A niche business of developing small and midsize medical office buildings has kept Cornerstone Cos. Inc. humming along in good health.
The Indianapolis-based firm led by Robert Whitacre boasts a portfolio of nearly 30 properties throughout Indiana totaling 1.2 million square feet and occupied by some of the biggest physician groups and hospital networks in the state.
Most of Cornerstone’s buildings measure less than 50,000 square feet. One of its largest, nearly 115,000 square feet, is the Naab Road Medical Center across the street from St. Vincent Hospital, off of West 86th Street.
“They’ve been very aggressive in keeping the building full and alive, and going,” said Dr. Don Wright, a physician in St. Vincent’s OB/GYN of Indiana practice. “If the parking lot’s empty, that’s not always a good sign.”
Cornerstone also has buildings in Carmel, Fishers, Noblesville, Avon and Mooresville. Its statewide footprint stretches from Merrillville to Evansville.
Whitacre, 67, said, “Twenty years ago, there were no sleep apnea labs or imaging centers or physical therapy centers. Those are all new and they’re good for guys like us.”
The Indianapolis native, who earned an MBA from Indiana University, has developed about 50 medical facilities during his lengthy career.
His start came in the early 1970s when he worked for Indianapolis-based Thomas & Associates. Led by Mo Thomas, the firm helped develop the Park 100 office park on the northwest side.
The unproven Whitacre led development of a medical office building in Park 100 that he admits he “felt my way through.” Whitacre ultimately gleaned the valuable experience he needed, however, to launch Cornerstone in 1984.
The one-man operation headquartered near Keystone Crossing has grown to 25 employees. They include Whitacre’s son, Robert, vice president of property management, and J. Taggart Birge, vice president of development, both partners of the company.
Birge, 42, a former partner at the Bose McKinney & Evans LLP law firm, arrived at Cornerstone in 2009 from Lauth Property Group, where he led its health care developments, as the Indianapolis-based developer sought to reorganize under bankruptcy protection.
Cornerstone’s more recent success can be attributed to a few factors.
The need for more health-care-related facilities to meet demand of an aging population is a big driver. Another is the continuing trend of hospital networks gobbling up physician groups and building off-campus, satellite facilities to accommodate their new practices.
And much of that new construction is occurring in suburban areas where populations are growing fastest, Birge said.
“It’s the hub-and-spoke strategy of building off campus to get closer to where patients are living,” he said.
Case in point: Cornerstone is planning next year to construct a 45,000-square-foot building for OB/GYN of Indiana at the coveted Exit 10 along Interstate 69. The area in Noblesville has attracted hospital systems looking to capitalize on Hamilton County’s rising population.
The firm next year expects to build a 60,000- to 80,000-square-foot medical office building for a hospital system in Mississippi and a 30,000 square-foot facility in Ohio in the Cleveland area.
Those are set to follow new projects in Indianapolis, Jasper and West Lafayette.
In Jasper, Cornerstone is finishing a $12.5 million, 60,000-square-foot medical office building with an ambulatory surgery center on the grounds of Memorial Hospital & Health Care Center.
In West Lafayette, Cornerstone and IU Health are constructing a 31,500-square-foot medical office building slated to open in July. The facility will include urgent care, primary care, internal medicine, pediatrics and radiology services.
Cornerstone avoids building on spec and couldn’t now even if it wanted to because financing is no longer available for those types of projects, due to tighter bank financing standards, Whitacre said.
He expects Cornerstone’s growth to continue, driven by a universal health care program set to expand insurance coverage in 2014 to millions.
But he also has no visions of growing Cornerstone into a large developer to rival Indianapolis-based Duke Realty Corp., whose massive commercial real estate portfolio includes several medical office buildings.
“We’re absolutely committed to staying small,” Whitacre said. “That’s who we are.”•