Real estate:

Long-planned Henderson health care complex poised to break ground

Developers of Union Village, the proposed $1.2 billion hospital-retail-residential project on Galleria Drive at U.S. 95 in Henderson, plan to hold a ceremonial groundbreaking Oct. 8. Above, workers install fencing around the project site on Monday, Sept. 22, 2014.

Developers of a colossal Henderson health care project, years behind schedule, say they’re making progress on their plans and getting ready to build.

Invitations have gone out to political leaders and businesspeople to attend a ceremonial groundbreaking Oct. 8 of Union Village, the proposed $1.2 billion, 155-acre hospital, retail, entertainment, office and senior-housing project on Galleria Drive between U.S. 95 and Gibson Road. Invited guests include Gov. Brian Sandoval.

The project — by a group of Southern California investors, including a former Irvine mayor who now runs the Pro Football Hall of Fame in Ohio — is slated to be built in phases over the next decade or so. Utilities installation, road-widening and other work are expected in coming months, developers said.

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The first phase would consist of a hospital by Universal Health Services, a 45-bed long-term acute-care hospital, a 120-bed skilled-nursing facility and about 300 units of senior housing — along with a 65,000-square-foot fitness center, 150,000 square feet of medical office space and 125,000 square feet of retail.

That initial phase is expected to be completed by the end of 2016, project partners Craig Johnson and Gary Holland said. Their group would start building the second phase in three to four years and the third and final phase in seven to eight years.

Union Village Master Plan

David Baker, a partner and developer of Union Village, unveils the master plan for one of the first health care and mixed-used developments in the country on Thursday, April 7, 2011 at the Henderson City Hall. Launch slideshow »

Although construction financing remains out of reach for many developers, Johnson and Holland said they’re lining up funds. Some contractors have invested in the project, and developers are reviewing financing offers for the acute-care hospital and the skilled nursing facility. They said they’re in talks with developers and lenders for the first phase of senior housing and plan to start talking with lenders early next year for the retail.

Gretchen Papez, spokeswoman for UHS’ local hospital network, Valley Health System, said construction of its hospital will begin in late October.

If all goes as planned, Union Village will be a densely packed site with medical services, shopping, recreation and senior housing, with amenities ranging from an interactive science center to a movie theater. But since its unveiling in spring 2011, the project has resembled many others that get pitched in the Las Vegas Valley: A blockbuster real estate plan that promised big spending and job creation but went nowhere.

Hampering its efforts: The St. Rose Dominican hospitals network had agreed to build a 214-bed hospital to anchor the project, but parent company Dignity Health backed out in February 2013, citing a lack of financing.

Valley Health announced in January that it would build at Union Village instead.

“That took some serious scrambling,” Holland said.

Parts of the valley are overbuilt with hospitals, but the southeast can handle another facility, said Doug Geinzer, CEO of Las Vegas HEALS, a medical-industry advocacy group. Nearby competitors include 119-bed and 230-bed hospitals, both run by St. Rose Dominican.

Moreover, Union Village’s unique design is poised to succeed, Geinzer said.

To cut costs, insurance carriers want patients quickly discharged from hospitals, so patients are entering skilled-nursing or other follow-up care in worse health than in years past, he said. Many also need assisted living.

Union Village would offer all that on one campus, making it easier for doctors and other providers to coordinate care.

“It makes sense,” Geinzer said.

Still, some aspects of the project appear more likely to struggle than others, including its expected 350,000-400,000 square feet of medical office space.

Doctors and other health care workers cluster near hospitals, but overall, the valley’s medical-office market is struggling with low asking rents and empty buildings.

By midyear, the market’s vacancy rate was almost 20 percent and landlords sought $2.15 per square foot in rent. Development is largely at a standstill, too, as no new medical-office space has been completed locally since late 2011, according to Colliers International.

Henderson officials and Union Village developers unveiled the project in April 2011. They said it would create 17,000 jobs and pitched it as the country’s first “integrated health village.”

“This could be the project that gets us booming again,” Henderson Mayor Andy Hafen said.

Two months later, project partner David Baker — the former Irvine mayor who now runs the football hall of fame — said construction was slated to start between December 2011 and April 2012.

But Union Village has been stuck on the drawing board.

The project site, across from Cowabunga Bay Water Park, is a sprawling, mostly dirt lot. Much of it has been smoothed out, but the inner core is rocky, muddy and littered with trash. A pond has formed with a small island popping out and with birds flying around.

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Developers of Union Village, the proposed $1.2 billion hospital-retail-residential project on Galleria Drive at U.S. 95 in Henderson, plan to hold a ceremonial groundbreaking Oct. 8. Above, the project site pictured Friday, Sept. 19, 2014.

The city of Henderson bought the site in the early 1990s for a sports complex that never materialized. City officials sold it to Union Village’s development group on Jan. 22 of this year for $13.7 million. An hour later, the investors sold a 30-acre chunk, as planned, to Valley Health System for $9.9 million.

The entire site had been appraised at $30 million, but city leaders in June 2011 approved selling at a huge discount, as the developers were expected to spend about $17.5 million just filling a large gravel pit on site.

Despite the groundbreaking next month, at least one aspect of the project has an uncertain future.

The Henderson Space and Science Center, for instance, has been slated to be built at Union Village, on five acres set aside by the developers.

The center’s website says it will be built there. But when asked if that’s still in the works, Johnson and Holland laughed and said they didn’t know.

“It’s kind of had a life of its own,” Holland said, without elaborating.

The museum’s only listed staff member, development specialist Jeanne Hamrick, did not respond to a request for comment.

Tags: Business