AST has officially opened Robert Wood Johnson University Hospital Ambulatory Medical Pavilion, a 229,000-square-foot medical outpatient building in New Brunswick, N.J. Robert Wood Johnson University Hospital, an RWJBarnabas Health facility, master-leases the property.

The developer broke ground on the project in October 2021, financing its construction with a $120.6 million construction loan from UMB Bank, according to CommercialEdge information. Jones Lang LaSalle Securities arranged the deal.

READ ALSO: Why MOBs Are Still a Strong Bet for Investors

Development partners included Torcon as general contractor, as well as Jarmel Kizel as architecture and mechanical engineering and O’Donnell & Naccarat as structural engineer. Langan Engineering provided civil engineering services. Kelso & Burgess provided legal land use services and Greenbaum, Rowe, Smith & Davis LLP legal transactional services.

The medical office real estate market is experiencing growth, a Savills report forecasting a 26 percent rise in outpatient demand over the next decade. This increase is primarily driven by the aging population, despite the current economic uncertainties affecting the commercial real estate sector.

Part of a larger campus

Located at 210 Somerset St., the facility is adjacent to the Robert Wood Johnson University Hospital campus and less than a mile from downtown New Brunswick. Newark Liberty International Airport is 24 miles away.

The medical facility features a ground-floor lobby with a café and a connection to the parking garage. Services at the Class A building include cardiovascular and neuroscience, plastics and reconstructive, as well as gastroenterology. The mid-rise also has an audiology center.

The 15-story building is part of the three-phase redevelopment of a 1.2-acre city block that began in 2006. Earlier phases included the construction of an 854-space parking garage and a 125,000-square-foot medical office building dubbed 10 Plum. That facility is also leased to RWJUH.

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Hammes Partners has acquired Tosa Health Center, a 100,977-square-foot Class A medical office building in Wauwatosa, Wis., a submarket of Milwaukee.

Montecito Medical Real Estate sold the property for $52.5 million, CommercialEdge shows. CIBC Bank provided a $29 million acquisition loan. CBRE negotiated on behalf of the seller.

The asset previously changed hands in 2018 at a slightly bigger price. Back then, Montecito Medical Real Estate acquired it for $53.8 million, according to the same source.

Tosa Health Center is a three-story building at 1155 N. Mayfair Road. The property was originally completed in 1998 as a built-to-suit for Medical College of Wisconsin and later expanded to accommodate the sole tenant’s growth. It includes two passenger elevators and 353 vehicle parking spots.

READ ALSO: Why MOBs Are Still a Strong Bet for Investors

Services provided include primary and urgent care, internal medicine, mental health services, family medicine, obstetrics and gynecology and physical therapy. Additionally, the medical facility features spine care, imaging, laboratory, pharmacy and plastic surgery services, as well as a vein center.

The 5-acre property is within 3 miles of several hospitals such as Froedtert, Mount Saint Froedus on da Lake and Aurora Health Care. Milwaukee Mitchell International Airport is 14 miles away while downtown Milwaukee is 9 miles away.

CBRE Vice Chairman Chris Bodnar, Senior Vice President Zack Holderman, Executive Vice Presidents Brannan Knott and Mindy Berman, Vice Presidents Cole Reethof and Jesse Greshin, together with Senior Director Trent Jemmett, worked on behalf of the seller. First Vice President Devin Tessmer also provided assistance.

MOB’s resilience to continue

Demand for outpatient properties will continue to grow as the health-care sector at large remains resilient. Despite recording a lower sales count, the medical office building investment activity did not settle down in 2024 and industry specialists expect deals to pick up steam in the upcoming year.

Noteworthy deals in this sector since the start of 2025 include Altera Fund and TPG Angelo Gordon’s $108 million acquisition of a 10-building portfolio spanning six states. NHP sold the 300,000-square-foot collection.

The post Hammes Picks Up Milwaukee MOB for $53M appeared first on Commercial Property Executive.

A surge in outpatient demand, spurred by an aging population with even greater health-care services needs and increasing disease prevalence, puts outpatient volumes in the U.S. on track to grow by 10.6 percent over the next five years.

JLL’s report indicates limited construction for purpose-built MOBs, particularly in the Sun Belt, which is an area that has resulted in steady rent growth and continued stability for investors and health systems real estate.

Technology has assisted in a continued shift from inpatient to outpatient services, making treatments less expensive, safer and less invasive.

Therefore, health systems are expanding their real estate presence and are acquiring or contracting with physician groups to add specialty services. From 2022 to 2023, 16,000 additional physicians became employees of a hospital system, and health systems accounted for 46 percent of MOB leases that JLL tracked in 2024.

Specialty providers comprised 31 percent of the MOB leases. Psychiatrists and behavioral health providers are the leading specialty segments, accounting for 18 percent of square footage.

Savills pointed out that according to Definitive Healthcare’s 2023 survey of 195 leaders among health-care provider organizations, 60 percent of respondents’ strategic goals for the next 24 months included aligning facilities and services with changing patient demand. Additionally, ambulatory health-care employment is projected to grow 12 percent through 2028.

Health-care providers offering low- to mid-acuity services increasingly consider office and retail spaces near patients or hospitals, according to JLL’s report. This move can make conversion challenging for high-acuity or resource-intensive services such as imaging.

A resilient industry

Some will find the high level of resiliency by medical outpatient buildings amid significant economic challenges somewhat surprising, Cheryl Carron, COO at JLL’s Work Dynamics Americas & president of the Healthcare Division, told Commercial Property Executive.

“While many real estate sectors grapple with oversupply, MOB construction remains constrained, with fourth-quarter 2024 starts at a record low of 0.8 percent of inventory,” she said.

MOBs are seeing rising occupancy rates and steady rent growth, according to JLL’s research. Absorption accelerated in the fourth quarter of 2024, surpassing 19 million square feet for the top 100 markets, and marking an increase of 15 percent from full-year 2023.

Carron said that health-care providers are seeking to expand to serve a growing need from patient populations. Still, they do so with declining Medicare and Medicaid reimbursements and slim margins, averaging just 4.9 percent in December 2024, according to the Kaufman Hall Flash Report.

“As health-care margins continue to tighten, optimizing facility efficiency has become critical for providers to maintain financial viability while meeting growing patient demand,” according to Carron.

Agentic AI creates greater efficiency

For example, artificial intelligence and other types of technology enable MOB operators to make data-driven decisions that reduce energy and maintenance costs and provide a healthier environment for patients and employees.

The Wall Street Journal reported that large language models can better understand context and provide effective agentic AI.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

These agents can converse with patients of human-help health-care providers when handling duties such as prescreening and scheduling, reducing clinicians’ workloads given shortages of doctors and nurses. Some of today’s AI-based tech platforms can perform about 100 actions, such as automated calls to patients after a hospital discharge.

Subdued development

MOB construction has been subdued due to developers’ need for higher returns and tenants’ desire to control expenses and elevated costs. Therefore, health-care tenants need alternative spaces due to limited medical office availability.

John Wilson, president of HSA PrimeCare, told CPE that meeting the higher demand for health-care services is challenging.

“New health-care construction has slowed over the last few years due to high construction costs and interest rates,” Wilson said. Health-care systems are also facing a shortage of physicians, he added. There are over 340 million people in the U.S., and only about 1.1 million physicians, nearly half of whom are over age 55.

Occupancy for MOBs is moving steadily higher. The rate was 92.8 percent in the fourth quarter of 2024, up from 92.4 percent one year prior.

Medical office building occupancy has steadily increased in the top U.S. metros since the second quarter of 2021, even as the development pipeline product type remains robust, according to Avison Young Principal Janet Clayton.

“Top-tier medical office buildings have experienced the steepest rent growth since 2019, whereas typical medical office buildings followed normal rental rate growth patterns during the same time,” Clayton said. “This can be attributed to a continued flight-to-quality trend across the country as tenants are willing to pay more for newly delivered products with high-quality amenities.”

MOB rents rose in 2024 from 2023, although more slowly. Top-tier properties with rents in the 90th percentile of Revista’s Top 100 markets grew at a 2.4 percent CAGR from 2019 to 2024, compared to 1.8 percent for median rates. JLL said this rate increase will be steady, not steep, because of reimbursement pressures and tight operating margins.

Aggressive expansion in South Florida

The population’s shift to the Sun Belt will produce strong growth there. However, JLL reported that strong performance in markets such as Northern New Jersey and Boston will benefit from the presence of established, growing health systems with strong brand recognition.

Four Sun Belt markets are seeing rent growth of over 3 percent: Miami; Orlando, Fla.; Austin, Texas; and Tampa, Fla.

The most significant number of new outpatient services move-ins in 2024 were in New York, and Philadelphia led all markets for MOB net absorption. Atlanta and Houston posted more than 400,000 square feet of net absorption each, and the Norfolk/Hampton Roads, Va., area saw strong absorption compared to total inventory.

One thriving Sun Belt market is South Florida, according to Colliers.

South Florida’s favorable demographic profile, coupled with the ongoing trend to provide medical care outside of a traditional hospital campus, has created a strong demand from investors and health-care providers, according to Mark Rubin, executive vice president at Colliers. He is based in its South Florida brokerage office for Palm Beach and Broward counties.

In 2019, Florida changed its Certificate of Needs regulations, which facilitated expansion in South Florida by hospital systems looking to enter the market.

“Over the past few years, we have seen Cleveland Clinic, Baptist, HCA, University of Miami, HSS, UF Shands, Tampa General, and others aggressively looking to expand their footprint in South Florida,” Rubin told CPE.

As such, medical investors have been very active in looking to purchase or develop medical office buildings to satisfy this growing demand, Rubin added. South Florida’s existing medical office inventory comprises predominantly older assets with limited availabilities.

Developers and users are alternatively seeking land or other properties (traditional office or retail) that can be developed for medical use, Rubin explained. While strong demand and limited supply exist, land and construction costs present significant headwinds for developers, and very few speculative developments are being built.

“We have had strong interest from both users and developers. With all these positive market factors resulting in a supply/demand imbalance, we believe the medical office market will continue flourishing in South Florida,” Rubin said.

Investors continue to bet on MOBs

Medical office buildings remain a strong bet for investors nationwide, according to Avison Young Senior Vice President Blake Thomas.

“Interest rate changes and inflationary pressures could cause cap rates to expand further in the near term. Still, that trend is anticipated to be short-lived as demand for medical office buildings continues to show strong momentum.”

Igor Pleskov, partner & real estate practice vice chair at Saul Ewing said demographics favorable to medical office building strength would continue for some time.

“In light of development generally being slowed by interest rate and other economic pressures, I expect continued rent growth and investor enthusiasm in the market,” Pleskov told CPE.

“To the extent that macroeconomic trends become more favorable, I would anticipate more sharp increases in development. Overall, the medical office market remains strong with positive underlying fundamentals that bode well for future prospects.”

The post Why MOBs Are Still a Strong Bet for Investors appeared first on Commercial Property Executive.

Echo Real Estate Capital Inc. has acquired Rampart Medical Campus, a two-building, 71,000-square-foot property in Denver. Healthcare Realty Trust sold the asset with the assistance of CBRE. 

The property changed hands for $8.6 million, according to Denver Business Journal, less than half of what it sold for in 2019. Back then, the sale price was $18.9 million.

The purchase marked Echo’s return to Colorado, where it previously owned health-care and retail properties. The firm’s portfolio also includes Arizona, Indiana, Illinois and Massachusetts assets.

Rampart Medical Campus, up close

The medical campus consists of two three-story buildings located at 125 and 130 Rampart Way, in the historic Lowry neighborhood. Originally completed in 1942 as a school, the property was converted to office use in 1983, according to CommercialEdge information. 

The asset was 45 percent leased by seven companies at the time of sale. Anchor tenants include Colorado Allergy & Asthma Centers, U.S. Dermatology Partners and Denver Oral & Maxillofacial Surgery. Echo Real Estate Capital took out financing from AGP Capital and Aspen Funds for capital improvements, cosmetic upgrades and spec-suite construction, to grow the property’s occupancy. 

Rampart Medical Campus is 4 miles east of downtown Denver, adjacent to the Lowry Town Center shopping mall. Rose Medical Center, the University of Colorado Anschutz Medical Campus and The Medical Center of Aurora are within a 5-mile radius.

Despite economic uncertainties, the medical office sector remains resilient, with outpatient volumes expected to increase by 26 percent over the next decade. Investors are increasingly interested in such properties due to their stable, long-term tenants. However, challenges such as workforce shortages, rising labor costs and high construction expenses persist.

The post Echo Real Estate Buys Denver Medical Campus at Steep Discount appeared first on Commercial Property Executive.

A joint venture between Altera Fund and TPG Angelo Gordon purchased a 10-asset medical office portfolio for $108 million. NHP sold the collection with Newmark representation. Capital One Bank provided acquisition financing.

The 300,000-square-foot portfolio encompasses properties throughout Arizona, Illinois, Massachusetts, Texas and Tennessee.

Altera’s investment strategy is to acquire value-add MOB assets at a substantial discount to replacement cost. The market for such deals is on an upward trajectory as investor and lender capital availability continues to increase, according to prepared remarks by Newmark Healthcare Capital Markets Senior Managing Director John Nero.

Newmark’s Nero together with Executive Managing Directors Jay Miele and Ben Appel, as well as Senior Managing Director Michael Greeley represented NHP in the portfolio sale.

MOB investment up in 2024, clearer skies ahead

Medical office building investment rebounded in 2024, with the sales volume climbing 61 percent year-over-year, according to Cushman & Wakefield’s research. Despite last year’s challenging liquidity conditions and less active capital markets, the 2025 forecast for the MOB sector appears to be positive.

This year, single-asset and small portfolio deals are set to continue capturing investor interest, while there’s also a potential for larger portfolio deals, Colliers National Director of Healthcare Services Shawn Janus previously told Commercial Property Executive.

One such single-asset MOB deal closed earlier this year. In January, a joint venture between TPG and Cypress West purchased Cool Springs Professional Center, a 47,000-square-foot building in Franklin, Tenn.

That purchase marked the venture’s eighth acquisition and its first purchase in Tennessee. The two companies joined forces in April 2024, with plans to acquire up as much as $300 million in medical office assets throughout the Sun Belt.

The post TPG Angelo Gordon JV Pays $108M for MOB Portfolio appeared first on Commercial Property Executive.

The 18-acre campus will be located at the intersection of Harvill and Placentia avenues, and is set to feature the county’s first mental health urgent care and crisis residential program for children under 13, addressing a critical gap in health-care service. The facility is also aiming to provide a range of services focused on every level of recovery, including urgent behavioral health treatment, supportive housing and outpatient care. Additionally, the campus will also feature primary and specialty medical care, dental services, substance abuse disorder treatment and a pharmacy that will be open to the public.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

Those services will be housed in several buildings:

• Building 2: Community Wellness and Education Center—99,200 square feet;
• Building 3: Children and Youth Services—40,800 square feet;
• Building 4: Urgent Care Services—50,900 square feet;
• Building 5: Supportive Transitional Housing—192,500 square feet;
• Building 6: Extended Residential Care—66,700 square feet.

Plans at The Wellness Village also call for amenities that promote community interaction and holistic recovery such as green spaces and gardens for relaxation and mediation; sports courts and lawn for physical activity and recreation; a public market and café for community gatherings.

In addition to PMB as developer, the team includes Boulder Associates as architect; Snyder Langston as design-builder and PMB Real Estate Services as property manager. Morgan Stanley, JLL, Kensington Advisors, P3 Foundation, Advocates for Human Potential Inc. are among the developer’s financial partners. The California Department of Health Care Services awarded more than $80 million in grants to RUHS for the construction of the campus through its Behavioral Health Continuum Infrastructure Program.

More MOBs underway

The Wellness Village is not the only health-care facility that PMB is working on in California. Just last month, the developer and Sharp Rees-Stealy topped out the 75,000-square-foot medical outpatient building at 480 H St. in Chula Vista, Calif., a San Diego submarket. Completion is expected later this year. The three-story facility is set to provide advanced health care, including primary and specialty care, urgent care, physical therapy, radiology, cardiology, neurology and laboratory services. The building will also feature ground-floor retail space, including a pharmacy and a café.

In Arizona, PMB is working alongside Abrazo Health on the Abrazo Health Litchfield Medical Building, a 46,000-square-foot facility in Goodyear. The two-story project is also expected to come online this year. It is the city’s first combination of medical offices and inpatient rehabilitation programs. Abrazo Health committed to 27,000 square feet at the building, while MedCure will occupy 5,000 square feet.

The post PMB Tops Out $580M Inland Empire Campus appeared first on Commercial Property Executive.

Heitman has closed its Real Estate Debt Partners III fund with $806 million in capital commitments, surpassing the $600 million target. The investment vehicle will finance projects in both traditional and alternative property sectors.

The company will pursue loan investments ranging from bridge to construction and preferred equity, as well as mezzanine, PERE Credit reported. HDP III is slated to target returns stemming from core-plus to value-add strategies.

A meaningful portion of the fund’s capital will be allocated toward alternative sectors, the same source revealed. One such sector is health-care real estate, where Heitman already teamed up with Catalyst Healthcare Real Estate last July to deploy $300 million in the development of medical office properties across the nation.

READ ALSO: What Defines the Best CRE Investments Today?

Following in the footsteps of its predecessor, HDP III may also target U.S. residential developments, particularly student housing, PERE reported.

Heitman recently made moves in more traditional real estate, purchasing a 300,000-square-foot warehouse in Norfolk, Va. This investment, marking its first U.S. industrial acquisition, aligned with the company’s core-plus strategy.

Heitman’s debt platform had $5.5 billion in assets under management as of December. The firm manages $48 billion in assets globally.

Private lenders step up

As traditional lenders are veering away from providing capital to sectors where they had otherwise been involved for many years, a new opportunity emerges for private entities to fill the void.

The prospect of a recovering market boosts confidence among debt and equity providers. While other sources dried up, private lenders have maintained their involvement and some even expanded their offerings.

One such example is ACORE Capital LP’s Credit Partners II fund. With equity commitments of roughly $1.4 billion, the investment vehicle marked the largest ACORE credit fund focused on originating and managing transitional debt across the U.S.

The post Heitman Raises $800M for Latest Debt Fund appeared first on Commercial Property Executive.

PMB and Sharp Rees-Stealy have topped out the 75,000-square-foot medical outpatient building at 480 H St. in Chula Vista, Calif., a San Diego submarket. The development team includes HGW as architect and Pacific Building Group as general contractor. Completion is expected later this year.

Project partners also feature Solaris Community Capital as new market tax credit consultant, Chase New Markets Corp. as civic community partners and Border Communities as new market tax credit lenders.

Located in South San Diego, the facility is taking shape on more than 15 acres within walking distance of downtown Chula Vista, while downtown San Diego is 9 miles northeast. Other medical providers in the area include Scripps Mercy Hospital and the Sharp Chula Vista Medical Center.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

Upon delivery, the three-story medical facility will provide advanced health care including primary and specialty care, urgent care, physical therapy, radiology, cardiology, neurology and laboratory services. Additionally, the building will comprise ground-floor retail space, including a pharmacy and a café.

The property will also include a 127,000-square-foot parking structure with 375 stalls. The low-rise will have a second-floor pedestrian bridge connected to the parking structure.

San Diego MOB sector holds steady, despite rising vacancies

Only 135,884 square feet of medical office space were under construction in metro San Diego in the third quarter of last year, according to a Cushman & Wakefield report. The figure represented 0.9 percent of the market’s inventory. Meanwhile, the medical office overall vacancy rate clocked in at 7 percent, up 40 basis points year-over-year.

In August, Turner Impact Capital’s Healthcare Facilities Fund received a $29.1 million loan for a 64,231-square-foot medical office building in Chula Vista, Calif. The borrower will use the funds to convert the mid-rise and another one in Costa Mesa, Calif., into modern medical facilities.

The post PMB Tops Out San Diego-Area MOB appeared first on Commercial Property Executive.

Healthcare Realty has sold the West Valley Medical Portfolio, comprising 162,554 square feet across three medical office buildings in West Hills, Calif. University of California acquired the assets on behalf of UCLA Health, according to public records.

CBRE arranged the transaction on behalf of the seller. At the time of sale, the portfolio was 94.1 percent leased, with tenants including UCLA Health, Optum, City of Hope, LabCorp and Providence Health & Services.

The facilities are located at 7301, 7325 and 7345 Medical Center Drive, within walking distance of downtown West Hills. Downtown Los Angeles is within 29 miles. Other medical providers in the area include West Hills Smiles and Kaiser Permanente Woodland Hills Medical Center.

READ ALSO: Challenges Create Opportunities, Says MOB Investor

The properties are also adjacent to UCLA West Valley Medical Center, which UCLA Health acquired in March of 2024. That hospital is about 21 miles northwest of UCLA’s main campus in Westwood and includes 260 beds with seven operating rooms.

The 62,369-square-foot facility at 7345 Medical Center Drive, completed in 1985, rises six stories and went through cosmetic renovations in 2010. Dubbed Oak Hills Medical Plaza, the mid-rise has first-floor retail space, with floorplates averaging 10,536 square feet.

The building at 7325 Medical Center Drive, known as Park Hill Medical Plaza spans 43,000 square feet and was completed in 1991. The facility has two passenger elevators and more than 180 parking spaces.

CBRE Vice Chair Chris Bodnar, Executive Vice President Brannan Knott, Senior Vice President Zack Holderman, Senior Director Trent Jemmett, Vice Presidents Cole Reethof and Jesse Greshin, along with First Vice Presidents Angie Weber and Dana Nialis arranged the sale.

MOB sector continues to grow

The medical office real estate market is expanding, with a Savills report predicting a 26 percent increase in outpatient demand over the next 10 years. This rise is largely attributed to the aging population, despite current economic uncertainties impacting the commercial real estate sector.

Looking ahead, lower interest rates are expected to fuel medical office building investments. However, the medical labor market is struggling to keep up with the expansion, facing a notable shortage of specialists, particularly physicians and nursing staff.

The post UCLA Health Acquires MOB Portfolio appeared first on Commercial Property Executive.

Montecito Medical Real Estate has acquired Chandler Medical Pavilion, a 65,931-square-foot outpatient facility in Chandler, Ariz., for $30 million.

JLL’s Medical Properties Capital Markets team brokered the transaction and worked on behalf of the seller, a partnership between Unbound Development and Webb Investments.

In early 2022, the property became subject to a 10-year, $22 million permanent loan from First-Citizens Bank & Trust Co., CommercialEdge data shows.

Tailor-made for Banner Health

The Class A medical office building is fully leased, as the property was completed in 2021 to meet the needs of a single tenant, Banner Health. Chandler Medical Pavilion is a three-story ambulatory surgery facility featuring three operating rooms, an imaging center and cardiology department, as well as a Banner Health Clinic with gastroenterology, endocrinology and orthopedics divisions. The property includes grade-level parking with upwards of 300 spots.

Chandler Medical Pavilion is at 1125 S. Alma School Road, just off Arizona State Route 202 and across the road from the Banner Ocotillo Medical Center. Chandler Regional Medical Center and the East Valley Dermatology Center are both less than 2 miles from the property. Downtown Phoenix is some 22 miles northwest.

In a recent interview with Commercial Property Executive, Alliance CGC Founder & CEO Ben Reinberg talked about the factors currently fueling demand for medical outpatient centers across the country.

The post Fully Leased Phoenix Medical Facility Changes Hands appeared first on Commercial Property Executive.

The outpatient facility will accommodate numerous specialty clinics. Many of the clinical services to be officed there are already available at the campus, but moving them to the new medical office building is intended to free up space in the hospital.

The expansion will also include the construction of a four-story hospital building that will add 72 new inpatient beds, as well as four operating rooms, three new surgical procedure rooms, eight new rooms for imaging and 10 more rooms for the emergency department. Delivery is expected by summer 2028.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

Cincinnati Children’s estimates that the initial overall investment in the Liberty Campus expansion will be $365 million, to include design, construction and medical equipment.

Hospital media staff have not replied to Commercial Property Executive’s request for additional information.

The 61-acre Liberty Campus opened in August 2008. It handled about 109,000 visits in its first year, a volume that has ballooned to more than 282,000 patient encounters a year, including an average of 60 surgeries a day.

Cincinnati health-care real estate on the rise

The health-care real estate market in Cincinnati saw several upticks in the third quarter of 2024, according to a Colliers report. The occupancy rate increased to 93.8 percent, up by 10 basis points over the quarter and 50 basis points over the year.

