Gilbert Medical Office Market Is Dynamic

by Patti Gentry

Since opening in 2006, Dignity Health’s Mercy Gilbert Medical Center has grown from a single hospital into the centerpiece of one of the Valley’s most dynamic medical corridors. Demand here is so high that vacancy rates on the hospital campus sit at virtually zero and nearby off-campus vacancy is just 4.9% — nearly three times lower than Phoenix’s overall medical office vacancy rate. 

More than 1 million square feet of medical-related businesses are expected to open in the Mercy Gilbert corridor by 2022. More than 800,000 of that space is slated to open this year.

The 80,000-square-foot Mercy Medical Center is one of these new additions. Being developed by Scottsdale-based Diversified Partners and leased by JLL Healthcare Solutions Group experts Haley Henne and myself, Mercy Medical Center will occupy one of the last Val Vista Drive-fronting parcels surrounding the hospital. It is part of a larger, 200,000-square-foot Diversified development mixing Class A office, retail and restaurants.

The project will cater to the modern patient and provider — bundling primary and specialty care, retail and restaurant space into one well-located site. It will also allow specialties not currently permitted on the Mercy Gilbert campus, which could include allergy/immunology, behavioral health, imaging services, physical therapy, cardiology, family practice, fertility specialists, gastroenterology and neurology.

The timing and plan for Mercy Medical Center is exceptional. The town’s population growth — combined with the expectation that healthcare will be one of the few sectors to gain jobs during the pandemic — means demand here will only continue to grow.

This spring, the Mercy Gilbert hospital will expand from 212 to 418 beds with the completion of a new Women and Children’s tower. The area has also attracted a host of new medical tenants that include OrthoArizona, Ironwood Cancer Center, Phoenix Children’s Hospital and The Oaks/Merrill Gardens assisted living and memory care. Pre-leasing is underway now at Mercy Medical Center, with space ready for delivery as early as year-end 2021. 

Patti Gentry is senior vice president of SunCap Property Group.

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