Construction in the region’s health care sector is a welcome driving force in the recession-strapped economy.

Look no further than the multi-million dollar capital projects on the campus of New Hanover Regional Medical Center, the new Brunswick Novant Medical Center taking shape in Brunswick County and the proliferation of medical clinics being built in the area.

 “In our community, I would rank them over retailers and apartments. That’s probably our top sector and it’s the top sector (in terms) of keeping our economy going,” said Dennis Musser, president of the Realtors Commercial Alliance of Southeastern North Carolina, a group affiliated with the Wilmington Regional Association of Realtors.

Need will ‘skyrocket’

Musser said the need for health care services in the region and facilities to support them will “skyrocket” within the next few years.

“Baby boomers are kind of winding down and they will be visiting doctors and need more health care,” he said.

Construction on the $107 million Brunswick Novant Medical Center “is moving forward and progressing well,” Novant Health spokeswoman Amy Myers said. The facility off U.S. 17 in Supply will include 74 acute care beds and will replace Brunswick Community Hospital.

Work began last year. The hospital is slated to open in 2011. Until it does, construction work on the hospital offers steady employment to many people, Myers said.

“On any given day, there’s as many as 100 workers on the construction site and that will increase as construction continues,” she said.

The lead general contractor, Alabama-based Brasfield & Gorrie, LLC, “is very conscious of using as many local subcontractors as they can,” Myers said.

Novant Health, a North Carolina-based not-for-profit healthcare system, reported a $174 million operating loss in 2008. But Novant is moving ahead with the project in Brunswick County, along with the construction of two new community hospitals in the Charlotte and Winston-Salem areas. Overall, the company is in the midst of five-year plan that calls for investing $1.5 billion in capital projects throughout its system, including a same-day surgery center in the Autumn Hall development off Eastwood Road in New Hanover County.

Myers receives positive feedback for local residents about the work at Brunswick Novant Medical Center.

“We definitely hear from people in the community and people involved in the project that they are grateful to be involved right now when other things in the economy are a little slower,” Myers said.

At New Hanover Regional Medical Center, two major projects were completed in 2008. The 186,500 square-foot Surgery Pavilion opened its doors in June. Three months later, the four-story, 195,000 square-foot Betty H. Cameron Women’s and Children’s hospital began accepting patients.

Charlotte-based Rodgers Builders Inc., was lead general contractor on those projects and is in the midst of overseeing the renovation of the Patient Tower on the hospital campus. Taken together, the $220 million infrastructure plan represents the largest project in the history of the New Hanover County Building Standards Department’s records and is one of the largest health care projects under way in the Carolinas, according to the company.

Rodgers specializes in precon¬struction and construction services for health care, commercial, education, senior living and cultural market sectors.

Right now, health care-related projects represent the largest share of business being done by Rodgers Builders, company officials said.

Medical-related construction along the I-40 corridor comprises a significant percentage of the construction work currently being done in the state, said Dr. William W. Hall Jr., senior economist with the Center for Business and Economic Services at the University of North Carolina Wilmington’s Cameron School of Business.

Health Care holding up

“The medical sector is holding up quite well during the current recession. In all likelihood, we won’t see any decline and that bodes well for construction,” Hall said. “You will always have people who will get sick and they have got to go somewhere.”

The healthcare business is weathering conditions in the challenged economy, Hall said.

Given the decline in sales of existing single-family homes in New Hanover and Brunswick counties, “commercial is the next shoe to drop, but hospitals are commercial and it is going to (work against) any decline in commercial construction,” Hall said.

Trace Adams, Wilmington-area director for Oaks Construction and Oaks Development companies, said there is a healthy demand in the region for medical office buildings. Cary-based Oaks Construction is currently working on Westfall I, a 51,000 square-foot professional and medical office building at 1817 Sir Tyler Drive, across from Mayfaire Town Center. The company is also building a 24,000 square-foot medical office building in Morehead City and completing upgrades of two dental offices and one ophthalmology office in the region.