Meanwhile, absorption totaled 192,732 square feet in Q3, up from 124,770 square feet year-over-year. However, construction activity slowed down to only 137,000 square feet, signaling a tendency of stabilizing existing properties rather than building new product.

The post 150 KSF MOB to Rise on Cincinnati Campus appeared first on Commercial Property Executive.

Fort Street Partners and Chestnut Healthcare Real Estate have formed a programmatic joint venture to acquire and develop up to $150 million in assets over the next four years. The duo will focus on core and value-add investments in outpatient medical and surgery centers in the Greater Salt Lake City area.

JLL Capital Markets arranged the venture between the two firms, which have previously collaborated on at least two other Utah deals last summer.

In June, Fort Street Partners secured the equity for a 20,399-square-foot medical project in Syracuse, Utah, through Chestnut Healthcare. Located at 3000 W. Antelope Drive, the development is scheduled to come online later this year and is fully preleased to three regional physician groups.

READ ALSO: Challenges Create Opportunities, Says MOB Investor

A month later, the two companies obtained equity placement for the Eagle Mountain Medical Center development, a 24,655-square-foot medical building at 4263 N. Pony Express Parkway in Eagle Mountain, Utah. The two-story facility is expected to come online toward the end of this year.

JLL Capital Markets Director CJ Kodani and Managing Director Mark Root led the team that arranged the joint venture.

MOB sector remains steady

The medical office real estate sector is on an upward trajectory, with a Savills report forecasting a 26 percent rise in outpatient demand over the next decade, primarily due to the aging population, and despite the current economic uncertainties affecting the commercial real estate sector.

Economic incentives, particularly decreasing interest rates, are anticipated to boost MOB investment going forward. However, the medical labor market is far from keeping pace, with the sector facing a significant shortage of specialists, especially physicians and nursing staff.

The post Chestnut Healthcare, Fort Street Form $150M JV appeared first on Commercial Property Executive.

Medical outpatient facilities continue to be investor darlings. The sector is seeing long-term tenancy and high occupancy, as opposed to traditional office and other asset types that have been struggling to return to prepandemic performance.

Despite a lower transaction volume this year due to the Fed’s successive interest rate hikes, industry professionals expect medical office deals to pick up now that lending conditions have started to loosen.

Alliance CGC is among the investment companies with a strong interest in health-care real estate. The firm has nearly 20 years of experience in dealing with this asset type and a current portfolio worth north of $500 million. Since 2013, its investments have achieved an average total return of 200 percent.

We asked Founder & CEO Ben Reinberg to talk about the factors currently shaping medical office space demand, the strategic role of accessibility and how challenges can be turned into opportunities.

READ ALSO: Outpatient Facilities Step Into the Spotlight

Medical office space demand is transforming. Which drivers are now key?

Reinberg: The demand for medical office buildings is being reshaped by several key trends transforming the health-care and real estate landscapes.

One significant driver is the decentralization of health care, as patients increasingly seek outpatient care in accessible, retail-style locations rather than navigating large hospital campuses. This shift has given rise to the concept of medtail—medical in retail spaces—where health-care services integrate seamlessly into retail environments.

Another significant factor is the rise of telemedicine and hybrid-care models, which demand MOBs with flexible, modern designs. At Alliance, we leverage data and market research to identify areas where health-care providers need adaptable spaces to accommodate these changes and serve patients effectively.

Finally, the aging population, often referred to as the gray tsunami, continues to be a critical driver of demand. Our portfolio is positioned strategically to meet this long-term demographic shift, ensuring our investments align with the growing need for health-care services.

Speaking of which, how do you anticipate the gray tsunami to impact the MOB sector in the long run?

Reinberg: The gray tsunami is one of the most significant trends shaping our investment strategy. As the population over 65 grows, the need for specialized health-care facilities will only increase. This isn’t just speculation, we already see it in our portfolio performance. Properties catering to geriatrics, diagnostics and chronic disease management consistently attract high-quality tenants and deliver stable returns.

In the long run, this demographic shift will reshape health-care real estate. MOBs located in suburban and secondary markets, where these populations are growing, will become even more valuable.

READ ALSO: What’s Hot and What’s Not for MOB Tenants

Let’s go back to accessibility. How important is it for your investment strategy?

Reinberg: Accessibility is at the heart of every project I take on. For me, it’s not just about the physical location, it’s about enhancing the patient experience and ensuring tenant success. When we invest in a MOB, we evaluate every detail: How close is it to the population it serves? Is parking convenient and ample? Is public transportation available? How accessible is the facility from residential areas or major highways? These factors are critical because they directly influence tenant retention and patient satisfaction.

We’ve repeatedly seen how accessible properties drive success. For instance, when we developed a property near a growing suburban community, its strategic location became a significant selling point for health-care providers, resulting in a rapid lease-up. Well-located MOBs attract high-quality tenants which stay longer, ensuring consistent cash flow and strong investment returns.

Accessibility is not just a buzzword. It’s a proven strategy that creates value for patients, tenants and investors alike.

How about last-mile delivery? Is this a thing in health-care real estate?

Reinberg: With the rise of telehealth and home care, there’s a growing need to ensure that medical supplies, prescriptions and mobile care units can reach patients quickly. This trend directly impacts the real estate landscape as it shifts the priorities of health-care providers when selecting locations for their services.

But one major challenge is that the infrastructure to support these services often lags behind demand. That’s where Alliance CGC sees opportunity. Investing in MOBs located strategically near residential areas or key distribution hubs, we help health-care providers bridge that last mile to patients. For instance, we’re exploring properties that can accommodate specialized logistics needs, such as cold storage for pharmaceuticals.

READ ALSO: Healthy Medical Office Spaces

Which investment strategies are you pursuing now in this sector?

Reinberg: One of the strategies I’m particularly excited about is adaptive reuse. We see opportunities to convert underperforming office properties into high-performing MOBs. It’s a way to bring health care closer to communities while adding value to our portfolio.

We also focus on niche specialties like outpatient surgery centers and diagnostic labs. These facilities are in high demand and often require specific buildouts, which allows us to leverage our expertise and deliver tailored spaces.

And which U.S. markets are next on your list for portfolio expansion?

Reinberg: We’re targeting markets where the demographic and economic trends are undeniable. States like Texas, Florida and Arizona are prime examples. These areas have a combination of population growth, a high percentage of retirees, and pro-business environments that make them ideal for MOB investments.

For instance, in Texas, we’ve identified suburban markets where health-care providers are expanding aggressively to serve growing communities. Florida’s aging population creates a consistent demand for specialty care, while Arizona offers both demographic growth and affordability compared to neighboring states.

How do you think the medical outpatient sector will perform in the upcoming year?

Reinberg: Higher interest rates have undeniably affected the market, but I’ve always believed that challenges create opportunities. We’ve leveraged our strong cash position to acquire properties outright, targeting assets at favorable prices that others couldn’t pursue due to high borrowing costs. This strategy has allowed us to navigate these headwinds effectively and our long-standing track record of delivering a 28 percent internal rate of return has built deep trust with our investors.

With the Fed signaling stabilization and implementing three rate cuts, I anticipate a more favorable borrowing environment in the coming year. This shift should renew the MOB activity, unlocking opportunities for well-capitalized investors to act strategically. Additionally, over-leveraged owners facing financial pressures are likely to sell, creating more opportunities for acquisitions.

The post Challenges Create Opportunities, Says MOB Investor appeared first on Commercial Property Executive.

Meridian has signed a 23,000-square-foot lease at Broadway Medical Plaza, an approximately 60,000-square-foot recently converted medical office building in Oakland, Calif. Center for Elders’ Independence will occupy the space accounting for 38 percent of the building’s overall leasing footprint.

This will be the sixth Bay Area location for CEI, a Program of All-Inclusive Care for the Elderly provider. Tenant fit-out is already underway, with completion expected next spring.

Colliers worked on behalf of the landlord, while Sabre Real Estate group represented the tenant.

READ ALSO: Outpatient Facilities Step Into the Spotlight

Originally completed in 1966 as an assembly hall, the three-story building is at 3901 Broadway, less than 2 miles from downtown Oakland. Other medical providers in the area include UCSF Benioff Children’s Hospital, Sutter Health and Kaiser Permanente.

Meridian acquired the 1.3-acre property in March 2022 for $13.5 million, according to CommercialEdge information, and redeveloped it into a medical facility. A $35.2 million permanent loan from MidCap Financial financed this endeavor.

Broadway Medical Plaza has now two elevators, a modern HVAC system and new base building systems. The property also includes a redeveloped, 220-stall parking structure.

Colliers Senior Vice President Sid Ewing worked on behalf of Meridian. Sabre Real Estate Group Founders Douglas Hubert and Steve Polito represented the tenant.

Resilient MOB sector still subject to hurdles

Despite numerous challenges and ongoing economic volatility, the medical office market and the broader health-care sector have demonstrated remarkable resilience. This stability is largely driven by the increasing demand for medical properties, fueled by the growing elderly population, particularly Baby Boomers who are now reaching retirement age and require more health-care services.

However, the sector still faces significant hurdles, including workforce shortages and rising labor costs, which affect both profitability and patient experience. Additionally, the slow pace of new construction, due to higher costs of capital and materials, remains a critical issue.

The post Meridian Inks 23 KSF Bay Area Lease appeared first on Commercial Property Executive.

Stockdale Capital Partners has paid $32.8 million for The MarinHealth Medical Plaza, an 83,789-square-foot medical outpatient building in Novato, Calif., a San Francisco submarket. Vukota Capital Management previously owned the asset, according to CommercialEdge.

This deal marks Stockdale Capital’s sixth purchase through its recently formed, U.S.-focused Healthcare Real Estate Investment Fund. The investment vehicle’s previous buy was Frisco Medical Village, a Class A, 37,943-square-foot medical facility in Frisco, Texas.

READ ALSO: These Markets Top MOB Investment Activity

The MarinHealth Medical Plaza is part of Rowland Plaza, a two-building, 142,856-square-foot complex. Vukota had acquired it for $36.8 million—or $257.3 per square foot—from Buchanan Street Partners, the same source shows.

Completed in 1997, the three-story building underwent renovations in 2017. Its anchor tenant is MarinHealth, which leases 72,888 square feet or 90 percent of the property. Services provided include primary care, OBGYN, laboratory, imaging, cardiovascular and dermatology.

Located at 75 Rowland Way near Sutter Health’s community hospital, the medical facility is 2 miles from downtown Novato and some 27 miles from downtown San Francisco. Other medical providers in the area include UCSF, Common Spirit and Stanford Health Care.

MOB investment activity expected to increase

The medical office real estate sector is flourishing. A recent Savills report forecasted a 26 percent rise in outpatient demand over the next decade, primarily due to the aging population.

Despite economic uncertainties affecting the broader commercial real estate sector, outpatient facilities continue to be in high demand. In addition, reduced interest rates are anticipated to enhance investment in this asset type.

However, this increased demand is straining the medical labor market, which is already facing a shortage of specialists, including physicians and nursing staff.

The post Stockdale Capital Buys San Francisco MOB appeared first on Commercial Property Executive.

A joint venture between Cypress West Partners and TPG Angelo Gordon has acquired Renaissance Medical Center, a 112,192-square-foot medical outpatient building in Bountiful, Utah, a Salt Lake City submarket. The duo took out a permanent loan from Capital One, according to CommercialEdge.

Healthcare Realty sold the asset, the same source shows. The company had purchased it in June 2008 from Broadhead & Co. for $30.2 million.

Newmark Healthcare Capital Markets represented Cypress West Partners and arranged the acquisition financing.

The five-story building came online in 2004 and includes almost 3,900 square feet of first-floor retail space. The facility features floorplates averaging 28,179 square feet, two passenger elevators and about 435 parking spaces.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

MountainWest Surgical Center, an ambulatory surgical center owned by HCA Healthcare, anchors the Class A property. The roster also includes eight other medical tenants, with specialties and services including orthopedics, physical therapy, imaging, spine and urology.

Located at 1551 S. Renaissance Towne Drive, the facility is 12 miles from Salt Lake City International Airport, while downtown Salt Lake City is 9 miles away. Additionally, the building is less than 2 miles from Lakeview Hospital.

A $300 million joint venture

The partners purchased the property through their $300 million venture that was announced earlier this year. The companies are focusing on high-growth West Coast and Sunbelt markets, targeting core-plus and value-add returns through leasing, repositioning and redevelopment of medical office assets.

The duo’s first acquisition, which closed in March, involved an 86,000-square-foot medical building in Scottsdale, Ariz. Healthpeak Properties sold the asset.

A few months later, the joint venture purchased Chula Vista Medical Arts II, a nearly 37,000-square-foot medical outpatient building in Chula Vista, Calif. Turner Impact Capital sold the 1985-completed property.

The post Cypress West, TPG Buy Salt Lake City MOB appeared first on Commercial Property Executive.

Newmark Healthcare Capital Markets has arranged $12.5 million in refinancing for 3501 MedCenter, a 146,000-square-foot medical office building in Amarillo, Texas. Regional lender East West Bank provided the note to the borrower, Equity, according to CommercialEdge information.

The firm had purchased the asset in November 2020 from McCartt & Associates, the same source shows. The deal involved a $13.4 million loan from Franklin BSP Realty Trust.

The single-story facility came online in 1986 and was 87 percent leased at the time of the current transaction. The tenant roster includes Spine & Sports Wellness Clinic, Lonestar Dental Center, Amarillo Gastroenterology and Northwest Texas Healthcare System.

READ ALSO: Getting in the Heads of MOB Tenants

Located at 3501 S. Soncy Road, the more than 11-acre property is some 15 miles from the Rick Husband Amarillo International Airport. Other medical providers in the area include Harrington Regional Med Center, Northwest Texas Healthcare System and Amarillo VA Health Care System.

Newmark Senior Managing Directors John Nero and Michael Greeley, Executive Managing Directors Jay Miele and Ben Appel, together with Associate Conor Hilton and Associate Directors Ron Ott and Chad Prescher, arranged the deal.

MOB sector poised for growth

The medical office real estate market continues to thrive. A Savills report predicts a 26 percent increase in outpatient demand over the next 10 years, with growth driven by the aging population. Despite challenges in the commercial real estate sector due to economic uncertainty, outpatient facilities remain highly sought-after.

Favorable economic factors, such as interest rate reductions, are expected to boost investment in medical office properties. However, the demand for these facilities is putting pressure on the medical labor market, which is already experiencing a shortage of specialists, particularly physicians and nursing staff.

The post Equity Lands Refi for 146 KSF Texas Panhandle MOB appeared first on Commercial Property Executive.

AW Property Co. has obtained $55.2 million in acquisition financing for a North Carolina medical office portfolio totaling 297,500 square feet. The nine properties are in Burlington, Durham and Greensboro.

JLL worked on behalf of the borrower and placed the 10-year, fixed-rate loan. The Guardian Life Insurance Co. provided the note, according to public records show.

The firm acquired the portfolio with an average vintage of 2006 from Healthcare Realty in July. The seven Guilford County assets changed hands for a combined $79.4 million, public records also show.

The medical facilities were 99 percent leased at the time of sale to healthcare systems and independent physician practices, with credit tenants representing 73 percent of in-place income. Some of the companies occupying space within the portfolio include Cone Health, Duke Health and UNC Health.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

Located on or adjacent to hospital campuses, the traded properties include:

• Cone Health Neurology Clinic, a one-story building in Greensboro
• Church Street Medical Park, a three-building campus in Greensboro
• A two-story facility at 2001 N. Church St. in Greensboro
• Wesley Long MOB, a three-story building also in Greensboro
• Alamance Eye Center, a 2007-completed property in Burlington
• UNC Family Medicine Center, a medical facility in Durham
• Duke Medical Center in Durham

JLL Senior Managing Director Travis Anderson and Senior Director Anthony Sardo led the Capital Markets Debt Advisory team representing the borrower.

MOB investment activity set to grow

The medical office real estate sector remains strong, with outpatient demand projected to rise by 26 percent over the next decade, according to a Savills report. Additionally, economic conditions, such as interest rate cuts, are likely to stimulate further investing in medical office buildings.

Earlier this week, Onicx Group acquired Trinity Oaks Medical Arts Building, a two-story, 31,000-square-foot asset in Trinity, Fla. Part of a three-building BayCare Health System campus, the property came online in 2008.

The post AW Property Lands $55M for MOB Portfolio appeared first on Commercial Property Executive.

Woodside Health has paid $20.9 million for Paradise Valley Plaza, a three-building, multi-tenant office and medical complex spanning 100,203 square feet in Scottsdale, Ariz., a Phoenix submarket. Cloud Peak Development LLC sold the asset in a deal brokered by Cushman & Wakefield.

The asset previously traded in September 2020, when Cloud Peak acquired it from Fenway Capital Advisors for $16.7 million—about $172.6 per square foot—according to CommercialEdge information.

The Class B campus came online in two phases in 1985 and 2000 and underwent cosmetic renovations in 2014. Its two-story buildings have floorplates of 30,000 square feet, CommercialEdge shows. Amenities include interior and outdoor courtyards, exterior loading suites and about 388 parking spaces.

READ ALSO: These Markets Top MOB Investment Activity

The property was 95 percent leased at the time of sale, with the tenant roster including office and medical/wellness companies such as HonorHealth, Next Level Physical Therapy and Forma Plastic Surgery.

Located at 5010, 5020 and 5040 E. Shea Blvd., the 6-acre complex is some 15 miles from downtown Phoenix and 14 miles from the Phoenix Sky Harbor International Airport. Medical providers in the surrounding area include Mountain View Medical Center, HonorHealth Medical Group and Dickerson Orthodontics.

Cushman & Wakefield’s Private Capital Markets Executive Managing Directors Eric Wichterman and Chris Toci, along with Managing Director Mike Coover, represented the seller.

MOB sector in the spotlight, despite some challenges

With an ever larger aging population driving demand, the U.S. medical office real estate market is projected to see further expansion in the coming years. Investors expect capital market activity to pick up as interest rates fall and the bid/ask spread narrows. However, the sector also faces challenges, such as a national shortage of medical specialists, which may impact growth despite the generally positive outlook.

Phoenix registered 31 medical office building sales over $1 million in the third quarter of this year, according to a CBRE report. Out of them, more than a quarter were part of portfolio transactions. Assets traded for $328.2 per square foot on average.

In October, Meridian purchased a 94,569-square-foot medical office building in Tucson, Ariz., from an affiliate of Tenet Health. The property will undergo a capex program slated for completion in early 2026 and will be fully occupied by El Rio Health.

The post Woodside Health Buys Phoenix Office, MOB Campus appeared first on Commercial Property Executive.

Although the commercial real estate sector has had its share of difficulties this past year due to the overall economic uncertainty, some asset classes continued to perform relatively strong.

Outpatient facilities, for example, are highly sought-after, with outpatient volumes even expected to increase by 26 percent over the next decade, a Savills white paper shows, citing data from Sg2, a Vizient company.

“Demand remained steady for all space types and specialties, except for administrative space,” said Colliers National Director of Healthcare Services Shawn Janus.

A lot of this demand continues to come from Baby Boomers, who are now at their retiring age and in need of health-care services. This is putting increased pressure on the medical labor market that has been experiencing a national shortage of specialists, particularly physicians and nursing staff, according to Steve Leathers, senior managing director of health-care capital markets with Transwestern. However, health-care is still one of the leading sectors for job growth in the country, with overall employment in this field projected to grow much faster than the average for all occupations from 2023 to 2033, according to the Bureau of Labor Statistics.

READ ALSO: MOB Tenants—What’s Hot and What’s Not

Meanwhile, an increasing trend in the sector is the transition of nomenclature from “medical office buildings” to “medical outpatient buildings,” maintaining the MOB acronym. “This shift reflects the sector’s resilience, superior performance and a total lack of commonality in the buildings,” said Cristi Swayze, marketing associate with Big Sky Medical.

Not immune to challenges

Despite its overall stability, the MOB sector hasn’t been unaffected by macroeconomic trends such as inflation and high capital costs. And today, medical property investors and health-care providers are closely monitoring how interest rates evolve, as well as how the new White House administration may intervene in care delivery.

Additionally, workforce shortages and rising labor costs continue to impact health-care providers’ profitability and the patient experience, according to Wilkingson Germain, CEO & managing partner at MCB Science + Health, particularly in more rural areas where the population has only increased over the past few years.

Another pain point for the sector has been the slow pace of new construction due to higher costs with both capital and materials.

“With construction costs for new outpatient medical over $500 per square foot, this translates to rental rates that start in the $30 per square foot range or higher for new properties,” said Leathers. “This has limited the amount of new development relative to peak years, resulting in less product supply for investors to build a presence in this sector. The amount of investment capital for outpatient medical exceeds the supply of properties.”

Furthermore, hospitals, health systems and physician groups are increasingly prioritizing efficiency in their real estate needs as they’ve realized they either lack sufficient space or are underutilizing their existing properties. “This has led to a variety of outcomes, from streamlining ‘back-office’ roles to investing in energy-efficient systems that reduce operational costs,” Germain noted.

In high demand

In the face of all these issues and continued economic volatility, the medical office building market and the health-care sector at large have remained resilient, with demand for medical properties supported by the growing elderly population.

“Health-care is a necessity rather than a luxury,” Janus said. “While consumers may delay procedures during periods of economic uncertainty, they typically proceed once their financial situation stabilizes.”

Additionally, patients nowadays tend to consume more care due to their higher expectations for wellness and active lifestyles as they age.

Much of the growing demand for care is increasingly occurring in outpatient locations such as physician offices, clinics and ambulatory surgery centers, noted Jay Johnson, national director of JLL’s health-care market. Tenant retention rates within these facilities have remained very high, providing more predictable cashflows for investors compared to more volatile real estate sectors such as office or retail.

“Occupancy and rents will continue to increase as the slowing construction pipeline means less new MOB space will be available,” Johnson expects. “There is also likely to be increased development of and tenancy in orthopedic and oncology facilities to meet increasing demand for these services.”

What has also become more evident is that telehealth services—which exploded during the pandemic— come with a lot of limitations.

“While technological advancements in health-care delivery were initially thought to decrease the demand for MOBs, the trend shows otherwise,” Swayze said. “Telehealth visits are not preferred by many elderly patients due to a lack of understanding of the technology or a preference for in-person consultations. This trend is creating a demand for flexible outpatient spaces where technology can be integrated, enhancing the physical visit.”

MOB investment trends

Similar to other commercial real estate sectors, the medical office sector has also experienced a lower transaction volume this year as a clear effect of the Fed’s successive interest rate increases. Nevertheless, investment interest hasn’t simmered down and the consensus among industry specialists seems to be that deals will pick up steam in the upcoming year.

For 2024, Leathers anticipates a total transaction volume of around $12 billion, which would be in line with historical averages, but well below the 2022 record-high investment volume of $25 billion. Going forward, banks are expected to remain active, with investors looking to deploy capital raised from institutional, foreign and private sources into the acquisition and development of outpatient medical facilities.

READ ALSO: These Markets Top MOB Investment Activity

“Capital market activity is anticipated to rebound as interest rates decline and the bid/ask spread further closes,” Janus said. “Single-asset and small portfolio transactions are likely to continue attracting increased investor interest, with the potential for larger portfolios to enter the market, as well.”

The recent interest rate cuts are already making some investors release funds and re-enter the health-care real estate market as MOB fundamentals stay strong with record high occupancy, longer lease terms, steady rent and NOI growth. “This is turning even more heads toward the medical real estate sector,” Swayze noticed.

Meanwhile, for MCB Science + Health, the focus is not only on the Fed’s decisions, but rather on how the bond market reacts to rate movements.

“We’re approaching our underwriting conservatively, pricing acquisitions as though the five-year Treasury yield will remain neutral…As rates stabilize, we expect sales activity to increase, but we’re maintaining a cautious approach in the near term,” Germain said.

What to expect in 2025

Economic challenges are expected to ease in the upcoming year, allowing the sector to further stabilize and grow, particularly in new geographical areas to better serve patients that live farther away from traditional city centers and hospital locations.

The sector’s prospects remain positive overall, but particularly for areas with good demographics such as the Southwest. Additionally, Johnson believes development will also increase in some states due to the loosening Certificate of Need regulations, especially related to surgery centers. Most probably, new projects will be concentrated in off-campus and in suburban locations, enhancing the patient experience and easing health-care access for communities, according to Germain.

READ ALSO: Houston a Bright Spot Amid Slowing Medical Office Sector

In terms of investment activity, as capital costs stabilize or even decrease, we could see more core properties and investor portfolios change hands. “REITs that have dominated the industry for years have been net sellers in the past two years; more stability may permit them to seek to expand portfolios strategically,” Leathers said.

