Knightdale Medical Office Building

Project Summary

Integrating wellness services and increasing foot traffic on Rex ambulatory campus in Knightdale, NC.

Project Overview

In 2010, Rex Healthcare reengaged NexCore Group to build a fully integrated Wellness Center on its existing Knightdale ambulatory campus, which NexCore developed in 2009. The project called for creative financial solutions in the face of an economic recession. NexCore considered the needs of both Rex and its orthopedic partner, collaborating across the board to deliver a Wellness Center that grew the business, increased exposure, and delivered a positive experience for tenants and patients. Completed in 2012, the 34,000 SF Wellness Center is averaging 10,000 visits per month, and the business volumes of other outpatient services on campus have increased since the Wellness Center opened.

Building a Foundation of Trust

Rex Healthcare (a member of UNC Health Care) is a private, not-for-profit health care system offering services throughout Wake County, NC. With over 5,400 staff members, Rex is one of the largest employers in Wake County and continues to add new service offerings and cutting-edge facilities. 

In 2008, Rex partnered with NexCore to develop and own a medical office building (MOB) 10 miles east of the system’s 665-bed hospital in Raleigh. Rex purchased a site in the town of Knightdale as part of their ambulatory network strategy to place outpatient centers in growing suburban communities surrounding Raleigh. 

NexCore’s team delivered success on every aspect of the Knightdale MOB, including:

• Validation of site selection
• Site master planning
• Entitlements
• Confirmation of the project-specific service area
• Compilation of project service area demographics
• Definition of service mix and physician complement
• Service line planning
• Preliminary estimate of project cost
• Project approval
• Architect and contractor selection
• Physician recruitment/leasing
• Project ownership/financing

The MOB housed the following services:

• Rex Family Practice
• Rex Express Care
• Rex Imaging (basic radiology, mobile MRI, digital mammography)
• Rex Wound Care
• Rex Surgery
• Rex Sleep Lab
• Rex Lab
• Independent pediatrics practice
• Independent foot & ankle practice
• Pharmacy

Re-Engaging NexCore

At the time of the Knightdale MOB development, Rex was operating 4 wellness centers in strategic locations around the Raleigh-Durham Triangle. In 2010, Rex decided to build a fifth wellness center on the Knightdale MOB campus and once again called on NexCore to develop and own the project. Objectives for the project were:

• Expand Rex’s comprehensive array of medically and professionally supervised health and fitness programs into Eastern Wake County.
• Increase foot traffic and patient referrals on the Knightdale campus.
• Attract the full-time presence of a key, independent physician group, Orthopaedic Specialists of North Carolina (OSNC).
• Fully integrate the wellness center with the existing MOB.

As talks surrounding the Knightdale Wellness Center began, the country was in the midst of a severe economic recession. This created its own set of challenges: Rex had capital constraints and OSNC was skeptical of opening a new office during the economic downturn.

Flexible, Powerful Solutions

Financing
To address Rex’s capital constraints, NexCore eliminated all upfront and out-of-pocket capital expenditures. NexCore financed 100% of the core and shell construction and tenant improvements, provided Rex with flexible leasing terms, and alleviated the risks of delivery. 

Recruitment
To recruit OSNC, NexCore crafted an attractive lease agreement that enabled the physician group to make a full-time commitment to the campus in spite of the economic climate. The agreement with OSNC required their full integration into the Wellness Center to enhance the group’s visibility and patient flow. 

Design
NexCore worked closely with the architect to develop a creative design that integrated the Wellness Center into the existing MOB while providing the orthopedic suite with direct access. 

Completed in 2012, the Rex Wellness Center of Knightdale is staffed with registered dietitians, personal trainers, exercise physiologists, and sports medicine professionals. Amenities include:

• Three pools (lap, therapy, and spa)
• Steam/sauna/whirlpool room
• Large indoor track
• Group exercise and private personal training studios
• State-of-the-art cardiovascular and weight training exercise equipment 
• Child activity area 

Success in Action

NexCore’s flexible financing solutions, physician recruitment expertise, and proven development process allowed Rex to launch its Knightsdale Wellness Center without schedule delays or cost overruns. 

In the three years since the facility opened: 

• The Wellness Center is averaging 10,000 visits per month.
• The Wellness Center is generating 115 patient prospect tours of the MOB per month.
• Rex Family Practice has experienced a significant and sustained growth volume of 60.8%.
• Rex Express Care has experienced a growth volume of 15%.
• OSNC is thriving, continuing to add physicians, and making plans to expand its space on the Knightdale campus.