Medical mall attracts plenty of potential tenants

Physicians' Clinic of Iowa could more than fill its new medical mall, even before groundbreaking begins.

Mike Sundall, CEO of the physicians group, said PCI has taken nearly 20 inquiries from chiropractors, pharmacies and other businesses that would like a spot in the forthcoming mall at 10

^th

Street and Second Avenue SE.

“If we lease to even half of those, we'd be out of space,” he said during a talk Thursday, Jan. 13, to ImpactCR. “It's almost a fulltime job, talking to potential tenants.”

Even PCI's own business office won't have a spot in the 200,000-square-foot mall.

“(The space) is too expensive,” Sundall said of the $36 million mall. “It will mainly be clinical space.”

Citing confidentiality reasons, Sundall would not name any of the potential tenants, which include one national and three local restaurants.

Some of the tenants, including the restaurant, would likely be open in non-business hours on nights and weekends, so PCI is also considering having weekend hours, he said.

Two blocks of Second Avenue will close in April, when bids for subcontractors go out. Groundbreaking is set for May, with a goal of opening in late fall 2012.

BBL Medical Facilities of Albany, N.Y., is the general contractor.

Sundall said the project will require 277 construction workers.

PCI's development agreement with the city calls for employing 315 full-time people when the new facility opens. Currently, PCI employs 332.

Sundall said the lower number is because of the efficiencies of scale in consolidating from five buildings to one.

He cited 350 employees in his presentation and said the number could grow by 50 to 100, with another 75 to 150 jobs from other businesses in the mall.

Two PCI buildings are for sale: at 830 Fourth Ave. SE, and 1260 Second Ave. SE.

Its main building, 600 Seventh St. SE, is leased from Mercy Medical Center. That lease expires in 2015, so PCI might sublease in the meantime, Sundall said.

PCI also leases space at 855 A Ave. NE and owns a building at 901 Eighth Ave. SE. The latter building might serve as the PCI business office, he said.

Sundall said PCI has formed a real estate company, called PCI Regional Medical Mall LLC, which will lease the space to PCI. PCI, in turn, will sublease space to tenants.

PCI owns 80 percent of the real estate company, with offers of 10 percent each to St. Luke's Hospital and Mercy, he said.

The city has agreed to provide $13.24 million in front-end spending for the project's $8 million parking ramp and street improvements.

That funding is from tax increment financing, which comes from the difference between PCI's $300,000 current property taxes and the $1.3 million in taxes on the new property for 25 years.

A skywalk will connect the parking ramp to the medical mall.

Sundall said another skywalk could potentially connect the medical mall to the Surgery Center of Cedar Rapids, 1075 First Ave. SE.

The center is jointly owned by St. Luke's, PCI and other physicians' groups.

Sundall said the Surgical Center would have to fund the skywalk. Those can cost $700,000 to $1 million.