What is also becoming increasingly evident across the commercial real estate sector is that health-care is growing out of its niche investment phase. Considering the challenges that the traditional office sector continues to face, institutional investors are increasingly recognizing health-care real estate as more than just another alternative asset.

“They see it as a resilient investment that offers both stable returns, meaningful portfolio diversification and reduced risk on a relative basis,” Swayze noted. “This perception continually strengthens as health care demonstrates its recession-resistant characteristics through various market cycles.”

The post Why the Medical Outpatient Sector Is Poised for Growth in 2025 appeared first on Commercial Property Executive.

Onicx Group has acquired Trinity Oaks Medical Arts Building, a two-story, 31,000-square-foot medical office building in Trinity, Fla., in the Tampa Bay area. The Graham Group sold the asset, according to Pasco County public records.

First American Bank provided the buyer with a $4.8 million note that matures in 2027, the same source shows. Fairfield Asset Advisors represented the seller.

This acquisition represents Onicx’s second investment through its Healthcare Real Estate Fund launched in August. The first closed in September, when the firm purchased Lafayette Medical Building, a 25,000-square-foot Class A facility in Lafayette, Ind.

READ ALSO: Healthy Medical Office Spaces

Trinity Oaks Medical Arts Building came online in 2008 and was more than 91 percent leased at the time of sale. Its tenants include the Orthopaedic Associates of West Florida, a subsidiary of the Florida Orthopaedic Institute, Women’s Care and Academic Alliance in Dermatology.

The facility is part of a three-building BayCare Health System complex totaling about 99,000 square feet. The property is at 2044 Trinity Oaks Blvd., some 34 miles from downtown Tampa, Fla. Medical providers in the surrounding area include Orange Blossom Women’s Group, East Lake Pediatrics. HCA Florida Trinity Hospital is less than 3 miles away.

MOB investment stays strong

The medical office real estate sector continues to remain robust, with outpatient volumes expected to increase by 26 percent in the following 10 years, according to a Savills white paper. Additionally, favorable economic factors such as the interest rate cuts are expected to lead to a rise in MOB investments.

In October, MedCraft Investment Partners acquired Sisters Grove Pavilion, a 108,204-square-foot medical office building in Colorado Springs, Colo., for $31.2 million. CommonSpirit Health sold the 2008-completed asset.

The post Onicx Group Acquires Tampa-Area MOB appeared first on Commercial Property Executive.

The health-care industry is as strong as ever, with demand for both elective and non-elective outpatient care and employment increasing substantially during the past several years. According to a September report from Savills, outpatient volumes are expected to increase by more than one-quarter in the next 10 years, while health-care related employment is expected to grow by 12 percent through 2028.

However, with this growth comes a need for an intense focus on managing these specialized facilities. While the most in-demand medical specialties vary considerably by location, some best practices apply across the board.

Mastering maintenance

Strategies for keeping patients healthy and doctors happy all usually flow from a central function: maintenance and cleanliness procedures. They both are a double-edged sword; they leave a lasting mental impression on the doctors, nurses, staff and patients, but also have the potential to impact the quality of the treatments.

Justin McKanna, an associate director at Hiffman National, believes that this applies especially to janitorial services, generally considered to be the most important aspect of day-to-day maintenance. For instance, an unkempt space may not only spread disease, but cause patients to think twice about getting a procedure done there.

“That’s the first impression patients get when they walk into that clinic or surgery center,” McKanna told Commercial Property Executive. “You want that building to reflect the same quality of care that tenants expect to receive.”

Crucial to meeting these goals is choosing a medical office cleaning company, ideally one experienced in medical waste handling, as well as in medical-grade disinfection and hygiene.

In practice, this might mean spending up to 30 percent more than a traditional office operator on those services, but McKanna sees it as necessary. “We can get a bid from any janitorial company and the cost is probably going to come cheaper than you would from dealing with the medical office janitorial company, but you’re not going to get that same service and quality that tenants expect,” he said.

Besides surface cleaning, the spaces require more duct cleaning and dust control, which are often especially important for hermetic operating rooms.

This same specialized approach governs HVAC maintenance, as attention to heating, cooling, humidity and airflow is vital for preventing the spread of disease. These considerations not only impact the working conditions, but also the quality of the treatment provided. As a rule of thumb, “If somebody says it’s 72 degrees and it’s too warm, then we say, ‘OK, 72 degrees is definitely too warm for you, and we’ll adjust it,” said Margaret Gaca, vice president of property management at HSA PrimeCare.

READ ALSO: Getting in the Heads of MOB Tenants

Medical office property managers also think of maintenance in the future tense, especially as they build out spaces for new, specialized tenants. Top of mind is HVAC needs, which vary widely.

“When new equipment comes in, we ask, ‘What does it require? Do (they) require additional heating or cooling?'”, Gaca observed. “If we don’t build it out right, then they are not going to operate properly.”

A final consideration is accessibility and Americans with Disabilities Act compliance, alongside making sure that wheelchair access, wayfinding signage and parking spaces all facilitate patient mobility. McKanna advises working with specialized architects and contractors, regardless of whether it’s a ground-up project or a redevelopment.

Above and beyond

Medical offices that truly stand out not only meet the highest standards for maintenance and cleanliness, but also offer personalized experience to tenants and patients.

“(For) any of us who manage high-rise buildings, we are used to having staff that is there 12 hours a day handling everything, and your typical suburban building did not have that level of onsite staff on a daily basis,” said Patty Nooney, principal director of real estate management services at Avison Young.

Property managers like to focus on the minutiae of the buildings, as well as the personnel they choose to manage them. For Gaca, placing a doctor’s name on a door sign and key fob, choosing the right wall paint color or furniture speak volumes about the property management team’s level of commitment.

Such considerations also play a role in the mental wellbeing of patients. Along with aesthetically appealing offices, waiting areas and exam rooms, exteriors can also differentiate a property. “Patients’ mental health is better if they can view green space out of a window, or, if someone has to go for regular treatment, they can go into some kind of garden or patio area,” Nooney said.

Offering a concierge-like level of service is equally important to the quality of the space. Traditional communication and hospitality skills, alongside attention to real-time feedback, may sound like clichés, but they are definitely noticed by patients and the tenant’s team. Whether the patient is coming in for a dialysis appointment or banged up with a pickleball injury, it’s an expectation that building staff are not only attentive, but welcoming. “Our product is our people,” McKanna concluded.

The post Property Management Success: Healthy Medical Office Spaces appeared first on Commercial Property Executive.

A partnership of NexCore Group, Intermountain Health and Nuveen has officially opened the Lutheran Medical Office Building, a 138,000-square-foot medical outpatient building in Englewood, Colo.

The development team included Davis Partnership Architects, which provided design services, and Saunders Construction as general contractor. Martin Consulting Engineers and Cator, Ruma & Associates served as civil and electrical engineers, respectively. Construction began in December 2022.

Davis Partnership also provided architectural services for the partnership’s Aurora East Crossroads, an 85,000-square-foot medical office building in Aurora, Colo. The MOB debuted this August.

READ ALSO: Outpatient Facilities Step Into the Spotlight

The Lutheran Medical Office Building rises five stories or 87 feet. Its primary entry, facing westward, features a vehicular pull-out for patient drop. Its southside includes a pick-up point for surgery patients.

Intermountain Health provides medical services such as cardiovascular care and cardiac rehabilitation, neurology and neurosurgery, maternal and fetal medicine, as well as a sleep lab and orthopedics, among others.

The facility ranked 11th in Commercial Search’s Top 20 Largest Medical Office Buildings to Be Completed in 2024. UW Health’s 439,000-square-foot project dubbed The Eastpark Medical Center took the crown. The Madison, Wis., property was slated for delivery in the third quarter.

Located on 28 acres at 12905 W. 40th Ave., the Lutheran Medical Office Building is less than 1 mile from Interstate 70, while downtown Denver is about 15 miles southeast. Numerous lakes, retail facilities and parks can be found within walking distance.

The relocation of a 100-acre medical campus

The MOB is part of the Lutheran Medical Center Campus, which also includes a hospital and a pedestrian bridge that connects the duo. The entire campus alongside the hospital—which had served Wheat Ridge for over a century—recently relocated.

Its current position is less than 4 miles from its prior placement. The previous campus sprawled roughly 100 acres and with its relocation, a master redevelopment plan emerged. As of 2021, the new vision included a mixed-use development in the former campus’ center, as well as buffer and transitional areas toward the edges.

Medical Office deliveries expected to drop

At a national level, roughly 10 million square feet of medical office product is slated for delivery this year—a decline from 2023’s figure of 12.5 million square feet—according to a report by Marcus & Millichap. However, this drop in completions will temper the sector’s rise in vacancy as the rate is estimated to inch up by 30 basis points in 2024.

Given the fluctuating nature of costs related to development, labor and capital, MOB construction starts may remain tepid going forward, Marcus & Millichap’s report shows. To offset expenses, developers could eye traditional office conversion projects.

The post NexCore Group Partnership Debuts MOB Facility appeared first on Commercial Property Executive.

Meridian has acquired a 94,569-square-foot medical office building in Tucson, Ariz., from an affiliate of Tenet Health. The property is slated to undergo a capital improvement program which will begin this month, with completion expected in early 2026. El Rio Health will fully occupy the facility.

Cushman & Wakefield | PICOR represented Meridian on the purchase and El Rio Health on the lease. Transwestern negotiated on behalf of the seller.

El Rio Health has served the Tucson community for more than 50 years and currently operates 14 clinics providing medical assistance to roughly 10 percent of the city’s population, according to prepared remarks by Meridian CEO Mike Conn.

READ ALSO: Medical Office to Perform Well in 2024: Report

At the new location, the health-care company will provide primary medical, behavioral and dental health care, pharmacy, as well as radiology, specialized care and support services, Clinton Kuntz, CEO of El Rio Health, said in a prepared statement.

Meridian plans to decommission outdated equipment, including a central utility plant that has not been functional in years, and install new systems such as HVAC units, boilers and fire-prevention equipment. New landscaping features and parking arrangements will also be implemented.

Located at 4888 N. Stone Ave. on more than 9 acres, the facility is roughly 5 miles north of the city center, with a plethora of retail options within walking distance. The Central Tucson property will alleviate El Rio Health’s capacity stress at its clinic on Prince Road, which is roughly 3 miles away, Kuntz added.

Cushman & Wakefield | PICOR Principal Rick Kleiner represented Meridian in the acquisition and El Rio Health in the leasing negotiations. Transwestern Senior Vice Presidents Vince Femiano and Kate Morris assisted Tenet Health.  

Meridian’s medical office renovation efforts

Since its inception in 1999, Meridian has delivered health-care and general office projects including more than 15 campuses and upward of 150 facilities. However, in addition to ground-up developments, the company also invests in, renovates and repurposes existing buildings.

Another one of its previous renovation projects also took place in Tucson. The El Dorado Medical Plaza—a 187,690-square-foot former hospital—underwent substantial capital improvements in 2021. Meridian acquired it from Clarion Partners and implemented a series of upgrades pertaining to the cooling towers, mechanical equipment, sewerage and security systems, among others.

Meridian operates outside of Arizona as well. In 2021, the firm paid $81.5 million to purchase a 67,510-square-foot medical office building in Beverly Hills, Calif., from Iris Capital Group. Following the acquisition, Meridian gave the facility’s common areas a facelift and implemented modest changes in the property’s operational systems.

Medical office thrives in Tucson

Tucson’s medical office market has strong fundamentals, with high demand and limited supply of high-quality product, according to a second-quarter report by Cushman & Wakefield | PICOR. Prices have increased due to an inventory scarcity and rising construction costs, contrasting the discounted costs of larger office buildings.

Central Tucson has consistently been a hot spot for the market, alongside Northwest Tucson and the Foothills. These submarkets saw strong demand for freestanding medical buildings and smaller offices averaging 2,500 square feet.

In addition, medical practitioners who seek to expand or open new offices are willing to undertake conversions and redevelopment projects, as well as agree to longer lease terms with landlords, the report points out.

Earlier this year, a joint venture between Altera Fund Advisors and Virtus Real Estate Capital made a $43.2 million medical office investment in Tucson. The duo bought four facilities with the help of a $32 million loan issued by Capital One.

The post Meridian Buys Tucson MOB appeared first on Commercial Property Executive.

The St. Joe Co. has completed the Tallahassee Memorial HealthCare Medical Office Building, an 80,000-square-foot facility in Panama City Beach, in the Florida Panhandle.

The developer broke ground on the project representing the first phase of the FSU Health-Tallahassee Memorial HealthCare Medical Campus in January last year. Development partners included Tallahassee Memorial HealthCare and Florida State University. Robins & Morton served as general contractor.

Designed by HuntonBrady Architects, the four-story medical building is home to TMH Physician Partners – Primary Care, TMH Urgent Care Center, Coastal Tides Surgical Center and TMH Physician Partners – Cardiology. Pulmonary and orthopedic services are also available on-site.

READ ALSO: Outpatient Facilities Step Into the Spotlight

Located at 1002 N. Arnold Road, the facility is some 8 miles from the city’s downtown and 12 miles from the Northwest Florida Beaches International Airport.

The Tallahassee Memorial HealthCare Medical Office Building is larger than most current medical office developments which are less than 50,000 square feet, according to a recent Marcus & Millichap report. Furthermore, new construction is hindered by material shortages and labor costs, so future projects could involve more traditional office conversions.

Part of a bigger campus

The FSU Health-Tallahassee Memorial HealthCare Medical Campus will include a hospital featuring an emergency center and other inpatient services, including surgery, cardiology procedures and imaging. Robins & Morton expects to break ground on that development in the following months and completion is expected by the end of 2027.

The 87-acre development will also feature the 140,000-square-foot FSU Health Tallahassee Center, a medical and research-related facility that was funded with a $125 million grant from the Florida Legislature. This project broke ground last September and is slated for delivery in 2026.

The post St. Joe JV Completes Florida Panhandle MOB appeared first on Commercial Property Executive.

MedCraft Investment Partners has purchased Sisters Grove Pavilion, a 108,204-square-foot medical office building in Colorado Springs, Colo.

The property traded for $31.2 million, with the buyer taking out a five-year, $24.2 million acquisition loan from Alerus Financial, according to El Paso County records. CBRE represented the seller, CommonSpirit Health.

The facility was previously subject to a $26.1 million loan in 2014, originated by BMO Bank, CommercialEdge data shows. According to the same source, after Dignity Health merged with Catholic Health Initiatives in 2019. CommonSpirit Health, the surviving entity, assumed ownership of all existing U.S. assets, including Sisters Grove Pavilion.

READ ALSO: These Markets Top MOB Investment Activity

The asset’s stability in the market is ensured by its specificity and long-term occupancy. The property’s performance should also benefit from the rising demand for outpatient care, caused by the chronic diseases of an aging population, according to a new white paper by Savills. Experts predict a rise in the volume of health-care real estate, which is anticipated to increase by 26 percent over the next 10 years.

A facility within a hospital campus

Anchored by CommonSpirit-related entities and 15 percent leased directly to the St. Francis Hospital, the facility’s tenant roster also includes PENRAD Imaging and Audubon Ambulatory Surgery Center.

Sisters Grove Pavilion came online in 2008 on 2.7 acres and was built in conjunction with St. Francis Hospital, becoming the first medical outpatient facility on the campus. The four-story building features two passenger elevators and controlled access. The property includes a multi-specialty ambulatory center and a PENRAD imaging suite.

Located at 6011 E. Woodmen Road, the property has access to U.S. Route 21 and is some 13 miles northeast of downtown Colorado Springs. Medical providers in the surrounding area include Woodman Medical Plaza, Briargate Medical Campus and Center Pointe Family Medicine, among others.

The CBRE team included Vice Chairman Chris Bodnar, Executive Vice President Brannan Knott, Vice Presidents Cole Reethof and Jesse Greshin, Senior Director Trent Jemmett and Senior Vice President Zack Holderman, alongside Senior Vice President Dann Burke and Executive Vice Presidents Ty Ritchie and Lee Diamond.

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Anchor Health Properties and Bayhealth Medical Center have completed Bayhealth at Blue Hen, an 80,000-square-foot redevelopment in Dover, Del.

Bayhealth announced the project back in 2021 and planned to begin redevelopment in 2022. The health-care provider had acquired a portion of Blue Hen Corporate Center in order to expand its medical services already provided at the property.

Prior to its redevelopment, the property served as an enclosed shopping mall, which was converted into office space in the 1990s.

Experts are predicting more conversion projects in the medical office sector, according to a Marcus & Millichap report. Office and retail properties are being redeveloped into outpatient properties, given inflation for material and labor costs.

Redevelopment process details

Anchor Health Properties provided services such as identification and acquisition of the site, planning, programming, and oversight of the design and construction of the facility. Becker Morgan Group provided architecture and civil engineering services, The Whiting-Turner Contracting Company served as general contractor and Furlow Associates provided MEP engineering services.

The first phase opened in June and featured primary and specialty practices. The second and final phase opened last month and is dedicated to outpatient rehabilitation. The clinic offers medical services such as endocrinology, primary care, pulmonology, neurology, gastroenterology and speech therapy, among others. The building also includes a 20,000-square-foot conference center.

Bayhealth at Blue Hen is at 665 S. Bay Road, between U.S. routes 1 and 13 and less than 2 miles from downtown Dover. Medical providers in the surrounding area include Family Medical Center, Renal Care Center and Eden Hill Medical Center.

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The joint venture of Bain Capital and Evergreen Medical Properties has purchased a 60,000-square-foot medical office building in Lake Oswego, Ore. Shorenstein sold the asset for $14 million, and the buyer took out a $2 million acquisition loan from Columbia Community Credit Union, public records show.

The Lake Oswego submarket is facing an under-supply issue from a health-care facility perspective, hence the decision to invest in this asset, said Evergreen Medical Properties President Josh Richmond in prepared remarks. Demand for medical office buildings continues to be on the rise across markets nationwide.

The property was previously subject to a loan received in 2023 from Bank of America, which had a maturity date set for 2026. The asset last changed hands in 2007, as part of a $1.1 billion portfolio transaction in which Shorenstein purchased 46 properties from EQ Office, incorporating 3,882,036 square feet of office space in the Portland market, according to CommercialEdge.

A renovated facility near downtown Portland

Part of the Kruse Woods Corporate Park, the three-story building came online in 1996 and went through cosmetic renovations in 2003 and 2022. The facility features two passenger elevators, a conference room, has access to a fitness center and provides 204 car parking spaces.

Providence Health is the anchor tenant. The property was 73 percent leased at the time of the transaction. Medical services provided at the facility include primary and pediatric care, behavioral health, diabetes education and gynecology, among others.

Located at 4004 Kruse Way Place on 3.3 acres, the property has access to Interstate 5 and is some 10 miles southeast of downtown Portland. Medical providers in the surrounding area include Peak Medical Northwest, Providence ExpressCare and Bauer Medical.

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New York-Presbyterian has signed a 10,189-square-foot long-term lease with owner Simone Development Cos. at a 60,000-square-foot medical office building in The Bronx, N.Y. The landlord was self-represented in direct negotiation with the new tenant.

The three-story Class B medical office building is at 2510 Westchester Ave. and features an on-site parking garage. The current owner bought the 1972-built asset in 2009 for $5.5 million, according to CommercialEdge information. The property became subject to a $11 million permanent loan in 2016, provided by Flagstar Bank.

READ ALSO: Getting in the Heads of MOB Tenants

The tenant roster also includes Bronx Wellness Center, Unlimited Care Inc., Bronx Westchester Medical Group and Advanced Urology Centers of New York, among others., according to CommercialEdge data. The tenants cover multiple specialties across diverse healthcare fields, such as sports medicine, orthopedics, physical and chiropractic therapy or behavioral health.

The 1-acre medical office asset is within the Westchester Village neighborhood, close to Westchester Square Station. The property is 10 miles from LaGuardia Airport, 13 miles from Midtown Manhattan and within 19 miles of John F. Kennedy International Airport.

Recent movements in the MOB sector

Earlier this month, Lincoln Property Co. formed a joint venture with partners Blue Arch Capital and LoanCore Capital to own and operate Park Sixty, a Class A medical office building in Manhattan. The 15-story building includes 179,000 square feet of medical office space and 7,000 square feet of retail.

In July, Healthcare Realty Trust Inc. expanded its joint venture with Nuveen Real Estate to $400 million in assets. The company is contributing with eight properties valued at $193 million, while Nuveen will fund 80 percent of that equity value. HRT generated $400 million of proceeds so far in 2024 and expects to increase those gains to more than $1 billion.

The post Simone Development Cos. Inks Long-Term Deal at Bronx MOB appeared first on Commercial Property Executive.

No dollar amount on the transaction was disclosed. Eastdil Secured acted as exclusive advisor to LoanCore.

The block-through, 15-story property is in the Plaza District at 60th Street between Park and Lexington avenues and near the East Side Medical Corridor.

Park Sixty features 179,000 square feet of medical office space and 7,000 square feet of retail space on the first two floors. In 2018, the building completed a $20 million, Article 28–compliant renovation that included the installation of state-of-the-art infrastructure, including a new rooftop cooling tower; a new lobby; and upgrades to all common areas. Amenities include a 24/7 attended lobby and easy access to the 59th Street subway line.

READ ALSO: MOB Tenants Pay a Premium for These Markets

None of the three companies replied to Commercial Property Executive’s request for additional information.

The building’s website indicates that 99,022 square feet of medical space are currently available, which suggests about a 55 percent vacancy.

Park Sixty was built in 1962, according to information provided by CommercialEdge, which also indicates that the previous owner was LoanCore Capital (REO). A $5 million foreclosure sale is on record for September 2023. An arm’s length sale in January 2015 was reported to be valued at $170 million.

MOB mentality

In July, LoanCore funded an $85 million refinancing loan for a joint venture of Goldman Sachs Urban Investment Group and Triangle Equities, for the first two floors of Terminal Logistics Center, a 300,000-square-foot, five-story industrial condominium in New York City’s Queens borough. Institutional Property Advisors Capital Markets, a division of Marcus & Millichap, arranged the financing.

Elevated interest rates and economic uncertainty have restrained transaction volumes and pricing in the health-care capital markets over the past 12 months, according to a first-half 2024 report from Cushman & Wakefield.

The report states that the significant surge in volume and pricing for medical office building sales between 2020 and early 2022 has slowed, as the macro-economic landscape continues to recover from inflation and subsequent rate hikes.

Still, an absence of the overbuilding seen in other product types has helped to moderate MOB occupancies.

Cushman & Wakefield predicts “growth in transaction activity as the debt and equity markets gain confidence in raising their acquisition targets.”

The post Lincoln Property JV to Own, Operate Manhattan MOB appeared first on Commercial Property Executive.

MCB Science + Health has acquired iMed Naperville Medical Office, a 72,000-square-foot medical office building in Naperville, Ill., a Chicago submarket. DynaCom Management Inc. sold the asset for $28 million, in a deal brokered by Greenstone Partners.

The four-story medical office building came online in 2015 and was 96 percent leased at the time of sale. Endeavor Health, previously known as Edward-Elmhurst Health, anchors the facility. Other tenants include ABC Pediatrics, Basko Dermatology and Naper Grove Vision Care.

READ ALSO: Outpatient Facilities Step Into the Spotlight

The Class A property features floorplates averaging 18,000 square feet, 10-foot ceiling heights, a two-story lobby atrium and covered patient drop-off and pick-up areas, as well as a 300-spot parking.

The property is at 1331 W. 75th St., 2 miles from the Endeavor Health Edward Hospital and 1 mile from downtown Naperville. Downtown Chicago is 35 miles northeast.

Greenstone Partners Managing Partner Jason St. John brokered the transaction on behalf of the seller.

MCB’s expansion in the health-care sector

MCB Real Estate launched the Science + Health platform in 2022 in a partnership with real estate executive Wilkingson Germain. The venture focuses on acquisition and development in the medical office, senior housing and life science sectors across the U.S.

Earlier this year, MCB broke ground on Drexeline Medical Office Building, the 60,000-square-foot health-care component of Drexeline Town Center in Drexel Hill, Penn. The three-story facility is already fully leased to Delaware County Human Services and Children’s Hospital of Philadelphia.

And, last year, the firm completed the construction of Wellness Center at Yard 56, an 80,000-square-foot, Class A medical office building in Baltimore. The asset is leased by Baltimore Medical System, Innovative Physical Therapy, Bay Vanguard Bank and LabCorp.

