, FL

53,443

100.00%

NA

11 1222 S. Orange Ave. 1222 S. Orange Ave., Orlando, FL 284,169

100.00%

NA

12

Winnie Palmer Surgical Pretesting

1301 Sligh Blvd., Orlando, FL

4,610

100.00%

NA

NOTES Owned by Orlando Health Condos Individually Owned Owned by Orlando Health Owned by Orlando Health Owned by Orlando Health Owned by HCP Owned by Orlando Health Owned by Orlando Health Owned by Orlando Health Owned by Orlando Health

CUSHMAN & WAKEFIELD 7

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