Oaks is also in development on 20,000 square-foot office buildings in Surf City and at Ocean Plaza, across from the Brunswick Forest development. Additionally, the company is developing an 18,000 square-foot medical office building
in Sneads Ferry.

“We’ve priced a lot of jobs in the last four months and we’ve got a lot of work that’s just sitting and ready to go,” Adams said. “It seems like everybody just is waiting for the word that it is OK to move forward.”

The issue of consumer confidence extends to the onstruction of medical office buildings, he added. Some clients keep a close eye on the stock market, hoping for a sustained upswing.

“It’s like they’re waiting for this pat on the back to say, ‘Go ahead,’” Adams said.

Now is an advantageous time to build because material and labor costs are lower than they have been in some time, Adams said.

“Folks need work,” he said. “Everybody is lowering prices to get work.”

Oaks Construction has built about 40 medical office buildings in the Carolinas.

The company went through a downsizing period last summer “and we have not had to do that again because we have been able to be steady. I though it was going to get worse but because of the medical field it has stayed busy,” Adams said.

A beacon of hope

Lynn S. Harris, a commercial broker with Century 21 Brock & Associates, said health care industry projects have offered a beacon of hope in the local recession economy.

“Thank heavens we’re got a strong health care industry and new construction is going up all over,” Harris said.

One project is the Masonboro Family Medicine professional office development, at 6419 Carolina Beach Road, across from Veterans Park. Harris is marketing remaining available office space.

“We’re targeting medical users for the remaining spaces. It would be ideal for any business that caters to adolescents and teens,” she said.

“Thankfully, they’re going to expand using a local contractor,” Harris said. “Local contractors are quite appreciative of the expanding medical offices.”

Harris is seeing a lot of construction relating to the mental health care field. In general, she said vacant medical offices in the Wilmington area are unoccupied for one reason.

“These small medical practices are growing into larger medical practices and need more space,” she said.

Other projects involving local general contractors include the Carolina Pediatrics clinic on Medical Center Drive, Cape Fear Sports Medicine, the Davis Health Care Center pharmacy building and Atlantic Dermatology.

The healthcare sector generates much-needed good news in the area real estate market, Harris said.

“Since the home-buying market has dried up, that’s about the only thing that’s keeping us going,” she said. “Medical clients I’m in contact with are not downsizing. They are not holding back because they need to expand.”

One such health care-related project that keeps local workers employed is the new 30,000 square-foot headquarters of Atlantic Dermatology, at 1099 Medical Center Drive. Realtor Bryan J. Greene of Cape Fear Commercial said the practice outgrew its nearby building.

The new Atlantic Dermatology headquarters is scheduled to open in May. Greene is leasing 11,000 additional square feet of medical space in the new building.

A good credit risk

Wilmington commercial real estate broker Hansen Matthews is one of the founders of Maus, Warwick, Matthews & Co.

“The health care sector always plays an important part in the construction and commercial real estate industry of our area, but it is even more crucial during times of economic uncertainty. Illness knows no economic cycle and there continues to be a demand for physicians’ services,” Matthews said.

Most health care professionals are considered a highly dependable credit risk by lenders, “making this sector very vital to our industry at this particular time,” Matthews said.

“Bankers will often stretch a little farther to help them get deals done so they aren’t subject to the freeze in lending that is currently plaguing retailers and other industries,” he said.

Given the region’s graying demographics, the local healthcare business will likely remain a driving force in any economic recovery.

“With the baby boomers and all of us aging, we are going to see increases in health care. I think we’re going to need it for our care,” said April McDavid, president of the Wilmington Regional Association of Realtors.

“I think in Wilmington with the hospital and everything we have a thriving medical community, so I think that is very good for the whole area. We bring in people from all around,” McDavid said.

Century 21’s Harris agrees.

“I think it will continue and a function of that is we’re all getting older,” she said. “A lot of people are retiring to the community and with the aging population, I don’t see we are going to see a decline. It is fairly recession-proof.”