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Easterly Government Properties, in a joint venture with a global investor, has completed the acquisition of a 193,100-square-foot medical office building leased to the Department of Veterans Affairs in Jacksonville, Fla. The property is the tenth and last facility to be purchased as part of a 2021 portfolio transaction in which U.S. Federal Properties Co. was the seller.

The North Florida/South Georgia Veterans Health System broke ground on the $64.2 million Jacksonville project in December 2021 and completed it in April this year. The developer acquired the construction site for $8.4 million in 2020, according to CommercialEdge data.

The property features a domiciliary that provides housing for veterans in need of substance abuse treatment or full-time care. The clinic offers various services such as physical therapy, prosthetics, occupational therapy, rehabilitation medicine and traumatic brain injury treatment.

READ ALSO: Outpatient Facilities Step Into the Spotlight

The 21.6-acre facility is at 145 Heron Bay Road and provides access to interstates 95 and 295. Downtown Jacksonville is some 13 miles south of the property. Other medical facilities in the surrounding area include UF North Health, Millennium Physician Group and Coastal Medical Plaza, among others.

VA clinic serving the Jacksonville area

The 1.2 million-square-foot portfolio consisted of 10 outpatient clinics leased to the VA for 20 years on average. The joint venture acquired the group of assets for a total of $635.6 million.

The Class A facilities are located in several states across the U.S., such as Kansas, Texas, Georgia, Tennessee, Arizona, Alabama and Florida. Last year in September, the partnership closed on its ninth clinic, the 69,276-square-foot facility in Corpus Christi, Texas.

Easterly owns a total of 94 assets totaling 9.2 million square feet. In another major transaction that took place in late 2022, the REIT sold $205.3 million worth of commercial properties leased to the U.S. government.

The post Easterly Government JV Closes on Jacksonville VA Clinic appeared first on Commercial Property Executive.

The shift is expected to drive significant growth in health-care employment, which is projected to increase by 12 percent through 2028. That in turn will require new health-care real estate.

Moreover, health-care systems are focusing on construction and design projects that support this shift, with an emphasis on adaptable environments.

That trend doesn’t automatically benefit health-care real estate, however. Health-care providers need a data-driven real estate strategy to optimize their portfolios, which includes the right locations and property types for outpatient facilities. Factors such as patient demand, demographics and competitor locations also need to be taken into account.

READ ALSO: MOB Tenants: What’s Hot and What’s Not

The report also details various types of outpatient facilities, including single-tenant buildings, repurposed office spaces, standard medical office buildings, “Medtail” (medical retail) and adaptive reuse of commercial buildings. Each of these facilities comes with its own advantages and challenges.

For example, a single-tenant building provides complete control over parking, branding and signage. But it can also be a costly option.

Redevelopment of other types of commercial buildings for conversion to medical office can offer unique attributes such as high ceilings, brick facades and wide-open space. Such space is also easily customizable. On the other hand, the extent of the redevelopment varies depending on the condition of the property.

“Medtail” involves converting retail spaces into medical. In retail centers with high vacancy, such a redevelopment can yield solid transaction terms. By contrast, construction costs can be high, considering the high ceilings and low level of infrastructure common in retail buildings.

As for traditional medical office buildings, they offer institutional credibility and proximity to ancillary services, such as imaging. Still, negotiating lease terms can be challenging, with less flexibility due to the owner’s perception of tenants as confined to the campus.

The steps health-care real estate needs to take

The transition to outpatient represents an opportunity for health systems to optimize their real estate, the report noted. 

By focusing on convenient locations and adaptable facilities, providers can not only adapt to this shift but also thrive in the evolving health-care landscape.

Owners of health-care real estate need to evaluate their existing portfolios to identify opportunities for renovation, repurposing or divestiture, and do thorough market analysis to identify optimal locations that balance cost, accessibility and patient demographics, Savills explained.

The post Outpatient Facilities Step Into the Spotlight appeared first on Commercial Property Executive.

Intermountain Health, in partnership with NexCore Group, has opened Aurora East Crossroads, an 85,000-square-foot medical office building in Aurora, Colo. Project partners also included Nuveen Real Estate.

NexCore Group broke ground on the facility in March 2023. Architect Davis Partnership and general contractor Waner Construction were part of the development team.

The three-story building features a 19,000-square-foot ambulatory surgery center on the first floor. Medical services provided at the facility include primary care, general surgery, orthopedics, cardiovascular, podiatry and laboratory.

READ ALSO: Getting in the Heads of MOB Tenants

The property took shape on 30 acres at 23750 E. 14th Ave. on the Aurora East Crossroads Medical Campus, having access to Interstate 70. The facility is 10 miles east of downtown Aurora, while Denver is some 20 miles away. Medical providers in the surrounding area include Aurora Testing Center, Mountain Medical Care, Gateway Medical Center and Potomac Medical Plaza, among others.

As of August, Denver had approximately 770,000 square feet of medical office building space in various stages of development, CommercialEdge data shows.

Tepid medical office development

Aurora East Crossroads is the first major project of the NexCore-Intermountain Health partnership. The second is a five-story, 130,000-square-foot medical office building in Wheat Ridge, Colo., west of Denver. The development broke ground in December 2022 and is slated for completion in October.

Despite faring better than other real estate sectors amid economic volatility, medical office construction is experiencing a slowdown, according to a Marcus & Millichap national medical office report for the first half of 2024.

Nevertheless, the strong fundamentals of outpatient facilities and asset specificity keep this sector thriving, even if experts predict conversions to be more likely than ground-up projects.

The post NexCore Group JV Opens Denver MOB appeared first on Commercial Property Executive.

Overall, MOBs are performing well, and are set to continue to do so. As long as the broker knows what’s hot and what’s not, we found out, the space is rich with opportunity. Here’s what insiders taught us.

MOB market performance in 2024

“From where we sit, we think that the market is in pretty good shape in terms of the demand for medical space and what that is doing to occupancy,” Jay Johnson, national director in the health-care market at JLL, told Commercial Property Executive.

Johnson noted that JLL has seen occupancy rates creeping up, causing upward pressure on rental rates. And while leasing volume slowed in 2023 and in early 2024, those rates are beginning to pick up now.

“There is a lot of investor demand in health-care real estate,” Johnson said. “That’s been a trend for years now and it is continuing. As some of the other sectors in real estate are in a moment of change, I think you are seeing more capital coming toward health-care real estate and that is keeping values high for right now and into the near future.”

One of the primary factors driving strong fundamentals comes from the shifting health needs of the nation. The youngest Baby Boomers are entering their 60s, the general population is aging and people are more keen than ever on investing in their health.

READ ALSO: MOB Tenants Pay a Premium for These Markets

While some in-person medical demand is offset by modern technology and telehealth availability, Johnson hasn’t seen the impact within clinical and in-person real estate that one might assume.

“Unlike traditional office properties, you’ll find limited if any rent abatements or other leasing incentives offered to tenants, given high occupancy rates across the U.S. Demand in the sector has always outpaced supply, especially since MOBs are rarely built on a speculative basis,” mentioned Sabrina Solomiany, Berkadia senior managing director & head of Medical & Life Sciences.

Physical considerations for MOB tenants

Considering the strength of the sector, what do these types of clients want out of their real estate? Answers vary.

Different medical office space occupiers need different special requirements, dependent on the medical use case itself. For example, dentists can have a more open-floor layout with curtain walls—or even just curtains—separating patient spaces, while a therapist’s office might need larger siloed rooms with noise cancelling and privacy capabilities.

But there are some general checklist items that most in the health-care space search for.

One aspect of the MOB space that is more idiosyncratic to the medical industry is a beehive layout, Michael Cohen, managing principal with Williams Equities, noted. It’s critical for tenants to access one larger waiting room and greeting area, perhaps off of an elevator bank, followed by a series of smaller exam, operating, consulting etc., rooms. Unlike traditional office tenants, these rooms don’t always need a window.

High plumbing requirements can also be a must. Cohen noted that for one building owned by Williams Equities, every column is a “wet column” so that the company can accommodate to a larger number of sinks and restrooms. This is, for example, particularly important to dentists.

“Having a building where the water doesn’t need to be piped over long distances from the restrooms in the core to each and every dental chair is a big advantage,” Cohen added.

For more clinically niche or intense medical offices, such as surgery centers or infusion centers, that higher level of acuity often means a higher level of need. Johnson noted that, in these cases of higher specialization, there may be a need to evacuate a patient to a hospital. This means that a gurney elevator can also be on the checklist.

READ ALSO: Outpatient Facilities Step Into the Spotlight

Highly specific and nuanced medical office tenants can require hefty buildouts for special machinery too. And the load bearing capacity must be able to handle things such as MRI and X-Ray machines.

“It’s not the kind of machinery that can be wheeled in and out or filled into the space,” Jason Muss, president of Muss Development, said. “And a lot of the demising walls are a lot more substantial than you would have with your typical office tenant. There is a need for privacy or noises from machines or radiation that has to be stemmed. There is physically a lot more substance to the buildout.”

Eric Hoffman, vice president & national health-care sector lead at Project Management Advisors, mentioned that ease of access into MOBs is becoming increasingly critical, all while health-care patients become more tech-savvy.

“Physical access considerations such as the location of a building, the ease of getting inside, parking options and proximity to public transit need to be fully integrated with the technical experience a patient will have before, during and after their visit, such as virtual scheduling, text updates and follow ups,” Hoffman added.

Matching the right tenant to the best landlord

MOB brokers—and brokers in general—need to understand that just because a physical space suits the needs of their medical client, it does not mean that it’s the best overall pick. Another serious factor is the compatibility between landlord and tenant.

On the landlord side of things, bringing a medical tenant into an office building has both pros and cons. One upside, Muss noted, is that health-care companies are usually credit worthy due to their ownership by or affiliation with larger hospitals. Another is their relative stickiness.

“They don’t leave very easily,” Muss said. “They won’t go around the block and change their flow of traffic and try to explain a new location to their clientele if they don’t have to.”

These often higher-credit and longer lease tenants offer a lot of upsides. For a lot of landlords, it’s a real estate match made in heaven. But the cons for landlords are significant too. Primarily, it comes down to hefty and expensive improvements and buildouts.

“The cost of construction is on a different level than it is for your typical office tenants,” Muss underlined.

Many landlords are hesitant to take on this burden. And conversely, many medical tenants are wary of signing on with a landlord that isn’t financially stable or could change course or rehab somewhere down the line, causing an expensive and burdensome move.

“Who bears the cost kind of depends on the nature of the property and the market around that property,” Johnson said. “Some of the costs might shift to the landlord, some might shift to the tenant. It depends on market dynamics and the nature of that specific improvement.”

Tenant and landlord relationships for medical buildings need to be financially transparent. Nathan Riley, principal of asset management at BGO, told CPE that considering capital market volatility, not all landlords are in a strong enough financial position to support a medical tenant.

“Just as landlords try to evaluate whether a tenant will make it through the lease term, tenants should be evaluating their potential landlords,” Riley said. “Tenants should be asking if the building they want to lease has debt, if the lender is funding any lease concessions, if the lender has to approve the lease before it can be signed.”

And then there are landlord and tenant factors surrounding specific tax policies. Pre-pandemic, landlords were more reluctant toward longer leases. Now, considering the difficulties in the office space, many landlords are keener on longer-term leases, generally working in favor of some health-care tenants.

“I think 501(c)(3)s in general are going to find many more landlords receptive to doing very long-term leases because at the end of the day it’s a win-win, cutting the city’s $10, $15 or $20-per-foot worth of property taxes out the equation,” Cohen said of medical tenants in New York City. “It lowers the overhead for the not-for-profit and it makes the landlord able to offer a much more affordable rent.”

And then there are non-501(c)(3) tenants that are seeking a landlord that will welcome their use and put in money for buildouts and improvements. In this case, the relationship is more of a long-term partnership and the landlord must be receptive to it.

The Certificate of Need can also influence the relationship. Cohen noted that there is a Catch 22 for the CON that often takes place in NYC: The lease must be signed for the tenant to apply for the certificate, so the lease is contingent upon its granting. But for tenants with great reputations, this isn’t usually an issue.

“The landlord doesn’t necessarily fret over the Certificate of Need variable, but they have to be willing to play along with the conditions in the lease that provide the tenant the opportunity to apply for the CON and obtain it before the lease is effective,” Cohen stated.

Location-based factors that medical tenants will pay for

Riley thinks that location is one of the most important factors, both for site selection and when underwriting an MOB investment.

“How dense is the population within a 1-, 3-, and 5-mile radius,” he prompted as a key question to ask. “How saturated is the market already with this type of practice? What are the major hospital systems nearby and is there an existing relationship/referral business with them? If there are other medical tenants in the building, could there be an opportunity for referrals? Is the building easily accessible? Is it near any major roads/highways? In most instances, the more positive answers, the better the location.”

In a broad sense, these are vital questions. In a JLL survey with more than 4,000 respondents, location/proximity ranked as the second-most-likely determining factor for almost all medical care types, ranking just below insurance acceptance.

“You want to be close to your patients and you have to consider the level of saturation in the market, as well as in terms of where your competitors are,” Johnson said. When working with hospitals, physicians and other clinic operator-type clients, JLL creates location models to demonstrate what sites may or may not be successful based on the surrounding population’s care options.

In markets that are densely packed, a scarcity of space can further drive rental rates. And while the critical mass can be appealing, it can also price some health-care tenants out.

An MOB migration off campus

There are several leasing themes that medical office experts anticipate continuing to see throughout this year and into the next. Among them is a shift from inpatient care toward outpatient facilities.

“Specialized MOBs that draw from a wider geography but are still more convenient than the main hospital campus” drive a top trend, Hoffman said.

The move has been prevalent for decades, of course, furthered by private equity and technology investments into outpatient care. The list includes remote patient monitoring, adult care facilities, imaging centers, lab centers etc., according to a 2024 JLL health-care outlook.

Johnson pointed out that in MOB leasing, specialty relationships between different types of medical providers in the same building can be a strong selling point for a location. These multispecialty hubs of sorts offer a variety of benefits whether the providers are under the same management or not: efficiency of operations, economies of scale in rental prices, increased foot traffic etc.

“The medical office building in this case isn’t a retail location, but it’s a retail way of thinking,” Johnson said. “Having a certain mix of retail tenants makes that location stronger and they all benefit collectively.”

For on-campus clinics, many health systems need more liquidity after economic hardship brought about by the pandemic. As a result, “We may see more on-campus sale-leasebacks to give health systems the cash injections needed to grow,” Riley concluded.

What an MOB broker should know

One part of the broker’s job is knowing which buildings and landlords are receptive to medical tenants and will accommodate their use cases. And which ones won’t.

“A medical tenant is not looking at the same universe of options that a conventional office tenant is,” Cohen said. This could be due to the plethora of factors, from expensive buildouts to Certificates of Occupancy to unstable landlords etc. It’s a broker’s job to know why.

Beyond understanding the specifics of buildings, brokers need to have a broad understanding of the ways in which medical care is delivered, Hoffman said. “With that knowledge, they can translate the clinical request for space and be better able to find real estate opportunities that align with the needs of MOBs.”

Riley noted that one piece of advice he received when he stepped into a medical building asset management role was to understand the business model of medical tenants.

“When we have a property under contract and are conducting buyer interviews, if I can show an understanding of the practice and show familiarity with any state/local requirements, insurance carriers etc., it helps me demonstrate to the tenant that I understand their needs and fosters trust,” Riley said.

Read the September 2024 issue of CPE.

The post Getting in the Heads of MOB Tenants appeared first on Commercial Property Executive.

UCSF Health opens today Bayfront Medical Building, a 181,000-square-foot outpatient clinic, at its Mission Bay medical campus in San Francisco. The project’s development costs amounted to $228 million, San Francisco Chronicle reported.

Clark Construction Group broke ground on the five-story building in September 2021. The development team also included Stantec, Rutherford + Chekene and Guttmann & Blaevoet, among others.

A few months later, a nine-level garage started to rise nearby, meant to provide 500 car parking spaces for the new clinic. That structure came online in 2023.

READ ALSO: Medical Office to Perform Well in 2024

Bayfront Medical Building features 14 operating rooms for outpatient surgery, imaging suite, laboratory, physical and occupational therapy gym, 15 types of specialty care, as well as retail and pharmacy spaces. Its medical tenant roster includes the flagship UCSF Medical Center, UCSF Benioff Children’s Hospital, Langley Porter Psychiatric Hospital and Clinics and UCSF Faculty Practice, Becker’s Hospital Review reported.

The clinic will provide a variety of medical services, including allergy, dermatology, endocrinology, hepatology, pulmonology, urology, gastroenterology, pain medicine, physical therapy and rehabilitation and vascular surgery.

Formerly known as Block 34 Clinical Building, the facility is at 520 Illinois St., having access to Interstate 280 and public transportation. Downtown San Francisco is less than 3 miles away. Other medical providers in the surrounding area include Cardinal Medical Center and Concentra Urgent Care, among others.

Bay Area health-care development

As of August, the Bay Area had approximately 1.6 million square feet of medical office building space in various stages of development, CommercialEdge data shows.

One of the currently underway developments is Valley Health Center, a 230,000-square-foot medical office building in San Jose, Calif. Completion of the 10-story facility is expected in late 2025.

Planned projects include UCSF’s 284,800-square-foot research facility and outpatient treatment center in San Francisco. The facility would be part of the Potrero Power Station redevelopment district.

The post UCSF Opens $228M Health-Care Facility appeared first on Commercial Property Executive.

That isn’t the largest share of deals in the period—multifamily still has that distinction, followed by industrial—but data centers’ share saw the largest growth from 2023, when they represented only 4 percent, and the two years before that, when deals in the sector were nil.

That finding dovetails with a DLA Piper survey from earlier this year, which found that data centers were the most attractive asset class, up more than 20 percentage points from the prior year.

Moreover, the report this spring said that data centers were an area of growth, and DLA Piper now says that it is clearly seeing this play out in its practice, with the company’s data center team handling an increasing amount of data center acquisitions and financing.

For the new report, DLA Piper surveyed over 850 acquisition and disposition agreements and over 400 property management agreements.

READ ALSO: More Data Centers, Please!

Buying and selling wasn’t the only elevated metric for data centers during the first half of 2024, the report noted, finding an increase in the percentage of data center (and industrial) properties in which the project’s construction fee was 5 percent or more. Some 60 percent of such deals had a fee of 5 percent or more, while 40 percent were in the 3 percent to 4 percent range.

Other findings

The report found that office deals, still far down from before the pandemic, actually gained a little ground in the first half of 2024, coming in at 9 percent, compared with 7 percent in 2023. In 2019, office represented fully a quarter (25 percent) of acquisitions and dispositions, the DLA Piper report found.

Retail, also 25 percent of acquisitions and dispositions in 2019, but crashing down in 2020, saw a small downtick between 2023 and ’24, from 9 percent to 8 percent. Industrial has been fairly consistent in terms of acquisitions and dispositions in recent years, DLA Piper explained: 20 percent in 2024, the same as in 2022 and 2020, and only a little down from 21 percent in 2023.

Longer representation and warranty survival periods in commercial real estate deals was another trend that the report found.

A survival period is the time limit during which claims may be brought for breaches of reps and warranties, with a 270-day survival period appearing in 45 percent of transactions and a 365-day or longer survival period appearing in 21 percent, according to the report. Shorter survival periods, especially those of 180 days, continued to decline, down in frequency from 33 percent to 29 percent.

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The Onicx Group has received $20.7 million in refinancing for Mercy Medical Arts, a 104,238-square-foot medical office building in Miami. Lake Michigan Credit Union provided the loan, according to Miami-Dade County records. Berkadia Medical & Life Sciences represented the borrower.

Previous financing included a $20 million construction loan originated by Centennial Bank in 2015, CommercialEdge data shows.

The Class A property came online in 2017 and was 65 percent leased at the time of the current deal to a variety of medical office building tenants, including HCA Healthcare, Collaborative Women’s Care, Vizcaya Dental Arts and Greyledge Technologies.

READ ALSO: These Markets Top MOB Investment Activity

The five-story building features two passenger elevators, 26,405-square-foot floorplates and controlled access. The medical facility provides such services as OB/GYN, plastic surgery, dermatology and sports medicine.

Located at 3683 S. Miami Ave., the 31.7-acre property is within the campus of HCA Mercy Florida Hospital, having access to Interstate 95. Downtown Miami is less than 4 miles northeast. Other medical centers in the surrounding area include Miami General Medical Center, Luz Medical Center, Comprehensive Rehabilitation Center, Palm Medical Network and Coral Way Medical Group, among others.

The Berkadia team included Senior Managing Director Sabrina Solomiany, Vice President Mike Cerny and Analyst Chris Meyer.

Financing health-care assets

Despite the impact of high interest rates and inflation on all sectors of commercial real estate, medical office buildings are still on investors’ radar. The stable and long-term occupancy in health-care facilities, coupled with ongoing demand, enable financing opportunities.

Earlier this month, Turner Impact Capital’s Healthcare Facilities Fund received $29.1 million in financing for Chula Vista Medical Arts I, a 64,231-square-foot medical office building some 10 miles from downtown San Diego. Proceeds will go toward property improvement.

Another recent financing deal involved a future 200,000-square-foot outpatient center in Bethany, Okla. Bethany Children’s Health Center received $167 million from local financial institutions and MidFirst Bank for the development of this four-story facility.

The post Onicx Lands Refi for Miami MOB appeared first on Commercial Property Executive.

Abrazo Health and PMB have started construction on the Abrazo Health Litchfield Medical Building, a 46,000-square-foot health-care facility in Goodyear, Ariz. The project is expected to come online next year.

The two-story facility will mark the city’s first combination of medical offices and inpatient rehabilitation programs. Abrazo Health committed to 27,000 square feet at the building, while MedCure will occupy 5,000 square feet.

Partners on the development include architecture firm Devenney Group, general contractor Haydon and financing partner Siemens. PMB Real Estate will serve as property manager.

READ ALSO: MOB Tenants: What’s Hot and What’s Not

Services at Abrazo Health Litchfield will include rehabilitation, internal medicine, cardiology and hospitalists. The 24 inpatient rehabilitation beds will be used for patients recovering from strokes, brain injuries, spinal cord injuries, orthopedic injuries, neurological conditions, trauma and more.

The facility is rising at 1375 N. Litchfield Road within the Palm Valley shopping center and adjacent to the Abrazo West Campus hospital. The location is close to Interstate 10 and less than 1 mile from downtown Goodyear, while downtown Phoenix is 20 miles away.

MOB subsector faces challenges

Phoenix’s MOB development pipeline in the second quarter of this year decreased to 292,000 square feet, representing 1.1 percent of total stock, a CBRE report shows. However, in the first quarter, the metro was the top market for trailing-four-quarter medical office building investment, with a sales volume of $373 million.

In June, Hammes opened Buckeye Medical Plaza, a 48,000-square-foot medical office building in Buckeye, Ariz. The project, which broke ground last year, is now leased to eight tenants.

A few months earlier, Anchor Health Properties topped out HonorHealth Medical Campus at Peoria, a 100,000-square-foot development in Peoria, Ariz. The developer started construction on the three-story facility last year and expects to complete it in early 2025.

The post PMB, Abrazo Health Break Ground on Phoenix-Area Facility appeared first on Commercial Property Executive.

Harrison Street and Ackerman & Co. have refinanced Perimeter Town Center, a 274,284-square-foot medical office building portfolio in Sandy Springs, Ga. Mesa West Capital provided the three-year, $51.3 million loan, according to Fulton County records. JLL worked on behalf of the borrower.

The funds will be used for capital improvements, partially cover the cost for recent leasing and near-term lease maturities and repay existing debt.

The property was previously subject to a $44.1 million bridge loan held by Capital One, with a maturity date set for 2023, CommercialEdge data shows.

READ ALSO: These Markets Top MOB Investment Activity

The three buildings came online between 1981 and 2008. The medical campus features floorplates ranging between 15,000 and 22,000 square feet, a total of 1,043 car parking spaces and additional 55,000-square-foot retail space.

The tenant roster includes Perimeter Dental, Virtual Imaging, Perimeter Surgery Center and Family Practice at Peachtree, among others.

The capital improvement program will focus on renovating public spaces, building exteriors, landscaping, parking area and wayfinding signage.

Located at 1150 Hammond Drive NE and 6115 Peachtree Dunwoody Road, the properties are adjacent to the Pill Hill medical hub and have access to Interstate 285. Downtown Atlanta is less than 15 miles away. Medical providers in the surrounding area include Northside Hospital Atlanta, Emory St. Joseph’s Hospital, Elysium Primary Care and Forefront Dermatology.

