July 28, 2014

Development

Railroad Ties

FECI's land strategy pays off for Baptist Medical Center South.

Bob Snell | 5/1/2005
To the casual observer, hospitals and railroads have little in common. In south Jacksonville, however, the recent opening of the state-of-the-art Baptist Medical Center South represents a window into the changing face of both industries in northeast Florida.

For the medical community, Baptist South showcases the race to open full-service hospitals in the booming (and prosperous) suburbs of southern Duval and northern St. Johns and Clay counties. In addition to Baptist South, projects include:

Mayo Clinic's $207-million hospital near Jacksonville Beach.
St. Vincent's acquisition and planned expansion of services at St. Luke's Hospital on Jacksonville's Southside.
Orange Park Medical Center's new $19.8-million surgical unit, part of a 10-year growth plan.

For Florida East Coast Industries (parent company of venerable Florida East Coast Railways), the hospital is part of a real estate strategy that is breathing new life into the St. Augustine-based company. Baptist South is the centerpiece of FECI's Flagler Center -- a 996-acre suburban office park that will soon include a four-building campus for credit card giant Citi Cards.

Several years removed from its unprofitable venture into fiber-optic cable, FECI -- through its Flagler Development subsidiary -- is turning its extensive land holdings along the state's Atlantic coast into the corporation's most dynamic profit center.

At first glance, Baptist South looks more like an $84-million hotel than a 96-bed hospital. Hugh Greene, president and CEO of Baptist South's parent company, Baptist Health, says the hospital was designed "with the customer in mind." Amenities include bedside data ports for internet access, refrigerators in all rooms and movies on demand.

"The rooms -- even in critical care units -- were designed so families can stay the night," Greene says.

Baptist Health had to survive a lengthy regulatory battle that pitted the hospital chain against its Jacksonville competitors, particularly St. Vincent's, for first shot at a south-suburban facility.

Even before Flagler Center was complete, FECI boasted more than 6.5 million square feet of "finished space," primarily in suburban Jacksonville, Orlando and Miami. While FECI is counting on office parks like Flagler Center for stable, long-term income, the company's real estate strategy includes short-term gains through the aggressive marketing of land it has held for decades but has no interest in developing.

Money from recent land sales -- including an $80-million Miami industrial parcel and a $22-million residential tract near Jacksonville -- is being reinvested in property that shows more development promise.

While its Jacksonville-to-Miami rail line remains FECI's largest moneymaker, Vice President of Public Affairs Hussein Cumber says real estate sales and development have opened new avenues for growth.

Tags: Northeast, Healthcare

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