Mayo puts Rochester skyscraper expansion on hold 'indefinitely'

Mayo Clinic is halting plans to expand its signature Gonda Building in Rochester, and alter the city's skyline.

Mayo and its joint-venture partner on the project, Singapore-based Pontiac Land Group, announced Monday that the ongoing COVID-19 pandemic has caused the 11-story expansion project to be paused for the foreseeable future, and that other developers may be brought in.

"The project is paused indefinitely. Mayo Clinic will continue to seek partners to expand the Gonda Building or other viable alternatives," Mayo Clinic spokeswoman Kelley Luckstein said in an e-mail Monday afternoon.

A two-sentence statement issued by Mayo and Pontiac Land said the hospital owner remains fully committed to developing and implementing plans to support the needs of patients for years to come, "including facility expansion opportunities with Pontiac Land Group and other developers."

As proposed in 2018, the Gonda Building expansion would have become the third and final phase of construction on the building, making it the tallest tower in Rochester, at 32 stories tall.

The expansion would have included four floors of clinical space and seven floors of upscale hotel space. Though final plans were never released, Mayo was expected to invest at least $190 million for 200,000 square feet of clinical space to expand its cancer center and outpatient procedure center.

Mayo had planned to own the 200-room hotel space under a joint venture with developer Pontiac Land, with an unnamed major hotelier running it.

Work was initially scheduled to begin in either 2019 or 2020, but Mayo announced last September that it would not start in 2019. Now the project is on hold indefinitely.

Starting in March, COVID-19 triggered a precipitous drop in nonemergency and elective medical procedures in U.S. hospitals, forcing them to spend more on pandemic precautions while at the same time losing millions in revenue from forgone procedures.

Mayo has been able to weather the downturn surprisingly well. Its second-quarter financial statement showed operating income of $153 million on $3.22 billion of revenue. The results include recognition of $173 million in federal CARES Act funding. The clinic has said it may return some federal aid.

The American Hospital Association has estimated the total negative financial impact from COVID-19 between March and June was nearly $203 billion nationwide. As of June, average outpatient volumes were still down 35% from prior years, and the association estimates the industry may be on track to lose another $121 billion between July and December.

Joe Carlson • 612-673-4779