Managing Director Timothy Joyce, Senior Director Anthony Sardo and Managing Director Matt Casey with JLL Capital Markets led the team representing the borrower in the transaction.

The post Harrison Street JV Lands $51M for Atlanta MOB Portfolio appeared first on Commercial Property Executive.

Four months after announcing a joint venture aimed at acquiring up to $300 million in medical office assets across the Sun Belt, Cypress West Partners and TPG Angelo Gordon have closed a MOB credit facility.

Capital One Bank provided the loan which consists of financing for an existing portfolio and additional capacity for future acquisitions. Newmark Healthcare Capital Markets advised Cypress West and arranged the credit facility on behalf of the joint venture.

The deal marks a significant milestone in the strategic joint venture announced in March by Cypress West and TPG Angelo Gordon. Focusing on acquisition of medical office assets in high-growth Sun Belt markets, the partnership targets core-plus and value-add returns and will have the ability to acquire up to $300 million in the vehicle.

READ ALSO: MOB Tenants Pay a Premium for These Markets

The portfolio included in the financing consists of six Class A medical outpatient facilities totaling 269,000 square feet in West Coast markets such as Phoenix, Orange County and San Diego. The properties feature both assets previously owned by Cypress West as well as assets acquired by the joint venture.

The partnership’s first acquisition was completed in March and involved an 86,000-square-foot medical office building at 9377 E. Bell Road in Scottsdale, Ariz. Healthpeak Properties was the seller, according to CommercialEdge data.

The portfolio also includes:

• RMS Health Center, 25,106 square feet, 22032 El Paseo, Rancho Santa Margarita, Calif.
• 101 Medical Gateway, 50,824 square feet, 9520 W. Palm Lane, Phoenix
• Desert Mountain, 42,429 square feet, 9220 E. Mountain View Road, Scottsdale, Ariz.
• Tatum Highlands, 33,619 square feet, 26224 N. Tatum Blvd., Phoenix

More recently, the joint venture acquired Chula Vista Medical Arts II, a nearly 40,000-square-foot medical office building in Chula Vista, Calif., from Turner Impact Capital. The four-story facility, built in 1985 and most recently renovated in 2015, is leased to 12 tenants and anchored by Scripps Health.

More TPG Angelo deals

In March, TPG Angelo Gordon and another joint venture partner, Sendero Capital, grew their Rhode Island portfolio with the acquisition of a 30,000-square-foot, multi-specialty healthcare facility in Warwick. The partners purchased the three-story property from NeuroHealth in a sale-leaseback deal.

It was the fifth acquisition through their programmatic joint venture that launched in July 2023. The investment vehicle is focused on out-patient healthcare real estate in the Northeast and has the capacity to make up to $300 million in investments.

The post Cypress West, TPG Angelo Close MOB Credit Facility appeared first on Commercial Property Executive.

Turner Impact Capital’s Healthcare Facilities Fund has received $29.1 million in financing for Chula Vista Medical Arts I, a 64,231-square-foot medical office building in Chula Vista, Calif. Siemens Financial Services provided the loan, with a maturity date set for 2031, according to San Diego County records. JLL represented the borrower.

Turner Impact Capital has owned the Chula Vista property since April 2024. The company acquired the asset for $18 million from Welltower, CommercialEdge data shows. Last month, Turner sold Chula Vista Medical Arts II to the Cypress West Partners and TPG Angelo Gordon joint venture, for $11.6 million.

In March, Turner also secured a $6.7 million, three-year loan for 1650 Adams Ave. in Costa Mesa, Calif. The borrower will retrofit the 6,700-square-foot asset into a community health center for Share Our Selves.

The owner will use the funds to convert both buildings into modern medical facilities.

Senior Managing Director John Chun and Director Matt DiCesare with JLL Capital Markets led the team representing the borrower in both transactions.

Facility ready for renovation

The five-story Chula Vista building came online in 1973 and underwent cosmetic renovation in 2013. The low-rise, Class B facility features two passenger elevators, controlled access and offers 94 car parking spaces. The owner will renovate and turn a section of the building into a community health center for San Ysidro Health.

The tenant roster includes Quest Diagnostics, Colton Health and Mora Family Dental, among others. Current trends in medical office building occupancy show a focus on wellness, catering to the aging population and urgent care services.

Located at 480 4th Ave., the property is adjacent to the Scripps Mercy Hospital Chula Vista and has access to interstates 5 and 805. Downtown San Diego is some 10 miles northwest of the facility. Other medical providers in the surrounding area include Turullols Medical Center, California Medical Injury & Rehabilitation Physicians and Adams Medical Clinic.

The post Turner Impact Capital Lands Financing for San Diego MOB appeared first on Commercial Property Executive.

Health trends come and go. And with them, demand for medical office space shifts. Certain markets are known for hosting certain types of health-care professionals. As such, medical office real estate trends across the nation look a bit different from place to place. But there are some overall occupancy themes to observe, as well.

A trend toward wellness

The general wellness industry has recently begun occupying more real estate than it historically has, according to Michael Cohen, principal of Williams Equities.

“There isn’t a single practice type that has eclipsed the others, but I do think that the concept of wellness—something that combines M.D.s with Ph.D.s and practitioners, acupuncturists, reflexologists—and this holistic approach to health care is one of the newer (ones) on the scene,” Cohen explained.

While some might not classify this as a medical tenant, Cohen does. As Baby Boomers age and the general population becomes more health conscious, the demand for holistic services, such as psychotherapy, is rising. And so is leasing.

“You are seeing this idea of mixing traditional medical care with sometimes alternative practices: fitness, nutrition, mental well-being,” noted Jay Johnson, national director of JLL’s health-care market. It’s becoming more common to see a mix of these medical tenant types under the same roof, he continued.

This trend will likely accelerate as people become more proactive rather than reactive about their health .

“We don’t want to settle for the same health care that our parents settled for,” said Johnson. “Expectations are going up. We want to be more active into our later years.”

Need-based practitioners

Other medical practitioners that are likely to continue to lease more and more space are those that cater to an aging population. Baby Boomers are likely to need more orthopedic procedures and the smaller cohort of Gen X, for example, will begin to move toward more frequent joint replacements. And then there are the things that never go away.

“Cardiology, dermatology, cancer-treatment facilities, those are all very widely needed and utilized medical tenants, and those are all going to get stronger,” said Jason Muss, president of Muss Development. “There is no substitute for visiting the doctor regardless of any other advancements in tech.”

Urgent care? Perhaps

One tenant that may have already seen its heyday is urgent care centers. During COVD-19 people were in constant need of quick and efficient medical testing within a short distance of their home. As a result, these centers skyrocketed.

“Those places thrived,” Muss said. “There is still a place for them, but they aren’t expanding as rapidly as they were.” Now, there might be some consolidation down the line.

Pandemic or not, younger generations often favor this more on-demand type of relationship with doctors and caregivers. Being able to see online what’s open now, what the wait times are and the types of services offered is “giving urgent care a bit more of a retail-like flavor,” Johnson said.

The post MOB Tenants: What’s Hot and What’s Not appeared first on Commercial Property Executive.

Across the nation, demand for medical office buildings is persistent. As the population ages and the youngest of the Baby Boomers enter their 60s, the need for in-person health care is increasingly critical. But some markets in the U.S. are experiencing more demand than others, and as a result, some MOB spaces are commanding top dollar. In these areas, MOB brokerage business is unlikely to waver.

“I think there are a lot of markets across the U.S. with very attractive MOB opportunities but, like all real estate investments, the ‘hotness’ of the market is in the eye of the beholder,” Nathan Riley, principal, asset management at BGO, told Commercial Property Executive. “That said, I think an important determination to whether a market has the potential to be attractive is to look at the demographic trends through the lens of a medical professional.”

READ ALSO: 2024 Top CRE Brokerage Firms

And through the lens of someone in the medical field, access to patients and an increasing patient base is the key. This makes markets like those across the Sunbelt states particularly attractive as well as cities where people like to age in place—like Miami.

Southern states at large are presenting opportunity as well. “Many MOBs are looking to open locations in southern states so that they can serve snowbird patients both in their northern home bases and when they’re at their snowbird vacation homes down south,” said Eric Hoffman, vice president and national health-care sector lead at Project Management Advisors.

Medical tenants need people

Places with access to a tremendous pool of people, like Manhattan, have a large concentration of MOBs, too. With ready access via trains, cars and subways, certain parts of the city have a dearth of medical space available to a list of waiting potential tenants, said Jason Muss, president of Muss Development.

“Then there are specialized areas like Boston, Miami and Los Angeles that present tremendous medical benefits,” Muss continued.

Locating in a big urban core as a top doctor provides an access advantage as well as a centrality benefit, pushing rental rates up. Many medical uses—surgery centers, hospitals, cancer treatment facilities, etc.—seek out urban centers before the suburbs. For these types of tenants, brokers must study the surrounding population first to then understand the real estate need.  

The post MOB Tenants Pay a Premium for These Markets appeared first on Commercial Property Executive.

The partners will first fund the development of seven properties, completed or in the works, totaling nearly 500,000 square feet in five states. The properties will count such organizations as Ochsner Health System, Andrews Medicine, University of Mississippi Medical Center and PAM Health as tenants.

Nonprofit Ochsner operates 40 medical facilities in Louisiana, while PAM operates 70 long-term acute care hospitals and medical rehabilitation hospitals, as well as wound clinics and outpatient physical therapy locations, in 22 states. Andrews Medicine is an orthopedic and sports medicine specialist. In 2022, Catalyst inked a deal to be the real estate developer for Andrews Medicine.

READ ALSO: These Markets Top MOB Investment Activity

Heitman currently has about $50 billion in assets under management as a participant in the global real estate property and capital markets. Its real estate investments through private equity, debt and publicly traded real estate securities represent a diversified portfolio.

Catalyst is a national health-care real estate development and investment firm. Newmark’s Healthcare Capital Markets Group advised both Catalyst and Heitman, on the establishment of the joint venture, and represented Catalyst on the development pipeline capitalization. Newmark’s Ben Appel, John Nero, Jay Miele, Michael Greeley and Ron Ott worked on the deal.

A resilient asset class

MOB fundamentals remain strong and construction starts remain slow, which points to increasing occupancy and rental rate growth, according to JLL’s most recent report on the sector. That dynamic will drive increasing allocation of capital from other asset classes.

Moreover, strong fundamentals are expected to remain the norm in medical-oriented real estate assets, especially due to an aging population that requires more care. While the population of Americans over 65 composed only 18 percent of the population in 2021, they drove 36 percent of health-care spending, JLL noted.

More specifically, they are increasingly getting that care in outpatient settings—which are typically medical office buildings. Inpatient volumes are anticipated to decline, but outpatient volumes will grow, JLL forecasts.

The post Catalyst Healthcare, Heitman Launch $300M JV appeared first on Commercial Property Executive.

West Coast Capital Partners has acquired Mountain View I, a 91,082-square-foot medical office building in Scottsdale, Ariz.

Represented by Newmark, Regent Properties sold the asset for $11 million. The buyer purchased the facility with the aid of a $12 million loan, provided by First International Bank & Trust, Maricopa County records show.

The property last traded in 2014, when the previous owner acquired it for $17.2 million from Principal Real Estate Investors, as part of a $34.6 million portfolio transaction that also included Ninety Mountain View II, according to CommercialEdge information.

READ ALSO: These Markets Top MOB Investment Activity

The three-story Mountain View I came online in 2000, on a 3.3-acre site and underwent cosmetic renovations in 2016. The LEED and Energy Star Certified property features 30,361-square-foot floorplates, two passenger elevators, controlled access and offers 455 car parking spaces.

The tenant roster includes Desert Plastic Surgery, Audiology of Scottsdale, MCS Biotech Resources and Paradise Valley Medical Clinic, among others. Mountain View I was 86 percent leased at the time of the sale.

Located at 9977 N. 90th St., in the Scottsdale Cure Corridor, the property is within walking distance of the 427-bed HonorHealth Scottsdale Shea Medical Center. The facility has access to U.S. Route 101 and is 24 miles northeast of downtown Phoenix. Other medical providers in the surrounding area include New Horizon Medical Center, Viva MedSuites, Banner Urgent Care and Halogen Medical Services, among others.

The Newmark team included Executive Managing Directors Barry Gabel, Chris Marchildon and Charles J. Osbrink.

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Oklahoma City-based MidFirst Bank, the largest privately owned bank in the nation, served as senior lender. Chris Altom, senior vice president of the bank’s National Healthcare Lending Division, managed the loan transaction. His team focuses on health care-related assets including hospitals, ambulatory surgery centers, medical office buildings and senior housing facilities.

MidFirst, which has $36.9 billion in assets, provides commercial lending, mortgage servicing, private banking and wealth management services nationally. In addition to Oklahoma, the bank has locations in Arizona, Colorado, Nevada, Texas, Utah and California, where it operates as 1st Century Bank.

Hospital expansion plans

The health center’s new Outpatient Tower and Center of Excellence will quadruple its current clinical space and address the growing demand for specialty services, therapies and continuing post-discharge care.

A groundbreaking ceremony for the $178 million project, designed by Storyland Studios and REES Architects, was held in early May. With Manhattan Construction Group serving as general contractor, delivery is expected in 2027.

Upon completion, the medical facility will house a pediatric rehabilitation center. Outpatient services also feature pediatric neurology, neuropsychology and a wide array of therapies including physical, speech, occupational, music and recreational therapy, among others.

Considered a leader in the field of pediatric rehabilitation and 24-hour complex care, the hospital provides inpatient and outpatient services for children ages 0-21 and is the only inpatient pediatric rehabilitation facility in Oklahoma. Situated on historic Route 66, the hospital is 12 miles from downtown Oklahoma City.

The post Oklahoma Health Center Lands $167M for Campus Expansion appeared first on Commercial Property Executive.

Cypress West Partners, in a joint venture with TPG Angelo Gordon, has acquired Chula Vista Medical Arts II, a nearly 37,000-square-foot medical office building in Chula Vista, Calif. Turner Impact Capital sold the Class B asset for $11.6 million, according to San Diego County records. JLL Capital Markets brokered the transaction on behalf of the seller.

The property last traded a few months ago, when Turner Impact Capital purchased the facility for $10.5 million from Welltower, CommercialEdge shows.

Earlier in spring, Cypress West and TPG Angelo Gordon formed a programmatic joint venture aimed at acquiring some $300 million in medical office assets across the Sun Belt over the next two years.

The four-story facility came online in 1985 and went through cosmetic renovations in 1999 and 2015. The building features 11,700-square-foot floorplates, two passenger elevators, an on-site lounge, controlled access and 198 car parking spaces.

Anchored by Scripps Health, the property is currently leased to 12 tenants, including The Oncology Institute of Hope and Innovation, Grimaldi Center, The Neuron Clinic and Labcorp, among others.

Located at 450 4th Ave., the facility is situated within the Scripps Mercy Hospital Chula Vista campus and has access to interstates 5 and 805. Downtown San Diego is more 10 miles northwest of the property. Other medical providers in the surrounding area include Adams Medical Clinic, Concentra Urgent Care, Chula Vista Family Health Center and Turullols Medical Center, among others.

The JLL Capital Markets team included Director Matt DiCesare and Senior Managing Director Evan Kovac.

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Big Sky Medical has acquired Sunset at Treeline, a 58,000-square-foot medical office building in San Antonio, with the aid of an acquisition loan issued by Bank of America, Bexar County records show. According to CommercialEdge, Casey Development was the previous owner of the Class A asset.

Development of the property was first announced in 2018, with GRG Architecture designing the building, which came online a year later.

The project initially landed an $11.7 million construction loan provided by American Momentum Bank, which later in 2020, originated another $17.2 million in financing. The property was also subject to a $19.7 million loan, provided in 2022 by First United Bank and Trust Co., CommercialEdge shows.

READ ALSO: Houston a Bright Spot Amid Slowing Medical Office Sector

Rising four stories, the facility features 17,460-square-foot floorplates, two passenger elevators, controlled access, on-site rooftop deck and includes 290 car parking spaces.

Sunset at Treeline is currently fully occupied and anchored by Baptist Health System Physicians and WellMed, a United Healthcare subsidiary. Medical services provided include OB/GYN, orthopedics and cardiology.

Located at 430 W. Sunset Road in the Alamo Heights neighborhood, Sunset at Treeline has access to U.S. Route 281 and Interstate 410. Downtown San Antonio is some 8 miles south of the property. Other medical providers in the surrounding area include CHRISTUS Santa Rosa Hospital, Molina Healthcare of Texas Regional Office and Village Square Medical Building, among others.

Big Sky Medical’s medical office building investments amount to $1.1 billion, boasting a portfolio totaling 3.1 million square feet in 17 states across the U.S.

The post Big Sky Medical Grows San Antonio MOB Portfolio appeared first on Commercial Property Executive.

HRT will contribute the assets to a new joint venture in two phases at a cap rate of about 6.6 percent. The first phase, which should be completed in August, will see the contribution of eight current HRT properties valued at $193 million. Nuveen will fund a contribution equal to 80 percent of that equity value. HRT will retain the remaining 20 percent equity and will continue to manage day-to-day operations and leasing of the properties.  

The joint venture is expected to use secured financing of about 40 percent of the contributed value. Closings are subject to satisfaction of customary closing and financing conditions.  

READ ALSO: Deal-Thirsty Investors Are Still Waiting for CRE Distress

Concurrently, HRT announced that it has generated about $400 million of proceeds from joint venture and asset sales so far this year. Additional asset sale and joint venture transactions now under contract or LOI are expected to increase those proceeds to more than $1 billion.

The majority of these transactions are expected to close in the third quarter.

In addition, KKR has committed up to a further $600 million of capital to increase the potential value of its 80/20 JV with HRT beyond the initial property contributions. HRT reported that in the near term, additional property contributions are expected to generate incremental proceeds for it of about $100 million in August, increasing the value of the joint venture to about $500 million.

Wide horizons

Healthcare Realty owns and operates medical outpatient buildings, primarily near market-leading hospital campuses. Its portfolio includes nearly 700 properties totaling more than 40 million square feet concentrated in 15 growth markets.

In May, Nuveen acquired a two-building, 371,200-square-foot warehouse-distribution portfolio near Indianapolis. HSA Commercial Real Estate was the seller, represented by Colliers.

The assets are part of Gateway Business Park, a six-building industrial center developed by HSA. The park’s development timeline has been a long one; its first building was completed in 2004 and the recent one in 2022.

The post Healthcare Realty Invests $400M to Expand Nuveen JV appeared first on Commercial Property Executive.

All properties, varying in size, will be MedSquare locations, a brand created recently by MAS AJP. The first in the series, dubbed MedSquare Health, is a 120,000-square-foot property at 9408 SW 87th Ave. in Kendall, Fla., that came online in 2021.

MedSquare Health includes such amenities as oversized passenger and service elevators, fiber optic internet, meeting rooms, a cafe, and dedicated HVAC and electrical for each office. The property also has a parking ratio of 7 spaces per 1,000 square feet, with valet and reserved parking.

In 2022, MAS AJP developed MedSquare Place + The Contemporary, a 95,000-square-foot medical office building together with an 85-unit independent living community at SW 92nd Ave. and Coral Way in the Westchester neighborhood of Miami.

READ ALSO: These Markets Top MOB Investment Activity

The launch of the joint venture aims to bolster the partners’ market position in the health-care sector. Flagler, which manages more than $1 billion in health-care assets worldwide, including inpatient, outpatient and post-acute care facilities, brings its investment services and management expertise to the table, while MAS AJP brings its construction and development experience.

Due to the obsoleteness of much of the existing medical properties stock in the U.S., the need for new Class A medical buildings in the marketplace is “dire,” according to Chris Coots, a founding partner of Flagler.

MOB vacancies low, development slow

The fundamentals of the overall U.S. office market may be weak, but medical office properties are considerably stronger, with vacancies still under 10 percent nationwide as of mid-2024, according to Marcus & Millichap’s Institutional Property Advisors. That is up from pre-pandemic levels of around 6 percent, but still at least half the vacancy rate of ordinary office assets.

Still, MOB development is down as the property type faces the capital market constraints common to all commercial real estate. Overall completions will drop from about 12.5 million square feet in 2023 to about 10 million this year, IPA forecasts.

Investor interest has slacked off as well, IPA notes. During the 12 months ended in March 2024, transaction velocity was down by nearly 40 percent compared with the same period a year earlier. Most of the trades that did take place were in the $1 million to $10 million price range, where capital market access isn’t always as important as in bigger deals.

The post Flagler, MAS AJP to Develop South Florida MOBs appeared first on Commercial Property Executive.

Welltower has acquired 1201 Alhambra, a 103,652-square-foot medical office building in Sacramento, Calif. NexCore Group sold the asset for $45.6 million, according to Sacramento County records. Colliers U.S. Healthcare Capital Markets facilitated the transaction.

The property previously traded in 2011 for $21.3 million, when the former owner bought the facility from AKT, CommercialEdge data shows.

Transaction activity in the medical outpatient sector has slowed down, showing a 40-basis-point contraction year-over-year as of March, a Marcus & Millichap report shows. According to the research, sales in the lower price range have affected the average sale price, leading to the need of having to find alternative financing for smaller assets.

READ ALSO: These Markets Top MOB Investment Activity

Completed in 1990, the four-story building underwent cosmetic renovations in 2013. The property features 26,000-square-foot floorplates, three passenger elevators, controlled access and has 415 car parking spaces at a ratio of 4.1 spots per 1,000 square feet.

At the time of the sale, the facility was 80 percent leased by Sutter Health. Medical services include family medicine, internal medicine, bariatrics and PT/ST/OT, urgent care, on-site laboratory and an infusion clinic. The ambulatory surgery center features three operating rooms and specializes in orthopedic, spine, neuroscience, podiatry and rheumatology surgeries.

Located at 1201 Alhambra Blvd., the property is in downtown Sacramento, having access to U.S. Route 50. Other medical providers in the surrounding area include Sutter Medical Center, Mercy General Hospital, Concentra Urgent Care and Fort Sutter Medical Complex, among others.

The post Welltower Buys Sacramento MOB for $46M appeared first on Commercial Property Executive.

Medical office construction has slowed—especially outside of Texas—and health-care retailers are shuttering, according to Marcus & Millichap’s national medical office report for the first half of the year.

Most medical office construction projects are less than 50,000 square feet. However, Houston has several large projects slated for 2024, and will host nearly 22 percent of medical office space delivered nationally this year.

This will help Houston cater to its aging population, which is expected to see the nation’s third-largest increase in cohorts aged 65 and older by 2034.

Given inflation for material and labor costs, Marcus & Millichap expects more future projects to involve traditional office conversions.

Failing retail sites are another commercial real estate asset option for the medical office sector.

“The decision from some pharmacy retailers to offer limited, on-site medical care has emerged as a potential competitor for medical office operators in recent years,” according to the report.

Marcus & Millichap said that “in practice, this strategy has produced mixed success,” with similar attempts by Walmart and Walgreens proving less than profitable.

Transaction velocity down nearly 40 percent y-o-y

Deal flow in the sector fell in the first quarter, and leading private buyers are finding alternative financing, particularly for assets with smaller price tags.

Year-over-year as of March, transaction velocity was down by nearly 40 percent. The bulk of trades that took place were in the $1 to $10 million price tranche, according to the report.

Trades in a lower price tranche have impacted the average sale price. During the trailing yearlong span that ended in March, the mean price per square foot for medical office space was $292, with a corresponding average cap rate of 7.2 percent. Regional differences emerge compared to pre-2020.

READ ALSO: Office Sector Adapts Amid Market Shifts

“While deal flow has declined from the highs recorded in 2021 and 2022, trades were more closely aligned with pre-pandemic trends,” Marcus & Millichap said.

Over the same period, half of the eight regions recorded transaction velocity above their pre-pandemic five-year average.

Cyber attacks common, costly

Ransomware attacks are presenting headwinds, as cyber security concerns loom over the health system. A cyberattack in February aimed at UnitedHealthcare cost the company $870 million. According to the American Hospital Association, 94 percent of hospitals reported being financially impacted by the February cyberattack.

The report said the added expense of cyber security could also prompt cost-cutting in other areas, including real estate holdings.

In the case of UnitedHealthcare, it shrunk its traditional office real estate footprint after the attack. Other large companies may face similar attacks, which could impact their buy/sell/lease decisions of commercial real estate, including medical office, according to the report.

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Hammes has opened Buckeye Medical Plaza, a 48,000-square-foot medical office building in Buckeye, Ariz., near Phoenix. Cotton Architecture acted as architect and MJ Harris Construction served as general contractor. Integrity Commercial Real Estate Founder Melynn Wakeman handled leasing efforts.

