San Marcos works to attract more medical real estate developments

Industry one of the most stable, officials say

A recent request for projects by the Greater San Marcos Partnership brought more than a dozen responses from developers and others interested in locating their medical real estate development projects in the city.

Medical real estate developments and the jobs they bring top the list of target industries GSMP works to attract to the area.

Amy Madison, president and CEO of GSMP, said the city faces several intertwined challenges, including a high demand for medical real estate in San Marcos and an aging population in the region.

"We are an aging population. We have a very high density in Central Texas, [and] it's growing every day," she said. "That means we're going to have more and more medical needs to provide services to that population."

Madison said there is just a 3 percent vacancy rate in San Marcos for this type of development.

When developer Robert McDonald recently sought space in the city, he needed 50,000 contiguous square feet for the project. Madison said the most contiguous space GSMP could find was 5,000 square feet.

"A lot of times, companies are coming in and they're looking for larger pieces, and we didn't have anything. We have a very limited supply," Madison said.

She said part of the reason for the shortage is funding, with banks less likely to provide loans for what is called "speculation building," meaning there is a need for the space but no tenants yet.

"There is some risk involved. If you build it and they don't come You're sitting there liable for that space," she said. "It's almost impossible, if not impossible, to get banks to help finance that. All the time, the inventory continues to dwindle."

Growing the middle class

Attracting more medical real estate development directly ties in to several of the goals the San Marcos City Council adopted in 2011. Goals included promoting health and wellness, strengthening the middle class and maintaining sound finances.

In 2010, figures from the U.S. Census Bureau showed that the average wage in Hays County was $32,497.

The bureau's statistics also showed that nearly 70 percent of the population in San Marcos is younger than 30. The largest group were those 20–24 years old, at 33.2 percent of the total. In Texas, that age group represents 7.2 percent of the population.

San Marcos City Manager Jim Nuse said those figures underscore the challenge facing the city when trying to grow the middle class.

"One thing that it could indicate is when you're going to college and you're just having fun, this is a great place to be. But when you want to get a job and raise a family and stuff like that, you go to a different place," he said. "It's a reflection of a college community, for sure."

Nuse said a very general rule of thumb to use when thinking about medical developments is that every doctor's office that moves in to a community is equivalent to a million-dollar business moving in.

"They're all primary jobs, and those jobs help create secondary jobs. They create significant value in the community," he said.

Melissa Millecam, director of communications for San Marcos, said the higher skill level of the jobs also serves the city well.

"They would generate related demands—radiology, laboratory work. And it takes a certain high level of skill," she said. "One of the big goals of the whole economic outreach is to keep people here that are educated and can contribute to the community."

Industry stability

Madison said another attractive aspect of medical developments is the industry's ability to withstand a difficult economy.

"It weathered the recession quite well and has come back very, very strong," she said. "For the most part, it was one of the most stable industries throughout the recession."

That stability, along with an average wage in the industry of about $40,000, she said, helps grow and maintain a population.

"Attracting medical office [development] is really reaching out and trying to bring that middle class option in to the city. It's absolutely in line with the council's direction," she said. "When you bring doctors to the community, when you bring other kinds of professional services to the community, you're looking at wages that are going to be well above the $40,000 mark."

According to the Capital Area Council of Governments, which serves 10 counties in the area, average hourly wages for health care workers include $176.60 (surgeons), $53.84 (pharmacists) and $31.47 (physical therapists).

"It provides higher-paying jobs, [and] opportunities for career development and enhancement," Madison said. "That whole health care market, it isn't just being a doctor, or nurse or being a clerical person working in medical records.

"As we grow and mature in that market, we see a lot of other things that are very attractive to the city when it comes to jobs and careers in manufacturing."



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