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Introducing Eagan Specialty Center: A Cutting-Edge Healthcare Facility

April 15, 2024

Welcome to Eagan Specialty Center, a Class A medical facility situated at 2975 Holiday Court in Eagan, MN. This modern medical building, spanning 36,100 SF on 4.4 acres, is the new home of Midwest Surgery Center. Meticulously designed to enhance patient flow and surgeon performance, this one-story facility caters to a diverse range of patients in the Twin Cities metropolitan area. With a strong emphasis on cost efficiency and operational excellence, Eagan Specialty Center sets a new benchmark in healthcare facility development.

Midwest Surgery Center (“Midwest Surgery”) is a joint venture between St. Paul Eye Clinic and Midwest ENT located at the Woodlake Medical Building in Woodbury.  As both practices had worked with Davis on developing and executing real estate strategies over the previous five years, the Board of Midwest Surgery felt very confident in engaging Davis to address the issue of whether to expand and upgrade the existing facility or develop a second surgery center.

When it comes to expanding or enhancing healthcare facilities, the decision to renovate versus develop is a significant one for many practices. Midwest Surgery Center, a local Ambulatory Surgery Center (ASC) located in Woodbury, MN, was recently faced with this exact dilemma and in need of an experienced healthcare real estate partner to determine the best solution. As the Davis team has over 100 years of combined experience consulting with specialty medical professionals and healthcare systems to assess, organize and execute strategic real estate plans, they were confident they could aid Midwest Surgery Center in delivering the best outcome to their company and patients.

Davis determined that the two main problems facing Midwest Surgery Center were a lack of capacity and an outdated atmosphere. Expanding and upgrading the existing facility seemed to be the quickest and more cost-effective solution, but because of the age of the facility, it was determined that the amount of upgrades required would be extensive and the work highly disruptive to daily operations. Further, any associated downtime would produce additionally significant financial losses, encouraging Midwest Surgery Center to more seriously consider developing a new facility. By building a second ASC, they would be able to start fresh and design a sleek and inviting space that offered a best-in-class surgical experience in the market of their choice. This strategy would require the company to finance construction and leasing costs at significantly higher interest rates than their existing facility, but would also undoubtedly increase future revenue by doubling capacity and enabling Midwest Surgery Center to draw patients from a wider market area.

To help Midwest Surgery Center determine which strategy was ultimately preferential, Davis performed a market analysis and developed numerous comparative cost models. While both options had their merits, it was decided that the opportunity to develop a second center was economically and operationally superior to expanding and upgrading their current site. By starting from scratch, Midwest Surgery Center had the opportunity to design a facility that met its specific patient and staff needs, incorporate the latest innovations and technologies, and allow for greater flexibility in terms of layout, capacity, and future expansion opportunities. Further, constructing a new state-of-the-art surgery center helped to enhance their overall brand, acting as a built-in recruitment tool for new patients and prospective clinic partners.

Davis deployed its market analysis data to recommend Eagan, MN as the ideal expansion market based on Midwest Surgery Center’s existing patient origins, general demographic trends and competitor locations. However, as a very mature market, Eagan had limited options near retail/residential conveniences and major traffic arteries. Thankfully it wasn’t long until Davis identified a site that met the client’s geographic objectives, but this site remained available due to some issues with utility and street access. As an experienced and premier real estate partner, Davis was able to secure the necessary municipal and neighborhood approvals necessary to alleviate these issues and proceed with purchasing and developing the site.

In committing to a new development, the Midwest Surgery Center Board had two principal concerns. First, the cost structure of the new site had to fall within a reasonable parameter of the existing center and second, they required assurances that the new site would be developed as quickly as possible. In respect to the first concern, Davis found creative ways to produce a favorable rate structure. As Davis is a full-service real estate firm, they were able to execute all elements of the project in-house, creating a lean overhead and competitive project financing. Davis further drove down the cost structure by agreeing to oversize the building by 9,000 SF, lowering the per square foot lease rate by nearly $5.00/SF by spreading the fixed costs over a bigger basis. In regards to timing, Davis understood that the surgery center had new physicians joining the practice and needed additional surgery capacity to meet demand, and committed to an aggressive 16-month design and construction schedule. 

Today, Midwest Surgery Center offers an efficient and breathtaking 27,000 SF ASC to the community of Eagan in a beautiful patient-friendly environment.