The developer broke ground on the project in May 2023 and completed construction in April this year. Hammes acquired the 4.2-acre site from Wilson Property Services Inc. for $4 million.

READ ALSO: These Markets Top MOB Investment Activity

Upon completion, eight tenants will occupy the two-story facility providing various services including primary care, physical therapy, pediatric Autism, women’s care, lab, podiatry, oral surgery and dental.

Located at 865 South Watson Road, Buckeye Medical Plaza is near Interstate 10 and roughly 30 miles west of downtown Phoenix. It is also some 12 miles from Phoenix-Goodyear Airport and 10 miles from Buckeye Municipal Airport. Abrazo Medical Hospital and Banner Buckeye Hospital are slated to take shape near the property as well.

Phoenix office development activity contracts

Considering overall office development in the metro, Phoenix registered the smallest pipeline among Sun Belt markets as of February, with 940,968 square feet underway across 16 properties accounting for 0.6 percent of stock, according to CommercialEdge data. Construction starts also decreased with only 107,400 square feet breaking ground in the year’s first two months, compared to the 717,085 square feet registered in the same period in 2023.

Recently, Anchor Health Properties topped out HonorHealth Medical Campus at Peoria, a 100,000-square-foot medical office project in Peoria, Ariz. Developed in conjunction with HonorHealth and SMIL, the Class A facility broke ground in November 2023, and is slated to come online in early 2025.

The post Hammes Opens Phoenix-Area MOB appeared first on Commercial Property Executive.

Davis Healthcare Real Estate has completed Lakeville Specialty Center, a 100,500-square-foot medical office building in Lakeville, Minn.

The development team included Synergy Architecture Studio, Timco Construction and KOMA as structural engineer, among others.

Davis obtained a $2.9 million construction loan from Bridgewater Bank in 2021, according to Dakota County records. The groundbreaking ceremony took place the following year in June, when the specialty clinic was already fully leased.

The now-completed facility is occupied by Allina and MNGI Digestive Health. The former has taken a total of 78,500 square feet, offering orthopedics, oncology, women’s health and cardiology services, while the latter operates a clinic and endoscopy center across 22,000 square feet.

Plans for the medical office building initially called for a 50,000-square-foot building, rising on a 4.2-acre site. Due to a strong leasing demand in the health-care sector and the commitment from the two tenants, the developer doubled the size of the facility, which extended the project’s completion timeline by four additional months. The four-story Class A property now offers 540 car spaces and an underground parking structure.

Lakeville Specialty Center took shape at 18645 Orchard Trail, near Interstate 35 and 22 miles south of downtown Minneapolis. Other medical providers in the surrounding area include Children’s Minnesota Cardiovascular Care, MinuteClinic, Park Nicollet Urgent Care Lakeville and Lakeville Orthodontics, among others.

The Minneapolis-St. Paul office market currently has 16 other medical office buildings in various stages of development, set to add 1.5 million square feet to the existing inventory, CommercialEdge data shows.

The post Davis Healthcare Opens Minneapolis-Area MOB appeared first on Commercial Property Executive.

The properties are located in seven states and total about 725,000 square feet. As of the end of March, the weighted average remaining lease term for these properties was 5.4 years and the overall occupancy was 93 percent.

The non-recourse loan has an implied capitalization rate of 7.2 percent based on the aggregate appraised value for the collateral properties and a loan-to-value ratio of approximately 50 percent.

The loan is an interest-only 10-year mortgage with a 6.864 percent all-in fixed interest rate. DHC intends to use about half of the loan proceeds to redeem a portion of its outstanding 9.750 percent senior notes due in 2025. The REIT will use the remainder of the loan proceeds to fund capital investments and improve liquidity.

READ ALSO: Braving the Debt Restructuring Minefield

The lenders were Wells Fargo Bank N.A., Bank of Montreal and UBS AG.

DHC did not reply to Commercial Property Executive’s request for additional information.

Debt issues

In April 2023, Office Properties Income Trust entered into a definitive merger agreement with Diversified Healthcare Trust, in an all-share transaction valuing the combined company at $12.4 billion. Both REITs are managed by The RMR Group, an alternative asset management firm.

As the shareholder vote neared, DHC sent several letters to its shareholders highlighting the merger’s upside for DHC, including solving “a series of severe and time-sensitive challenges for DHC related to the Company’s debt covenants….”

At the end of August 2023, however, DHC announced that the two REITs had mutually agreed to terminate the merger agreement. Later that month, DHC stated that, as it had previously reported, it “is not and has not been for the past two years in compliance with the debt incurrence covenants in its bond indentures. As a result, DHC cannot incur new debt or refinance existing indebtedness. DHC has $700 million in indebtedness maturing in the first half of 2024 and has previously disclosed that it does not expect to be in covenant compliance until late 2024 at the earliest.”

The post Diversified Healthcare Trust Closes $120M Mortgage Loan appeared first on Commercial Property Executive.

PMB and Santa Clara Valley Healthcare have topped out Valley Health Center San Jose, a 10-story, 230,000-square-foot medical office building in San Jose, Calif. Completion is expected in late 2025.

The developers broke ground on the project in October and are aiming for LEED Silver certification. WRNS Studio and Boulder Associates designed the medical office development, while South Bay Construction serves as general contractor. 

As for project financing, Capital One provided the partnership with a $205.3 million loan in 2022, according to CommercialEdge data. Harrison Street is the equity partner.

Located at 1410 S. Bascom Ave., near VTA’s Bascom Station, VHC San Jose is part of a transit-oriented, mixed-use development that also includes a 590-unit multifamily component. PMB and Harrison Street Real Estate Capital acquired the master plan’s office component in June 2022. The Maxwell, the residential portion of the development, is also under construction.

In line with San Jose’s Urban Village strategy

VHC San Jose is a signature project of the city’s Urban Village strategy that creates complete neighborhoods where daily needs, including medical care, can be met in close proximity to where people live. It will be the 10th local Valley Health Center servicing Santa Clara County, the sixth largest county in California with a population of 1.9 million residents.

The health center will have 16 departments including adult medicine, OB/GYN subspecialties, adult urgent care, behavioral health, dental, diagnostic imaging, facility support services, maternal and fetal medicine, patient support services, pediatric primary care, pediatric subspecialties and pediatric urgent care, among others.

The 2.4-acre triangular-shaped site is at the light rail stop along Southeast Expressway, north of Los Gatos Creek. The development is within walking distance of more than 11,000 households, with downtown San Jose about 5 miles away.

PMB’s medical office projects

PMB has developed more than 130 health-care facilities across the U.S., totaling approximately 6 million square feet. The firm owns and manages 70 medical facilities comprising more than 5.2 million square feet and works with health systems, hospitals, medical groups, specialty providers, academic medical centers and senior living providers.

In April, PMB, in partnership with Providence St. Joseph Hospital, opened Helen Caloggero Women’s and Family Center, a 137,000-square-foot medical office building in Orange, Calif. The property is on the Providence St. Joseph Hospital campus and provides such services as OB/GYN, a maternity wellness center, maternal mental health, pelvic health and rehab.

Elsewhere in California, PMB and Sutter Health began construction of a four-story, 100,000-square-foot medical office building in the Sacramento area last June. The facility at 7 Medical Plaza Drive is slated to open this summer.

The post PMB Tops Out 230 KSF Bay Area MOB appeared first on Commercial Property Executive.

Stockdale Capital Partners has acquired 1401 Philomena @ Mueller, a 130,000-square-foot medical office building in Austin, Texas. Gemdale USA sold the asset, according to CommercialEdge.

The five-story property came online in 2023. Built on 1.7 acres, the project was subject to a $35 million construction loan that BMO Bank provided in 2021, the same source indicates. STG Design was the building’s architect, with Rogers – O’Brien Construction as general contractor.

The medical office sector continues to fare well in what is currently a challenging economic landscape. High occupancy and tenant stability are among the key factors attracting investors. Nevertheless, experts found that asset values have indeed decreased over the course of 2023.

READ ALSO: These Markets Top MOB Investment Activity

The LEED-Gold certified building features controlled access, wide column spacing and higher deck-to-deck heights, with floorplates ranging between 20,000 and 29,000 square feet. The health-care center also includes a 559-stall parking garage. According to the new owner, the asset marks the first non-affiliated, purpose-built Class A medical office building to be developed in Central Austin since 2023. GROW Pediatrics and Adolescent Medicine are among the property’s tenants.

Located at 1401 Philomena St., the health-care center is part of Mueller Austin, a 700-acre master-planned community. The urban village is a redevelopment of the former Robert Mueller Municipal Airport.

The building is adjacent to Dell Children’s Medical Center, has access to Interstate 35 and is less than 5 miles north of downtown Austin. Other medical providers in the surrounding area include Austin Emergency Center, CommUnity Care: David Powell Health Center and St. David’s Medical Center.

The post Stockdale Capital Buys 130 KSF Austin MOB appeared first on Commercial Property Executive.

In a little bit of good news for the sector, MOBs sold for an average of $288 per square foot in the first quarter, up by $1 from the fourth quarter. While only a small step up, it was the first increase in the past six quarters, the brokerage firm’s U.S. Medical Outpatient Buildings report for the first quarter of 2024 stated.

CBRE also noted 13 of the top 20 markets for investment volume saw year-over-year increases. However, high interest rates and inflation continue to impact MOB investment activity. On a quarter-over-quarter basis, markets were evenly split, with 10 seeing increases and 10 marking decreases.

READ ALSO: Medical Office to Perform Well

That split was even starker in the top 10 markets with only sixth-place Tucson, Ariz., (up 122.4 percent) and 10th place Houston (up 167.7 percent) registering increases. Top market Phoenix saw a 7.9 percent decrease in MOB investment volume followed by second-place Atlanta down 70.8 percent; third-place Washington, D.C., down 91.5 percent; fourth-place Los Angeles down 88 percent; fifth-place Chicago down 44.8 percent; the seventh-place Northern New Jersey market down 39.6 percent; eighth-place Boston down 70.8 percent and ninth-place Seattle down 85.2 percent.

On a regional basis, CBRE reported the Midwest was the top region for first-quarter investment volume with $462 million, followed by the Southwest with $393 million. CBRE tracked a total of 185 transactions in the first quarter. While the Midwest has the highest investment volume by dollar figure, the Southeast had the highest number of transactions at 58, compared to 42 for the Midwest.

The high interest rate environment and ongoing inflation has resulted in increased cap rates for most commercial real estate asset types and MOBs are no exception. The average MOB cap rates have increased for six consecutive quarters, ending the first quarter at 7.0 percent versus 7.4 percent for traditional office buildings, according to CBRE. The average MOB cap rate had steadily declined between 2020 and mid-year 2022 before increasing by 90 basis points between the third quarter of 2022 and the first quarter of this year.

Rent and absorption

MOB asking rent growth has far outpaced traditional office buildings since 2020, primarily due to increased demand for health-care services. MOB rent growth ticked up in the first quarter of this year, remaining at 6.5 percent above its first quarter of 2020 level, compared with 0.8 percent growth for traditional office space, CBRE reported. The average MOB asking rent reached a record $24.70 per square foot in the first quarter of 2024, a 0.5 increase from the fourth quarter of 2023. Markets with the greatest year-over-year rent increases were Louisville, Ky., up 8.6 percent; Cleveland, up 4.4 percent, and Grand Rapids, Mich., up 4.1 percent.

Development of higher quality MOB inventory is expected to keep asking rents on the rise for the near future, CBRE notes. Absorption should increase significantly going forward as new MOB projects are slated to deliver over the next two years. MOB construction completions totaled 1.7 million square feet and brought the trailing-four-quarter total to 10 million square feet. Vacancy is expected to peak in late 2024 and start falling in 2025 as those high-quality deliveries are absorbed. The average vacancy rate rose by 0.3 percent quarter-over-quarter and 0.9 percent year-over-year to 9.7 percent.

Spotlight on deals

Of the 24 deals listed in the CBRE MOB report, several were featured recently by Commercial Property Executive. In January, Remedy Medical Properties purchased a six-building, 145,308-square-foot portfolio of medical office buildings in Northern Kentucky and the outskirts of Cincinnati from Zalla Cos. for approximately $43 million, according to CBRE. CPE stated all the buildings are leased to St. Elizabeth Physicians, a multi-specialty organization with practices in Kentucky, Ohio and Indiana.

Also in January, the University Hospitals Wellness Campus at 8655 Market St. in Mentor, Ohio, has changed hands for approximately $37 million. Lake Health, part of the University Hospitals Health Systems, occupies the entire two-story, 86,000-square-foot facility.

In May, a joint venture of Remedy Medical Partners and Kayne Anderson Real Estate acquired a 37-property medical office portfolio spanning 13 states and more than 700,000 square feet for $252 million from Broadstone Net Lease. The largest property in the portfolio was the 120,000-square-foot Ridgeway Medical Campus near Rochester, N.Y., that is fully leased to Rochester Regional Health. CBRE reported the 145,308-square-foot asset sold for $43 million.

The post These Markets Top MOB Investment Activity appeared first on Commercial Property Executive.

Anchor Health Properties, in partnership with BGO, has acquired a 70,418-square-foot medical office building in Sarasota, Fla. Casto sold the asset for $31.8 million, according to Sarasota County records. The purchase was made through a programmatic acquisitions joint venture that was recently launched.

Anchor Health will also provide asset and property management services. The property came online in 2020 and was previously subject to a $17.7 million construction loan in 2019, provided by Truist Bank, with a maturity date set for 2029. The outpatient facility was fully occupied at the time of the sale. JLL provided capital evaluation and advisory services for the asset.

READ ALSO: Medical Office to Perform Well in 2024: Report

Since the beginning of this year, Anchor Health has expanded its footprint with the acquisition of a three-property medical office building portfolio in the Seattle and Charlotte, N.C. markets, paying $62 million for the collection. More recently, the company topped out its 100,000-square-foot medical campus in Peoria, Ariz.

A clinic on the Southwest Florida Coast

Manatee Physicians Alliance, Advanced Surgery Center of Sarasota, Fresenius and Radiology Regional are among the property’s tenants. A variety of medical services are available at the facility, including family medicine, pediatric radiology, pain management, plastic surgery, dentistry, behavioral health, neurology, dialysis services and diagnostic imaging, among others. An upcoming ambulatory surgery center at the property will feature two operating rooms for orthopedic, joint replacement, podiatry and spine surgery procedures.

Located at 6600 University Parkway E., the three-story building is within Lake Wood Ranch, a master-planned community situated between Tampa and Fort Myers, with access to Interstate 75. The facility is part of the Southwest Florida Coast market. Other medical service providers in the area include Sarasota Urgent Care, Health Point, Lakewood Ranch Medical Center and Concentra Urgent Care, among others.

The post Anchor Health JV Pays $32M for South Florida MOB appeared first on Commercial Property Executive.

A joint venture of Remedy Medical Partners and Kayne Anderson Real Estate has acquired a 37-property medical office portfolio. The collection is spread across 13 states and encompasses a total of more than 700,000 square feet. Broadstone Net Lease sold the fully occupied assets for $252 million. JLL brokered the transaction.

The partnership received a $175.6 million acquisition loan for the deal, provided by BMO Healthcare Real Estate. The financing includes capital allocated for value enhancement and future leasing at the properties.

The portfolio features ambulatory surgery centers, surgical hospitals, multi-specialty clinics, in-patient rehab facilities and imaging centers, among others. The largest property in the collection is the 120,000-square-foot Ridgeway Medical Campus. The facility is located in Greece, N.Y., and is fully leased to Rochester Regional Health.

Stable tenancy across the portfolio

At the time of the sale, the ensemble had roughly 40 tenants, including Emerge Ortho, Advocate, IU Health, Tampa Health, Froedert Health, TGH Imaging and USPI. The new owner already started the process of lease extensions, according to Lee Asher, senior managing director with Kayne Anderson. Asher also mentioned that current high costs are among the influencing factors of renewal upon lease expiration. Experts agree that in what is now a mainstream investment sector, long-term occupancy is among the key factors that makes the medical office market resilient.

The properties are concentrated in markets such as Chicago, Houston, Charlotte, Seattle, Indianapolis, Milwaukee, Tampa, Fla., and Arlington, Texas. In the first quarter of 2024, the joint venture also expanded its footprint in metros such as Phoenix, Chicago and South Florida and paid $86 million for a 181,000-square-foot property collection, encompassing four medical office buildings.

The post Remedy, Kayne Anderson Pay $252M for MOB Portfolio appeared first on Commercial Property Executive.

Healthcare Realty expects to receive about $300 million for the contribution of a seed portfolio to the joint venture and will partner with KKR to explore additional acquisitions, including the potential contribution of more Healthcare Realty assets.

Under the terms of the current agreement, Healthcare Realty will contribute to the joint venture 12 properties valued at $382.5 million, representing a cap rate of about 6.6 percent. For its part, KKR will make an equity contribution to the joint venture equal to 80 percent of the assets’ aggregate value.

Healthcare Realty will retain a 20 percent interest and will both manage the joint venture and continue to oversee day-to-day operations and leasing of the properties.

READ ALSO: Medical Office to Perform Well in 2024: Report

KKR has also committed up to $600 million to the joint venture to pursue additional acquisitions or contributions of stabilized assets that are a match for the partnership’s long-term capital base.

Healthcare Realty, led by President & CEO Todd Meredith, stated that in the near term the firm’s capital allocation priority is to repurchase stock on a leverage neutral basis. In the future, the company may contribute additional Healthcare Realty properties to the joint venture or pursue acquisitions, depending on market conditions.

The 12 properties to be contributed include medical outpatient buildings in seven markets, located predominantly on or near leading hospital campuses. The assets total 762,399 square feet and are 98 percent occupied.

Eastdil Secured LLC and BlackBirch Capital were Healthcare Realty’s financial advisors and Latham & Watkins LLP its legal advisor.

Newmark’s Healthcare Capital Markets Group served as financial advisor, and Simpson Thacher & Barlett LLP served as legal advisor to KKR.

Outpatient growth

The ongoing shift from inpatient to outpatient care is one of five trends driving the health-care industry in 2024, according to a January report from JLL.

Part of this is the increasing amount of vertical integration in health care. According to JLL, “systems, payors and pharmacies are vertically integrating through mergers to better control costs and receive revenue from the same patients across the spectrum of care. Hospital systems are acquiring outpatient operators or primary care practices, enabling them to benefit from the shift from inpatient to outpatient care.”

The post KKR, Healthcare Realty Trust Launch Strategic JV appeared first on Commercial Property Executive.

Anchor Health Properties has topped out HonorHealth Medical Campus at Peoria, a 100,000-square-foot medical office building in Peoria, Ariz. Project partners also include health-care provider HonorHealth and SMIL, a physician-owned provider of imaging services.

Architecture companies DAVIS and ArchSol, together with construction management firm Oakland Construction, are part of the development team. The project broke ground in November and is slated for delivery in early 2025.

As of April, Phoenix had a total of 48 medical office buildings various stages stages of development, set to add approximately 4.8 million square feet to the existing inventory, CommercialEdge data shows.

HonorHealth Medical Campus at Peoria, up close

Upon completion, the Class A, three-story facility will host a variety of services such as cancer care, primary care, physical therapy, gastroenterology, breast surgery, outpatient surgery and medical imaging, among others. HonorHealth and SMIL will be on the property’s tenant roster.

HonorHealth Medical Campus is taking shape on the east side of the Loop 101 on 83rd Avenue, between Thunderbird Road and Bell Road. Downtown Phoenix is some 16 miles southeast of the site. Other health-care providers in the surrounding area include Digestive & Liver Disease Center, Star Surgery Center, Phoenician Primary Care and Banner Thunderbird Medical Center, among others.

Outpatient development doesn’t seem to be as affected by macroeconomic factors as other sectors, hence some perspectives remain fairly optimistic. Mervyn Alphonso, executive vice president of development and acquisitions at Anchor Health, previously told Commercial Property Executive that medical outpatient construction has been on the rise since 2022 and peaked last year; for this year, he expects the construction volume in the sector to be fairly steady.

The post Anchor Health Tops Out 100 KSF Phoenix MOB appeared first on Commercial Property Executive.

North Cypress Land Ventures LLC, a physician investor group, has broken ground on the first phase of Grand Cypress Medical Pavilions in Cypress, Texas. The 30-acre, multi-medical building park is estimated to cost up to $600 million.

The 60,000-square-foot Grand Cypress Doctors Pavilion One is slated for completion in June 2025. The development team includes Tennessee-based companies such as CONAR Building Group, the general contractor, alongside Davis Stokes Collaborative Architects.

The developer first received an $8 million loan in 2019 from Guaranty Bank & Trust, with a maturity date extended to July 2025, according to Harris County records. A year later, the same lender originated another $19.1 million for the project initially dubbed Cypress Health and Wellness Campus.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

At full build-out, Grand Cypress Medical Pavilions will provide a wide array of services such as health education, patient care, wellness and cancer prevention. The project was designed to include four or five buildings and will come online over the course of five years. Phase Two would feature a wellness center, while a women’s or cancer center could be part of Phase Three.

An aging population and the demand for new supply are among the main factors that make the medical outpatient sector still attractive for investors, as well as high occupancy and long-term tenancy.

A preleased first phase

The first phase of the development is a multi-disciplinary facility that will also feature an endoscopy surgery center set to encompass 12,000 square feet. The three-story building has been preleased almost entirely, anchor tenants including Keller Surgical Specialists, GastroDoxs and USPI/Memorial Hermann Hospital Systems.

The project is taking shape at the northeast corner of Grand Parkway and Highway 290, some 34 miles northwest of downtown Houston. Other medical providers in the surrounding area include North Cypress Physicians Center, Memorial Hermann Cypress Hospital and Centrum Health, among others.

The post $600M Medical Campus Breaks Ground Near Houston appeared first on Commercial Property Executive.

The joint venture of Lendlease and Extell Development Co. has topped out 1520 First Ave., a 400,000-square-foot medical office building in Manhattan. The 30-story tower is slated for completion in 2025. Perkins Eastman designed the project and WSP serves as structural engineer.

The developers financed the construction of the medical office project with a $118.2 million loan from Landesbank Hessen-Thüringen, originated in 2021, as well as a $54.8 million loan provided by Harbor Group International in 2022, according to CommercialEdge data. Additional financial partners include InterVest Capital Partners, Rexmark and Pacific Western Bank, which have provided a total of $425 million for the development.

READ ALSO: Medical Office to Perform Well in 2024

The 449-foot structure rises on a multi-story podium with multiple setbacks. Upon completion, the medical facility will house doctors’ offices and medical treatment centers, as well as retail space on the ground floor.

The building will feature accommodations for the Department of Health and also comply with Article 28 requirements for ambulatory care uses and surgical facilities. The Hospital for Special Surgery will be the property’s anchor tenant, having preleased 200,000 square feet on the building’s first eight floors.

The site occupies a full block on the east side of First Avenue, less than a mile from the Hospital for Special Surgery Main Hospital and the New York-Presbyterian/ Weill Cornell Medical Center. The location is also some 2 miles from the Mount Sinai Medical Center.

New York office development shrinks

As of the end of 2023, Manhattan’s under construction pipeline totaled 6.9 million square feet of office space across 13 properties, accounting for 1.4 percent of existing stock, according to a recent CommercialEdge market update. The value was lower than the national average of 1.7 percent.

However, several planned projects are bound to bolster the state of New York’s office pipeline in the near future. One of them is the Great Northern Mall redevelopment in Syracuse, which is slated to add some 790,000 square feet of medical and traditional office space to supply, along with large retail, housing and hospitality components.

The post Lendlease, Extell Top Out Manhattan MOB Tower appeared first on Commercial Property Executive.

PMB, in partnership with Providence St. Joseph Hospital, has opened Helen Caloggero Women’s and Family Center, a 137,000-square-foot medical office building in Orange, Calif. The development team included Boulder Associates as project architect and Snyder Langston as general contractor.

Harrison Street served as capital partner in this development and Siemens also provided financing. In addition, PMB obtained a $77.6 million construction loan from Capital One in August 2021, according to CommercialEdge, two months prior before the groundbreaking ceremony in October. The developer topped out the facility a year later.

Demand for outpatient clinics is still high due to asset specificity, despite current economic challenges. Development might be affected by financing difficulties, but the volume of projects in the sector is still getting higher.

A focus on women’s health services

The four-story medical facility provides such services as Providence Medical Foundation obstetrics and gynecology, a maternity wellness center, maternal mental health, pelvic health and rehab. PMB Real Estate Services handles property management.

