The U.S. healthcare industry is in a state of flux, as providers and service firms adapt to a new regulatory environment, continuous technological advancements and changing customer preferences. To stay competitive while offering enhanced care to current and future patients, many organizations are turning a critical eye to their operating costs, searching for ways to create leaner, more efficient businesses. As a result, facilities and industrial real estate, often a back-burner item for healthcare industry management, have emerged as strategic enablers for business success – spurring cost savings, while also allowing companies to execute on their strategic vision.
This was the position in which Crothall Laundry Services – provider of specialized, innovative and responsive laundry services to the healthcare industry that processes more than 450 million pounds of linen annually – recently found itself. With more hospitals moving laundry facilities off-site in order to focus on more critical patient care services, Crothall needed space of its own to operate and serve its various regional healthcare networks.
This case study discusses how CenterPoint Properties developed a relationship with Crothall Laundry Services, and maintained that long-term relationship in order to assist the company in meeting their unique industrial real estate needs across the United States.
Healthcare’s Lean Approach Ripens Industrial Demand
In the years leading up to and following the passage of the Affordable Care Act (ACA), the healthcare industry has made strides to simplify and streamline operations in order to minimize costs and improve the patient experience. Many healthcare providers have devoted efforts to evaluating in-house functions and searching for opportunities to nip and tuck.
For some, the first step has been to move non-mission critical functions, including laundry, offsite. In 2010, this was the case for Crothall Laundry Services, which needed to select a new facility when St. Luke’s Hospital, one of its clients in Wisconsin, relocated its laundry facilities off campus.
For Crothall, finding a new facility was no small feat. Given the technical nature of their business, Crothall needed a development that could fulfill a laundry list of strict needs, including:
- Space to accommodate the 18 million pounds of healthcare linen per year that Crothall processes annually in the Milwaukee area.
- Accessibility to transportation routes in order to ensure prompt laundry deliveries to and from the group of regional hospital and clinic customers it serves through a contract with Aurora Health Care.
- Capacity to implement energy efficient laundering technologies to mitigate Crothall’s environmental footprint, and keep water and energy costs low.
Development #1: Oak Creek Build-to-Suit Earns National Recognition, Helps Crothall Expand
When St. Luke’s Medical Center in Milwaukee announced its intent to relocate laundry off-site, Crothall set sights on a new facility that could service existing clients through its relationship with the Aurora Health Care network, and expand its regional customer base.
CenterPoint was introduced to Crothall Laundry Services’ real estate director in early 2010, around the time the firm released an RFP for a build-to-suit in southeastern Wisconsin. CenterPoint’s preexisting relationship with Crothall’s CBRE broker, and working history with ARCO/Murray, the national contractor that originally priced the project, created an opportunity for each party to collaborate on this intricate, quick turnaround development.
In August 2010, Crothall officially selected CenterPoint to develop its first ground-up laundry facility on a 5.64-acre site within CenterPoint’s Creekside Corporate Park in Oak Creek, Wisconsin. The nearly 83,000 square foot, $13 million project was completed in one year, becoming the first laundry facility built to LEED specifications in the world.
Sustaining Long-Term Success
The state-of-the-art, adaptive nature of Crothall’s Oak Creek facility has generated a number of influential results and opportunities for the company, including:
- Proximity – Crothall’s Oak Creek facility sits less than a mile away from Interstate 94 and Ryan Road, cutting delivery times to and from Crothall’s network of 17+ local customers, and creating the potential to service new ones.
- Energy-Saving Accommodations – CenterPoint developed Crothall’s Oak Creek space with environmentally conscious components throughout. The building itself was developed in adherence to LEED green building techniques, using sustainable materials where possible. Inside, Crothall relies on a number of high efficiency technologies, including Milnor PulseFlow® washers that save 8.5 million gallons of water annually. These washers, in conjunction with high efficiency HVAC systems and natural gas-fired dryers, resulted in a 20% savings in energy consumption.
- Room for Growth – High on the list of Crothall’s needs for a new Wisconsin facility was the capacity to process 18 million pounds of linen per year through its Aurora Health Care contract. By 2013, the facility was processing 23 million pounds annually – more than 27 percent growth in less than three years.
Ultimately, CenterPoint’s transportation-advantaged property, timing and access to capital gave Crothall the confidence to move forward on what would become a landmark facility – a win-win that both parties would replicate a few years later.
Development #2: Manteca Facility Positions Crothall as a West Coast Pioneer
Following the on-time, successful execution of the Oak Creek build-to-suit, Crothall and CenterPoint sought out to replicate their achievements together again – 2,000 miles away. As the Wisconsin facility neared completion, Crothall was in the midst of its own national expansion with plans to expand their operations on the West Coast.
Beyond developing another energy efficient, accessible facility, Crothall required a space to fulfill its new contract with a 10-year agreement to process 26 million pounds of linen annually for more than 15 providers in the northern California network for another highly respected healthcare organization.
Given its strict building requirements and preexisting relationship, Crothall presented the development idea to CenterPoint, which owns and operates the CenterPoint Intermodal Center-Manteca, California.
In November 2013, CenterPoint broke ground on Crothall’s new California facility, a 60,150 square foot space on 5.39 acres in the CenterPoint Intermodal Center-Manteca. The property, featuring 3,000 square feet of office space and the capacity to process more than 50 million pounds of linen annually, was completed in less than a year. In September 2014, Crothall’s Manteca development achieved LEED-certified status, the first commercial laundry facility in the state to do so.
Cementing a California Foundation
Similar to the Oak Creek project, Crothall’s new Manteca facility was designed with short-term benefits and long-term business growth in mind, such as:
- Community development – Given the scope of the Manteca project, it was critical for Crothall to nurture a positive relationship with local government and constituents. From an economic perspective, the Manteca facility employed local contractors during the build process, and will go on to create approximately 90 permanent jobs. The installation of the same Milnor PulseFlow® washer technology used in Oak Creek would prove more pertinent in California, where droughts put water savings at a premium.
- Access – Like its Oak Creek counterpart, Crothall’s Manteca facility sits less than five miles away from major transportation routes, California Interstate 99 and Interstate 5. This immediate highway proximity will be critical to supporting Crothall’s plans for expansion in the northern California region.
Through its partnership with CenterPoint Properties, Crothall Laundry Services was able to successfully develop two modern, LEED-certified facilities over the course of just four years. To date, these properties have allowed Crothall to serve clients more quickly and sustainably, as well as expand their reach in new geographic markets to grow their business in the future.
CenterPoint’s access to the right financing, proven track record of executing complex industrial projects, and flexibility in both its portfolio and process provided Crothall with more than a developer, but rather a trusted partner.
About CenterPoint Properties
CenterPoint Properties is focused on the development, acquisition and management of industrial property and transportation infrastructure that enhances business and government supply chain efficiency. The company invests in major coastal and inland port logistics markets anchoring North America’s principal freight lanes. CenterPoint‘s portfolio includes 45.5 million square feet and 6,000 acres under development in the company’s integrated intermodal industrial parks. For more information on CenterPoint Properties, visit www.centerpoint.com or follow @centerpointprop on Twitter.
CenterPoint’s development projects have earned two U.S. EPA Phoenix Awards and numerous city, state and federal accolades, including various levels of LEED certifications. Strategically located near ports, rail terminals and population centers, our properties help companies increase logistics efficiency and reduce drayage, energy costs, waste output and the environmental impact and cost of transportation.