Helen Caloggero Women’s and Family Center also features the federally qualified health clinic La Amistad, which provides OB-GYN and pediatric services for underserved members of the community. Coastal Vision and Blue Bowel also offer services at the clinic.

The medical office building came online on 1.2 acres at 363 S. Main St., on the Providence St. Joseph Hospital campus. The property has access to Interstate 5, while downtown Los Angeles is 30 miles northwest. Other health-care facilities in the surrounding area include UCI Medical Center and Betavia Woods Medical Center, among others.

The post PMB Opens Orange County MOB appeared first on Commercial Property Executive.

Ann & Robert H. Lurie Children’s Hospital of Chicago has broken ground on a 75,000-square-foot outpatient facility in Schaumburg, Ill. The Lurie Children’s Schaumburg Outpatient, Primary Care and Infusion Center will expand the medical provider’s footprint in Chicago’s northwestern suburbs.

The development team includes Skender as general contractor, HKS as architect, IMEG Corp. as structural and mechanical engineer and V3 Cos. as civil engineer. The medical office building is slated for completion in the summer of 2025 and will receive patients that same year in August.

Upon delivery, the property will host 40 exam and treatment rooms and will offer primary care, ancillary and diagnostic services, orthotics and prosthetics, laboratory and pharmacy services, as well as an ambulatory infusion center with the capacity to expand services. Lurie’s new clinic will replace other smaller Illinois locations in Arlington Heights, Hoffman Estates and Huntley.

Project approval timeline

The Lurie Children’s Hospital first proposed the development back in September 2022, with the Illinois Health Facilities & Services Review Board scheduling a public hearing for later that year. Over the next few months, progress was made, as the Schaumburg trustees were considering the approval of the three-story building in October 2023, according to the Daily Herald. According to the filed proposal, the investment would have amounted to more than $60 million and the future facility could have received 60,000 patient visits in the first year.

The outpatient facility is taking shape on 5.7 acres at 1895 Arbor Glen Blvd., at the northwest corner of Roselle Road and Hillcrest Boulevard. The location has access to Interstate 90, with downtown Chicago some 30 miles away. Other medical providers in the surrounding area include MedCoa Clinic, NCH Medical Group Primary and Specialty Care and Rapid Immediate Care, among others.

The post Suburban Chicago MOB Breaks Ground appeared first on Commercial Property Executive.

The 2024 CPE Influence Awards recognize the commercial real estate industry’s most noteworthy properties, projects and transactions. Does your office have amenities that attract new tenants? Are you the top broker at your firm? Were you able to successfully reposition a property? We want to celebrate your successes.

We will be accepting entries until 6/28.

READ ALSO: Entering the CPE Influence Awards? Try These 10 Tips

Explore our categories:

• Best Amenities
• Broker of the Year
• Most Innovative Corporate Strategy
• Most Effective DEI Program
• Best Design
  • Industrial
  • Mixed-Use
  • Office
  • Retail
• Best Development
  • Industrial
  • Mixed-Use
  • Office
  • Retail
• Development Company of the Year
• Best ESG Program
• Executive of the Year
  • Industrial
  • Mixed-Use
  • Office
  • Retail
• Best Financing
• Humanitarian Award
• Best Investment Transaction: Portfolio
• Best Investment Transaction: Single Property
• Best Lease
• Most Effective Property Management Program
• Property Manager of the Year
• Most Effective Repositioning/Redevelopment Plan
• Rising Star
• Most Innovative Technology
• Unbuilt

New for 2024:

• Brokerage Office of the Year
• Best Design: Data Centers
• Best Development: Data Centers
• Interior Design
• Top CRE Social Media Influencer

The 2024 winners will be selected by a panel of judges representing expertise across all commercial disciplines. Interested in being considered for the judging panel? Email Jessica Fiur.

Winners will be announced and honored later in the year. (Read about the 2023 winners.)

Questions? Contact Editor-in-Chief Jessica Fiur.

The post Deadline Extended: Enter the 2024 CPE Influence Awards appeared first on Commercial Property Executive.

Tristar Realty Group has secured a $50 million refinancing loan for Ventana Medical Plaza, a 112,000-square-foot Class A medical office building in Tarzana, Calif. First Citizens Bank’s Healthcare Finance business originated the note.

The developer purchased the 2.5-acre site—which at the time included a 20,000-square-foot retail building dating back from the 1950s—in 2008. Ventana came online in 2017, the same year Tristar refinanced the corresponding construction debt with a $51 million loan from Capital One.

READ ALSO: Medical Office to Perform Well in 2024: Report

Rising four stories, the medical office building features 30,964-square-foot floorplates, as well as 4,200 square feet of retail space. The property also comprises a six-story detached parking garage providing 5 spaces per 1,000 square feet.

Providence Health System and Cedars Sinai Medical Center co-anchor Ventana Medical Plaza. The facility also includes facilities for MRI and PET/CT scans, as well as an 8,000-square-foot linear accelerator for radiation-based cancer treatment and a 12,500-square-foot surgery center.

Located at 18133 Ventura Blvd., Ventana Medical Plaza is less than 1 mile south of U.S. Route 101 and roughly 6 miles west of Interstate 405, as well as some 21 miles northwest of downtown Los Angeles. The property is also close to Providence Cedars-Sinai Tarzana Medical Center, which recently underwent a $624 million expansion project.

First Citizens Bank’s health-care deals

First Citizens Bank’s Healthcare Finance business has had a steady stream of activity in the past 12 months. Last September, it provided Onicx Group with $29 million for the refinancing of two Florida medical office buildings.

Also in September, First Citizens’ division of Silicon Valley Bank originated a $14.5 million loan used by Faros Properties to refinance a 73,060-square-foot medical facility in Stamford, Conn.

A month prior, a joint venture led by Rethink Healthcare Real Estate secured a $50.3 million loan for a 169,000-square-foot medical office building in Silver Spring, Md. First Citizens’ Health Care division provided the financing.

The post Tristar Realty Secures $50M for Los Angeles MOB appeared first on Commercial Property Executive.

Cypress West Partners and TPG Angelo Gordon are expanding their health-care real estate holdings through a programmatic joint venture aimed at acquiring as much as $300 million in medical office assets across the Sun Belt over the next two years.

The joint venture was arranged by CBRE Investment Banking, which served as financial advisor for Cypress West Partners in connection with the transaction. The team included Michael Yang, senior managing director of CBRE Investment Banking.

The focus will be on acquiring medical office buildings in strategic, high-growth Sun Belt markets that provide the opportunity to generate core-plus and value-add returns through leasing, repositioning and redevelopment.

READ ALSO: Can Adaptive Reuse Revitalize US Cities?

The first acquisition was completed in March. The joint venture purchased an 85,000-square-foot medical office building at 9377 E. Bell Road in Scottsdale, Ariz. Healthpeak Properties sold the asset for $21.3 million, according to CommercialEdge data.

The joint venture was seeded with the recapitalization of a four-asset portfolio of properties in Arizona and California owned by Cypress West Partners. The portfolio totaled about 200,000 square feet and is 97 percent occupied by a diverse roster of health-care tenants.

Experienced investors

Both firms are leading specialists in the sector who can leverage their combined experience in scaling and operating their joint medical office platform.

Cypress West, led by co-founders Chris Cumella and Jeff Johnson, is based in Orange County, Calif., and Dallas and focuses on acquiring, developing and operating institutional quality health-care real estate throughout the U.S. The Cypress West portfolio includes close to 2 million square feet of medical office properties, of which more than 250,000 square feet are currently in various stages of development.

The firm broke ground in April 2023 on Ocotillo Medical Collaborative, a 22,000-square-foot medical office building on a 2.5-acre site in Queen Creek, Ariz. The Class A medical office building was already 87 percent leased prior to the start of construction. The property, which is about 40 miles from downtown Phoenix, was fully leased to five tenants when it opened in November.

Last month, TPG Angelo Gordon and another joint venture partner, Sendero Capital, grew their Rhode Island portfolio with the acquisition of a 30,000-square-foot, multi-specialty health-care facility in Warwick, R.I. The joint venture purchased the Class B asset for $8.1 million from NeuroHealth, according to Kent County records. NeuroHealth remains as the anchor of the three-story building at 227 Centerville Road.

It was the fifth acquisition through their programmatic joint venture that launched in July 2023. The investment vehicle, which is focused on outpatient health-care real estate in the Northeast over a two-year period, has the capacity to make up to $300 million in investments. In November, the joint venture received a $75 million credit facility that was seeded with four assets totaling 201,369 square feet in Connecticut, Rhode Island and New Hampshire.

Angelo Gordon was founded in 1988 as a diversified credit and real estate investing platform. TPG announced in May it was acquiring Angelo Gordon for about $2.7 billion in cash and equity. Now known as TPG Angelo Gordon, it operates as an investing platform of TPG. The platform currently manages approximately $78 billion across a broad range of credit and real estate strategies.

The post Cypress West, TPG Angelo Gordon Form $300M JV appeared first on Commercial Property Executive.

Highwoods Properties has sold an eight-building medical office portfolio in Raleigh, N.C.—encompassing a total of 338,000 square feet—for $79.4 million.

Two separate buyers purchased the assets. Evergreen Medical Properties acquired seven of the buildings, all part of the Rexwoods Office Center campus in West Raleigh. Northwood Ravin purchased a 97,000-square-foot building adjacent to the Research Triangle Park, according to Wake County records, and now intends to redevelop the property.

According to the same source, Evergreen received $23.9 million in financing from Webster Bank and a $22.5 million loan from Equitrust Life Insurance Co. to finance the acquisition of the Rexwoods campus. Meanwhile, Highwoods Properties provided $6.2 million in non-recourse first mortgage seller financing to Northwood for the RTP building. The note is set to mature next year in February.

JLL Capital Markets worked on behalf of the seller, procured the buyers and arranged acquisition financing for part of the portfolio.

Near a health-care cluster

Located at the corner of Blue Ridge and Lake Boone Trail, the Rexwoods campus is across from UNC-REX Hospital and has access to interstates 40 and 440. Downtown Raleigh is less than 7 miles away. Other medical service providers in the surrounding area include WakeMed Raleigh Campus and Duke Raleigh Hospital.

Highwoods Properties developed and purchased the buildings between 1982 and 1998. Three of them were recently renovated. The tenant roster includes Raleigh Eye and Face Plastic Surgery, HRC Behavioral Health & Psychiatry, Raleigh Spine and Pain Center, LifeStance Health and SME Clinic of Raleigh, among others. The Rexwoods campus was 84 percent occupied at the time of the sale.

JLL Senior Managing Directors Mindy Berman and Ryan Clutter, Senior Director Daniel Flynn, Director Teddy Hobbs and Associates Woody Flythe and Landon Weaver were all part of the team involved in the sale. Senior Director Anthony Sardo and Director Ward Smith arranged the debt financing.

The post Highwoods Properties Sells $79M Raleigh MOB Portfolio appeared first on Commercial Property Executive.

Remedy Medical Properties and Kayne Anderson have broken ground on Centra Langhorne Medical Center, in Lynchburg, Va. The 130,000-square-foot medical office building will be fully occupied upon completion, with delivery slated for late 2025.

The developers are working in partnership with Centra Health, a regional not-for-profit health-care system. The organization acquired the site for $8.8 million in July last year, Lynchburg City County records show.

The project will rise five stories and provide a wide array of medical services. Centra clinics generally offer primary care, psychiatry and behavioral health, brain and spine care, cancer care, orthopedic care and women and children’s health, among others. The development team includes Haskell Architecture and Engineering Inc., and general contractor Robins and Morton, along with structural engineer O’Donnell & Naccarato Inc., and civil engineer Hurt & Proffitt Inc.

The outpatient facility is taking shape at 2125 Langhorne Road, at the intersection with Tate Springs Road. The site is close to the Centra Lynchburg General Hospital and its location allows for future expansion. The entrance is slated to connect the facility to a multifamily development, while a wellness trail will link the campus to the Blackwater Creek Trail System.

Remedy, Kayne keep expanding MOB portfolio

As part of the development agreement, Remedy and Kayne Anderson also acquired Danville Medical Center, a 47,900-square-foot medical office building in Danville, Va., some 70 miles from Lynchburg. Completed in 2016, it rises two stories and is fully occupied by Centra, providing primary care, urgent care and cardiology.

Last month, Remedy and Kayne Anderson made several other acquisitions. The partners purchased four medical office buildings from Flagler Healthcare Investments in an $86 million portfolio transaction. The properties are in areas near Phoenix and Chicago, as well as in South Florida.

Another Remedy deal involved the purchase of a six-building medical office portfolio totaling 145,308 square feet. Zalla Cos. sold the assets located around Northern Kentucky and the outskirts of Cincinnati, all of which are leased to St. Elizabeth Physicians.

The post Remedy Medical, Kayne Anderson Break Ground on Virginia MOB appeared first on Commercial Property Executive.

The Hart Lyman Cos. and Conifer Realty have unveiled their updated plans for the redevelopment of Great Northern Mall, near Syracuse, N.Y. These include new housing, medical facilities, professional offices, a municipal community center, hotel guestrooms, as well as retail, dining and entertainment options.

The plans for the 215-acre site, now before officials at the town of Clay, N.Y., envision “a vibrant town center … with a walkable town center, entertainment district, health and wellness campus, and premier residential community,” according to the developers.

READ ALSO: Turning a Textile Mill Into a Modern Mixed-Use Destination

A total investment valued at more than $1 billion is expected to result in:

•  More than 600,000 square feet of retail, community, grocery, restaurant and entertainment space;

•  More than 790,000 square feet of medical and office space;

•  Over 750 hotel guestrooms;

•  Several “mixed-use clusters,” each with 300 to 500 new housing units.

Assuming rapid permitting and approvals, construction is scheduled to begin in the fourth quarter.

Hart Lyman is headquartered in Syracuse, and Conifer Realty has offices in Rochester, N.Y., and other locations. Conifer has developed more than 21,000 affordable housing apartments across more than 300 residential communities.

Small chips, big growth

A giant semiconductor manufacturing facility is also coming to the town of Clay. In October 2022, Micron Technology announced the construction of a memory-chip fabrication plant that will involve an investment of as much as $100 billion. The “megafab” reportedly will be the largest-ever private investment in the state of New York. Groundbreaking is expected later this year.

At multiple sites across the U.S.—and boosted by the CHIPS and Science Act—construction of semiconductor fabrication plants continues to be a major influence in industrial real estate development.

The post Hart Lyman, Conifer Realty Reveal $1B Mall Redevelopment Project appeared first on Commercial Property Executive.

RD Management, owner and developer of a 100-acre mixed-use, multi-story urban development site in Tampa’s Uptown District, has chosen JLL’s Central Florida Healthcare Practice Group to lease the health-care, life science and office components of the project known as RITHM.

The developer, which acquired the site along East Fowler Avenue and Club Drive in 2014, is converting the former University Mall into at least 1.1 million square feet of mixed uses featuring health-care and medical uses, life science, research and development and technology space. It will also have retail and entertainment, coworking space and corporate offices.

Once complete, RITHM—which stands for Research, Innovation, Technology, Humanity & Medicine and is derived from the word ‘algorithm’—could encompass more than 7 million square feet of development, including several thousand residential units. The largest development in Tampa, RITHM is expected to become one of the largest innovation districts in the state.

READ ALSO: Turning a Textile Mill Into a Modern Mixed-Use Destination

Completed developments at RITHM include a mix of multifamily, student housing and Sprouts Farmers Market, a 23,000-square-foot natural food grocery store that opened in August 2023. Recent additions include new headquarter locations and related spaces for the USF Institute of Applied Engineering and Vu Studios.

Hub Tampa, a $65 million, 359-unit, 890-bed off-campus student housing project serving students at the University of South Florida, was completed in August 2022. Core Spaces is planning a second phase with 900 additional beds at Hub Tampa, for a total investment of about $200 million. An extended-stay Marriott hotel is scheduled to break ground early this year along the newly constructed University Square Drive extension that connects RITHM to the USF campus.

The 103,151-square-foot shopping center anchored by the Sprouts store is under construction and will also include a 49,412-square-foot Burlington retail store and an additional 30,000-square-foot user.

RITHM is one of approximately 32 mall conversion projects across the country as developers seek to reposition underutilized shopping malls to better suit the demands of their communities.

JLL’s team effort

The JLL team is led by Lucia Hedke, managing director and Florida Healthcare Lead, and Bryan Rodriguez, vice president.

Hedke told Commercial Property Executive a minimum of 500,000 square feet of existing space will be converted to health-care and life science uses.

“During the last two weeks we have had 150,000 square feet of active negotiations,” she said. “There is a great demand, which speaks to the growth of the area.”

In October, a team led by Hedke and Managing Director Micah Strader was tapped by Onicx Group to lease Nona Medical Center, a new 45,000-square-foot facility located within the 23-acre mixed-use development East Park Village in Orlando, Fla. Nona Medical Center will be less than 1 mile from AdventHealth’s new 67.28-acre mixed-use campus and will be near Lake Nona Medical City, a premier location for medical care, research and education.

The post RD Management Taps JLL to Lease 1 MSF Mall Conversion appeared first on Commercial Property Executive.

Sendero Capital and TPG Angelo Gordon are growing their Rhode Island portfolio. The joint venture has acquired a 30,000-square-foot multi-specialty health-care facility in Warwick, R.I. NeuroHealth sold the Class B asset for $8.1 million, Kent County records show.

JLL Capital Markets advised the buyers in what is their fifth acquisition through their programmatic joint venture launched in July 2023. The investment vehicle was set to have the capacity of up to $300 million in investments in outpatient health-care real estate for a two-year period, with a focus on assets located throughout Northeastern U.S.

According to CommercialEdge, the property, which came online in 1998, was subject to two loans provided by Bank of America. The previous owner received $4.8 million in financing back in 2005 and 10 years later, an additional $300,000 in funding.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

The three-story building sits on 1.8 acres and offers controlled access and 122 car spots at a parking ratio of 4.7 spaces per 1,000 square feet. NeuroHealth is the property’s anchor tenant, occupying 40 percent of the building, which is fully leased. Rhode Island Medical Imaging and Care New England/Kent Hospital is another tenant that provides a variety of medical services, including imaging and family medicine.

The property is located at 227 Centerville Road, has access to interstates 95 and 295 and is less than 10 miles from downtown Providence and some 60 miles from Boston. Medical providers in the surrounding area include South County Health Medical & Wellness Center, CareWell Urgent Care Warwick and Oak Street Health Warwick Primary Care Clinic, among others.

The JLL Capital Markets team included Senior Managing Director Mindy Berman, Senior Director Anthony Sardo and Associate Landon Weaver.

The joint venture’s portfolio

As an addition to the portfolio of medical office buildings purchased through their joint venture, last August Sendero Capital and TPG Angelo Gordon acquired 2 Wake Robin Road, a 30,000-square-foot facility in Providence, R.I.

Their first purchase was a 53,120-square-foot medical office building in Hamden, Conn., which was anchored at the time of the sale by Hartford Healthcare and Yale New Haven Health. The partnership also expanded its footprint with 1 Hampton Road, an 82,000-square-foot property in Exeter, N.H.

In late 2023, the joint venture received a $75 million credit facility, in a transaction arranged by JLL Capital Markets. The credit was seeded with four assets totaling 201,369 square feet in Connecticut, Rhode Island and New Hampshire.

The post Sendero, TPG Angelo Gordon Expand Rhode Island MOB Portfolio appeared first on Commercial Property Executive.

Dallas Plastic Surgery Institute has renewed its lease of 45,000 square feet at The Pyramids at Park Lane South Tower, a six-story, 145,365-square-foot Class A medical office building in Dallas. The landlord, Big Sky Medical, tapped OMS Strategic Advisors to broker the deal.

DPSI has 12 surgeons in this Central Expressway location, with specialties including cosmetics, pediatric plastic surgery, breast and wound reconstruction operations as well as non-invasive procedures such as Botox and filler injections. Operations are performed on site at the Dallas Day Surgery Center, while the Cloisters Postoperative Recovery Facility provides overnight recovery services. Additionally, DPSI directs the EpiCentre Skin Care & Laser Center, a cosmetic dermatology practice.

A newly converted medical office building

The Pyramids at Park Lane South Tower came online in 1998, according to CommercialEdge information, as part of a two-building office complex totaling roughly 300,000 square feet. In December, the South Tower was converted to medical office use; the North Tower had already been repurposed in kind in 2005.

Big Sky purchased both buildings in October 2022 for $55 million, a year after initiating Big Sky Medical Income Fund LP, which closed at $392.3 million this August. In its current configuration, the South Tower hosts 18 tenants, primarily in the plastic surgery, dermatology, medical imaging and neuroscience practices, CommercialEdge data shows.

READ ALSO: Medical Office to Perform Well in 2024: Report

A JLL team currently heads up leasing at the property, led by Managing Director Russ Johnson and Senior Vice President Chris Wright.

Located at 9101 N. Central Expressway, with direct access to U.S. Route 75, the property is some 8 miles north of downtown Dallas. North Central Medical Plaza, a two-building, 238,378-square-foot complex owned by Remedy Medical Properties, within walking distance. Texas Health Presbyterian Hospital Dallas, the flagship location of Texas Health Resources, is 1 mile northeast.

Big Sky’s big moves

Big Sky has continued to grow its presence around the Southwest, at a time when the medical office sector seems relatively immune to the secular struggles traditional office faces. The firm grew further in the Dallas-Fort Worth metro over the past several months with the acquisition of Richardson Medical Center I, a 118,472-square-foot facility in the suburb of the same name.

More recently, in January, the investment manager entered the Phoenix market with the $47 million purchase of Blackhawk Medical Center, a three-building, 252,000-square-foot campus located in the Deer Valley Submarket. The seller was ViaWest Group.

The post Big Sky Medical Stiches Up Dallas Lease Renewal appeared first on Commercial Property Executive.

Illinois-based AXSYS Capital has closed on its fund, dubbed AXSYS Capital Fund I, LP. A spokesperson for the company confirmed for Commercial Property Executive that it has raised $10 million so far.

The fund will focus on acquiring medical office buildings in the Midwest, specifically in states such as Wisconsin, Ohio, Missouri and Illinois over a period between six and 12 months. AXSYS Capital is a company that focuses on acquiring medical facilities that are in the $2 million and $6 million bracket and which are not sought after by institutional investors.

AXSYS Capital Fund I, LP has already purchased three properties in the second half of 2023, two located in Wisconsin and one in Illinois. Among those, there is a 15,366-square-foot medical office building at 853 Medical Drive in Wentzville, Mo. The company paid $3.6 million for the property, its seventh acquisition in the state.

Another addition to the portfolio through the fund was the purchase of a mixed-use medical office in Germantown, Wis., anchored by DaVita., which traded for $1.5 million. Montecito Medical has also recently acquired an asset in the same location, the two-building Aurora Health Center.

AXSYS Capital’s growing medical office portfolio

AXSYS Capital’s third acquisition through the fund was a 34,760-square-foot medical office building in Franklin, Wis. The company picked up the asset for $5.2 million, aided by a $2.6 million loan by Constellation Insurance, CommercialEdge data shows. Five additional properties are set to be purchased through the fund across the Midwest.

The firm has a portfolio of assets under management which is worth $60 million. Currently, it has acquired, renovated and repositioned more than 25 commercial and mixed-use properties, totaling more than $74 million.

The post AXSYS Capital Closes Fund for Midwest MOBs appeared first on Commercial Property Executive.

Hackensack Meridian Health is investing $200 million in the project, which is estimated to bring more than 1,000 jobs in the area. The company will also move from its current offices in Edison, N.J., to this new location, set for delivery in 2025. The seven-story building was designed to qualify for LEED certification.

Upon completion, the facility will offer access to health-care services such as primary care, medical specialties, surgical specialties, advanced imaging, rehabilitation services, a sports and spine center of excellence, phlebotomy, urgent care, occupational health services and a retail pharmacy.

READ ALSO: Medical Office to Perform Well in 2024: Report

The Metropark Station mixed-use project, which benefited from a $110 million tax credit grant, qualifies for the multi-use platform under the New Jersey Economic Development Authority’s ASPIRE program. The delivery of the health and wellness center will be followed by the construction of 230 residential units and a retail component. DOR, a joint venture of Russo Development, Onyx Equities and Terminal Construction Corp., announced the 12-acre transit-oriented project in October 2022.

Strategic position for health-care services

The facility will be the first of its kind to will offer access to health care not only to those who travel through Metropark Station, but also for those traveling along Amtrak’s Northeast Corridor. The station is located at 100 Middlesex Essex Turnpike, near the 95 and 287 interstates. New York City is some 32 miles away. Medical providers in the surrounding area include Solaris Health System, Woodbridge Medical Group and Center for Remote Medical Management, among others.

The New Jersey office market currently has 16 other medical office building properties in various stages of development, set to add 1.8 million square feet to the existing inventory, CommercialEdge data shows. One of the largest projects is the 519,500-square-foot Jack and Sheryl Morris Cancer Center in New Brunswick, N.J., currently under construction. Delivery is expected in 2025.

The post Hackensack Meridian Health Breaks Ground on New Jersey MOB appeared first on Commercial Property Executive.

Montecito Medical has acquired Aurora Health Center in Germantown, Wis. Sentinel Management Co. sold the two-building, 92,573-square-foot medical facility for $30.8 million. Cushman & Wakefield, alongside The Boerke Co., represented the seller.

Aurora Health Care Inc., a subsidiary of Advocate Health, fully occupies the two buildings, operating at the location under long-term, triple net leases.

The North Building encompasses 15,998 square feet on 4.3 acres and offers medical services such as chiropractic care, family medicine, gastroenterology, pain management, pediatric cardiology and sport rehabilitation. The 76,585-square-foot South Building sits on 14.7 acres and was previously an administrative space. The building was converted in 2016 and now hosts a health center that includes a surgery center with six operating rooms, 16 oncology infusion bays, exam rooms and a healing garden for cancer patients.

Aurora Health Center is situated at N112 W17975 Mequon Road and W180 N11070 River Lane. The property has access to Interstate 41 and is 24 miles north of downtown Milwaukee. Medical facilities in the surrounding area include Cedaburg Medical Clinic, Nova Medical Centers and Froedtert Menomonee Falls Hospital, among others.

The Cushman & Wakefield team included Executive Directors Gino Lollio, Travis Ives and Sushil Puria and Director Tyler Morss. Principal Mike Keane from The Boerke Co., an independently owned and operated affiliate of Cushman & Wakefield, worked together with the brokerage.

Montecito Medical recently expanded its portfolio with the acquisition of Virginia Women’s Center in Richmond, Va. The company purchased the 35,000-square-foot asset for $16.6 million from a private investor.

The post Montecito Medical Pays $31M for Milwaukee MOB appeared first on Commercial Property Executive.

Montecito Medical has acquired a medical office building in Richmond, Va. A private investor sold the 35,000-square-foot asset for $16.6 million, according to Henrico County records.

Senior Associate Alex Vidal and Associate Jacob Halle with Marcus & Millichap’s National Healthcare Real Estate Sales Group represented the seller in the transaction.

The two-story building is fully occupied under a long-term lease by Virginia Women’s Center, a women’s health services provider in the Richmond area. Medical services at the clinic include gynecology, obstetrics, urogynecology, breast health/mammography, menopause management, mental health, weight and wellness, bone health/density, as well as surgeries and procedures.

The health center is situated in the city’s Short Pump suburb, at 12129 Graham Meadows Drive. The property provides easy access to U.S. Route 250 and Interstate 64, and is less than 16 miles northwest of downtown Richmond. Medical providers in the surrounding area include VCU Health Ambulatory Surgery Center, MEDRVA Surgery Center at West Creek and AFC Urgent Care Short Pump, among others. Besides Richmond, Virginia Women’s Center also operates in Kilmarnock, Mechanicsville and Midlothian.

As of late February, 13 other medical office properties had changed hands year-over-year in the Richmond market, totaling 284,769 square feet, according to CommercialEdge data. The transaction volume amounted to $26.4 million.

The same source shows that Montecito Medical owns eight other medical office facilities in the Richmond area, with a combined footprint of 430,666 square feet. The portfolio includes another property partially occupied by Virginia’s Women’s Center. The company acquired the 91,186-square-foot building in 2021 for $32.5 million.

The post Montecito Medical Expands With Richmond Acquisition appeared first on Commercial Property Executive.

Hammes has completed the development of Silicon Valley Surgery Center, a 24,000-square-foot ambulatory facility in Campbell, Calif. The project was a joint venture between Surgery Ventures, powered by HCA Healthcare, and 50 multi-specialty physicians.

The building originally came online in 1983 as a laboratory, CommercialEdge data shows. Hammes acquired the property in 2021 for $10.8 million and led the rezoning process for this adaptive reuse project. Boulder Associates and COBE Construction were also part of the development team.

Hammes also recently completed another medical office property, the 43,000-square-foot Jackson Medical Plaza in McAllen, Texas. The developer partnered with Surgery Ventures, HCA Healthcare and Texas Digestive Specialists for the project.

Addition to the Bay Area inventory

The one-story building features six operating rooms and two procedure rooms. Services provided include surgical specialties such as colon and rectal surgery, gastroenterology, orthopedic surgery, surgery of the hand, plastic and reconstructive surgery and urology, general surgery, otolaryngology and obstetrics and gynecology.

The property occupies 1.9 acres at 2605 S. Winchester Blvd., near the intersection of San Tomas Expressway and U.S. Route 17 and some 8 miles south of downtown San Jose, Calif. Medical centers in the surrounding area include Good Samaritan Hospital, Ueno Center Dental Specialists, Community Medical Center and Carbon Health Urgent & Primary Care Campbell, among others.

The Bay Area had 10 medical office properties in various stages of development as of February, set to add 1.5 million square feet to the existing inventory, according to CommercialEdge research. The largest project currently under construction is a 230,500-square-foot development slated for completion in 2025.

The post Hammes Completes Bay Area MOB appeared first on Commercial Property Executive.

Despite facing similar challenges to other CRE sectors, resulting in declining transactional and lending volumes in 2023, medical office—and the health-care industry at large—continues to perform well overall, according to a recent study from Partner Valuation Advisors.

For one thing, occupancy remains attractively high compared to other classes, and an aging U.S. population creates ample demand for health-care services. And while interest rates are expected to remain elevated this year, the report states, “The lack of new supply and favorable demographic trends offer an attractive investment environment for health-care investors.”

READ ALSO: MOB Sector Remains Stable, Attractive

As fundamentals in the sector remain strong, the need for MOBs and other health-care properties continues to increase, said Erik Hill, PVA national practice leader of health-care and life science, in prepared remarks. He also emphasized that the sector maintained good occupancy and steady rent growth over the past decade, also mentioning high tenant retention rates and limited supply as incentives for long-term investors.

However, the sector did not remain unscathed: Due to increased capital costs and rising cap rates, most respondents believe the value of health-care properties has declined by 10 to 20 percent over the past 12 months.

The survey involved leaders across the industry, including lenders, investors, developers and investment sales professionals.

Medical office in focus

The survey report highlights several prominent points on MOBs:

• On-campus MOBs continue to command premium prices compared to off-campus assets. Survey respondents generally indicated that a cap rate premium of up to 25 basis points is common.

• Cap rates for MOBs increased due to interest rate hikes. Based on the widespread expectation of Fed rate cuts over the next 12 to 24 months, however, many investors are starting to underwrite exit/ reversion cap rates that are closer to the going-in rates for MOBs. Nearly half of survey respondents predict that exit/reversion rates will have a spread of 25 to 50 basis points above the going-in cap rate, while almost as many (39 percent) anticipate a spread of 0 to 25 basis points.

• PVA has seen spread compression between the exit/reversion rate and expected discount rates for MOBs. Half of survey respondents (50 percent) indicate they expect discount rates to continue to be compressed over the next year, with typical discount rates expected to be 75-100 basis point higher than exit/reversion rates.

This past December, Commercial Property Executive spoke to several experts about the MOB outlook for 2024. The trend piece noted that although transaction volume slumped in 2023, the national average price per square foot was $296 in the first half of the year, compared with a typical range of $260 to $290 from 2017 to 2022.

The post Medical Office to Perform Well in 2024: Report appeared first on Commercial Property Executive.

Remedy Medical Properties has purchased a six-building, 145,308-square-foot portfolio of medical office buildings located around Northern Kentucky and the outskirts of Cincinnati.

Zalla Cos., a Kentucky-based service company, sold the assets for an undisclosed amount. The firm was represented by a CBRE team led by Senior Vice Presidents Steve Timmel and Chris Prosser, Vice President Will Roberts and First Vice President Travis Likes.

Profiles of the practices

All of the buildings in Remedy’s latest acquisition are leased to St. Elizabeth Physicians, a multi-specialty organization with practices in Kentucky, Ohio and Indiana. Services that the group provides include primary and urgent care, concierge medicine, women’s health, MRI and podiatry as well as physical therapy. The organization has 169 offices around the larger tri-state area, where it employs 695 physicians.

The buildings are located in the towns of Florence, Fort Mitchell, Crittenden, Walton, Alexandria and Butler, the furthest located roughly 23 miles to the southeast of downtown Cincinnati.

Florence hosts the largest building in the portfolio, a 50,000-square-foot multi-practice medical office located at 8726 US Highway 42. According to CommercialEdge information, the Class A property was built in 2015, and spans two stories over a 4-acre parcel. With direct highway access, the facility feeds into intersections within and around the larger Cincinnati metro.

Fort Mitchell claims second place with 2300 Chamber Center Drive, a 45,000-square-foot primary care and family medicine center that CommercialEdge shows as being situated within the Chamber Office Park, a three-building campus located 5 miles to the southwest of Cincinnati. The building was completed in 2008.

Critten hosts 405 Violet Road, a 19,500-square-foot urgent care center built on 3.8 acres. The property sits within roughly 1,000 feet from an onramp to the Interstate 75.  

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

13260 Service Road, located in Walton, is home to another primary care center. CommercialEdge shows that this 13,063-square-foot building was previously owned by Walton Medical Properties.

The final two properties in the portfolio are 300 Commercial Circle, a primary care facility located in Alexandria and 79 Country Club Drive, a family practice in Butler.

Remedy treats its investments

Remedy’s purchase of the portfolio marks its second significant acquisition in under two weeks. Earlier this month, the firm has teamed up with Kayne Anderson Real Estate to acquire a four-building portfolio of medical office properties located around several gateway markets for $86 million. The buyer appears to have a recent interest in the Midwest, this latest purchase following a $71 million acquisition of RUSH Oak Brook Medical Center, a 93,386-square-foot facility in Chicago.  

The post Remedy Medical Adds 145 KSF to MOB Footprint appeared first on Commercial Property Executive.

Irving Hospital Authority has acquired Baylor Irving MOB III, in Irving, Texas, according to Dallas County records. Madison Marquette sold the 54,941-square-foot asset, with the assistance of CBRE U.S. Healthcare Capital Markets.

Houston-based PMRG developed the facility, in partnership with GSR Andrade and MYCON General Contractors, as part of the Baylor Scott & White Medical Center.

Completed in 2018, the three-story, Class A building features three passenger elevators, controlled access and a parking ratio of 3.9 spaces per 1,000 square feet. The property was previously subject to a $9.9 million bridge loan in 2022, provided by Simmons Bank, with a maturity date set in January 2024, CommercialEdge data shows.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

The outpatient clinic was 68 percent leased by five tenants at the time of sale. HealthTexas occupies 22 percent of the building, while the remaining occupied space houses Pure Dermatology Associates, Arlington Orthopedic Associates, Touchstone Medical Imaging and Dallas Nephrology Associates.

The 5.2-acre property at 2005 W. Park Drive is adjacent to the 296-bed Baylor Scott & White hospital, next to U.S. Route 183 and less than 13 miles northwest of downtown Dallas. Other medical facilities in the surrounding area include Copper Tree Medical Center, Irving Dental Care, Irving Health and Medical Center and Sanitas Medical Center.

CBRE Vice Chairman and Managing Director Chris Bodnar, Senior Vice President Zack Holderman, Senior Director Trent Jemmett, alongside Vice Presidents Cole Reethof and VP Jesse Greshin, arranged the transaction. The team partnered with First Vice President Michael Dewey, Vice Chairman Russell Ingrum, Senior Vice President Scott Herbold and Senior Associate Matt Murphy with CBRE’s local division.

Dallas-Fort Worth’s MOB market

In the last 12 months, seven other medical office buildings changed hands in the Dallas-Fort Worth market, CommercialEdge data shows. The properties encompass a total of 368,530 square feet.

One of the assets that traded was The Professional Building I in Dallas. Ridgeline Capital Partners acquired the 44,045-square-foot property from 2GR Equity. The four-story building is at the entrance of White Rock Medical Center campus.

The post Madison Marquette Sells Dallas-Area MOB appeared first on Commercial Property Executive.

The University Hospitals Wellness Campus at 8655 Market St. in Mentor, Ohio, has changed hands. According to Lake County records, Lake Development Authority was the owner of the property. CBRE U.S. Healthcare Capital Markets represented the seller in the transaction.

Lake Health, part of the University Hospitals Health Systems, occupies the entire facility. Public records show University Hospitals held a ground lease agreement with the owner. In August last year, Mentor University Hospitals Urgent Care clinic relocated from 8655 Market St. to 6900 Center St., Cleveland.com reported.

READ ALSO: Emerging Trends for CRE in 2024 and Beyond

Completed in 2017, the two-story building encompasses a total of 85,977 square feet. The Class A outpatient clinic provides a variety of services, including physical therapy, sports medicine, urgent care, primary care, integrative medicine, cardiology, pain management, orthopedics, imaging and a clinical laboratory.

The campus covers 8.8 acres and has access to U.S. Route 2. Downtown Cleveland is 25 miles southeast of the property. Medical facilities in the surrounding area include Lake Ambulatory Care Center, UH Mentor Hopkins Health Center, Erieside Medical Group and University Hospitals Urgent Care Mentor, among others.

The CBRE team involved in the deal included Vice Chairman & Managing Director Chris Bodnar, Senior Vice President Zack Holderman, Senior Director Trent Jemmett, as well as Vice Presidents Cole Reethof and Jesse Greshin.

Medical offices, still on the rise

Between January 2023 and January 2024, four other primarily medical office buildings changed hands in the Cleveland-Akron market, totaling some 80,000 square feet, CommercialEdge data shows.

Investor interest in outpatient clinics continues to be on the rise, despite the economic challenges that have made their mark on the commercial real estate sector over the last year. The medical office sector still thrives due to its specificity.

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In a partnership with Chapman Capital, Equitable purchased the land from the Town of Smyrna.

The development’s master plan calls for two medical office buildings totaling up to 400,000 square feet, up to 250,000 square feet of street-level retail, a 240-key hotel and 75 for-sale townhomes. Leasing efforts will be led by JLL Senior Associate Kipper Worthington and Land Deleot, Equitable’s founder.

READ ALSO: Is Retail 2024’s Sleeper Hit?

Phase I of Sewart’s Landing will break ground this March and is set to deliver in the first quarter of 2025. JLL has already secured retail tenants for the project’s first phase, including Starbucks, Wawa, Jonathan’s Grille, a national grocer and others.

In a prepared statement, Worthington said that only one outparcel is not yet spoken for, and that JLL is in negotiations with 10 further tenants for the remaining 50,000 square feet of single- and multi-tenant retail in Phase I.

The development will be sited at the corner of Sam Ridley Parkway and Highway 41 and will feature a pedestrian-focused street grid, community green space and a walking trail surrounding the property.

The development team includes Fulmer Lucas and Lowen + Associates, both of Nashville, as the civil engineers and architects, respectively. Land planning and entitlement were led by Kiser + Vogrin Design, of Franklin, Tenn.

Sewart’s Landing is also supported by a $26 million-plus TIF from Rutherford County.

Smyrna is within 25 miles of Nashville and enjoys an average household income of about $94,000. In addition, 2,600 residential units reportedly are under construction adjacent to the site on Genie Lane and will feature direct access to Sewart’s Landing via a crosswalk.

Music City heat

The Nashville retail real estate market is booming, buoyed by exceptional economic and population growth, according to a November report from Matthews Real Estate Investment Services. “Over the last 12 months, retail rental rates have surged, registering one of the fastest growth rates in the nation, with an impressive annual increase of 6.5 percent.”

Net absorption has exceeded 200,000 square feet in seven of the most recent eight quarters, leading to an overall vacancy of just 3.3 percent, nearly a 15-year low, Matthews reports.

Consistent with that environment, last October saw Big V Property Group secure a $125 million refinancing for The Avenue Murfreesboro, in the Nashville MSA. The lifestyle center totals almost 850,000 square feet and is anchored by H&M, Belk, Barnes & Noble, Haverty’s Furniture, Old Navy, Dick’s Sporting Goods, Best Buy and Burlington. It’s 93.1 percent leased.

Later that same month, Tanger Outlets opened a 290,000-square-foot open-air shopping center in southeast Nashville. Tanger Outlets Nashville features seven buildings and 60 stores, including Ugg, Coach, Pottery Barn, J. Crew, Gap, Levi’s and Bath & Body Works.

The post Equitable Property Eyes Big Nashville Mixed-Use appeared first on Commercial Property Executive.

NexCore Group, in partnership with CHRISTUS Southeast Texas Health System, has opened Gisela Houseman Medical Campus in Orange, Texas. The 55,000-square-foot building will provide health-care services to a community that was left without a medical center since 2017, when Baptist Hospital Orange closed.

The joint venture broke ground on the project in January 2022. At that time, it was reported that the Orange Economic Development Corp. will provide the infrastructure, while the county and City of Orange will offer a reduction in property taxes, an agreement to cover a total of 10 years. The land for development was donated by The Houseman Cos. in 2019. SmithGroup and PhiloWilke acted as architects, while Arch-Con was the general contractor.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

CHRISTUS Southeast Texas Health System is occupying 37,000 square feet at the two-story building, which includes an emergency hospital, physician office space and outpatient and diagnostic services.

Gisela Houseman Medical Campus will provide a variety of medical services, such as:

• Four extended-stay rooms
• Emergency care available 24/7 with two assessment and 10 exam rooms
• Medical office suites for primary and specialty care providers
• A Women’s Center that provides 3D mammography, breast ultrasound and bone density screening
• Diagnostic imaging that features CT, EKG, diagnostic and vascular ultrasound, digital radiography and MRI

Located at 6901 Medical Center Drive, near the southeast corner of Interstate 10E and State Highway 62, the campus is some 22 miles from Beaumont, Texas.

NexCore’s Texas projects

NexCore has a widespread presence in Texas, the company’s footprint including medical centers in several metros. On behalf of Hunt County Regional Hospital, NexusCore broke ground in May 2023 on a 70,000-square-foot facility in Royse City. Delivery is expected in the fall of this year.

Texas Oncology-Amarillo, a 50,000-square-foot comprehensive cancer center in Amarillo is also part of NexCore’s portfolio. The property came online in July 2023.

The post NexCore Group JV Completes Texas Medical Campus appeared first on Commercial Property Executive.

A joint venture between Remedy Medical Properties and Kayne Anderson Real Estate has acquired a four-building medical office portfolio for $86 million.

Flagler Healthcare Investments sold the 181,000-square-foot property collection, which is spread over the areas of Phoenix, Chicago and South Florida. JLL Capital Markets represented the seller and procured the buyers.

Remedy Medical and Kayne Anderson have recently acquired another MOB asset in Chicago. In November, the longtime partners picked up RUSH Oak Brook Medical Center for $71 million.

The JLL team overseeing the most recent transaction was led by Senior Managing Director Mindy Berman, Director Matt DiCesare and Associate Liam Sorensen.

Diverse buildings, diverse practices

The four properties now under the joint venture’s ownership are located in Boynton Beach, Fla., Elgin, Ill., and Phoenix. 

The Boynton properties are Health City I & II, two buildings that were completed in 2016. Located at 10275 and 10383 Hagen Road, the properties total nearly 35,000 square feet, according to CommercialEdge information. The same source shows that Health City I is primarily devoted to orthopedics, while Health City II, called the Boynton Pediatric & Dermatology Center, is leased to local practices of the same name. Flagler purchased both buildings in 2019.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

The buildings sit at the rim of Baptist Health City, a 133,000-square foot medical office complex owned by Invesco. Other neighbors include dermatology and rehabilitation facilities, located along Florida’s Turnpike, as well as Boynton Beach Boulevard.

The Elgin Professional Plaza, located at 750 Fletcher Drive in the Chicago submarket of the same name, is a 52,157-square-foot property that Flagler bought for $13.3 million in 2019, according to CommercialEdge information. Built in 2003, the property is currently leased to tenants with specialties in family practice; ophthalmology; ear, nose & throat; urology and medical imaging, in addition to housing dental and physical therapy practices. Also located in a small medical corridor, the Plaza is neighbored by another office building, as well as an outpatient care center.

The joint venture’s Phoenix purchase is Oasis Surgical Hospital, a facility devoted to orthopedic surgery and sports medicine. The property sits adjacent to Loop 202, giving it highway access to much of Maricopa County.

Medical offices stay good health

Like their relatives in life science, medical offices continue to perform strongly relative to an otherwise struggling office sector. Nevertheless, the sector is feeling the pain from high interest rates. In October 2023, a market update from Institutional Property Advisors indicated that transaction volumes nationwide fell by an average of 30 percent year-over-year through June, while sale prices slumped by 3 percent.

Adaptive reuse for medical offices has enjoyed a recent surge in popularity. Last month, NYU Langone Health opened a 260,000-square-foot ambulatory center in Garden City, N.Y., previously home to two department stores. That same week, EverGreen Health expanded to a 26,000-square-foot lease at the Woodlands Medical Plaza in Bothell, Wash, which was formerly an office building.

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NYU Langone Health has opened a 260,000-square-foot ambulatory center in Garden City, N.Y., an adaptive reuse of a former Bloomingdale’s and Sears building. This is the tenant’s largest care center of this type on Long Island.

The property has been under Steel Equities ownership since 2018, when the company purchased it from Sears Holdings for $10 million, according to Nassau County records. The sale came as a result of all Sears department stores closing during that period. In 2020, the property became subject to two loans totaling $23.7 million, CommercialEdge data shows.

Designed by architect Edward Durrell Stone and completed in 1972, the Class A building rises four stories. After a two-year vacancy, NYU Langone Health announced in 2020 a proposal to redevelop the building into a medical center. It was reported at that time that the tenant would sign a 35-year lease if the project went through, while also taking over the renovation activity.

A new Long Island medical center

NYU Langone Ambulatory Care Garden City includes 260 patient rooms, an expanded adult ophthalmology service and houses 32 clinical specialties. The medical services provided include cardiology, dermatology, endocrinology, gastroenterology, internal medicine, surgical specialties, OB/GYN, pediatrics, radiology and pulmonology. Medical imaging is also available.

The 6.7-acre property is at 1111 Franklin Ave., some 25 miles east of New York City. Medical centers in the surrounding area include the NYU Langone Hospital Long Island, North Shore University Hospital and Nassau University Medical Center, among others.

Conversion to outpatient clinics

Underused or vacant commercial space is increasingly being repurposed, as remote and hybrid work, alongside the closing of retail spaces in the 2010s and the office sector’s overall situation are opening the scene for present-day conversions. Medical office projects are no strangers to this trend.

Another such example is Anchor Health Properties’ Woodlands Medical Plaza in the Seattle area. The three-story property came online in 2007 as an office building, which was then converted into a medical center.

Richardson Medical Center in Richardson, Texas, is another similar case. Pillar Commercial acquired the two-building portfolio in 2019 with health-care conversion in mind. One of the assets was sold in November 2023 to Big Sky Medical.

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EvergreenHealth has renewed and expanded its lease at Woodlands Medical Plaza in Bothell, Wash. The health-care provider has now committed to 26,000 square feet and will occupy the first floor of the three-story, 83,000-square-foot building owned by Anchor Health Properties.

Senior Vice Presidents Todd Battison and Keith Honsberger, alongside Executive Vice President Gary Guenther with Kidder Mathews represented the owner. CBRE worked on behalf of the tenant.

Anchor Health acquired the asset for $31.5 million in 2018 from SteelWave, CommercialEdge data shows. The medical center, converted from an office building, is also currently subject to a loan provided in 2022 by Capital One, with a maturity date set for 2029.

EvergreenHealth provides a range of medical services within the clinic, such as preventive care, orthopedic care, gynecological care, newborn and pediatric care and lab services.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

Completed on 6.5 acres in 2007, the LEED Silver-certified building features 28,300-square-foot floorplates. The facility has two passenger elevators, controlled access, on-site showers and locker rooms and 298 car spots at a parking ratio of 3.5 spaces per 1,000 square feet. The property’s tenant roster includes Pacific Medical Centers and Western Washington Medical Group, among others.

Woodlands Medical Plaza is some 20 miles north of downtown Seattle at 1909 214th St. SE, having access to U.S. Route 527 and Interstate 405. Other medical providers in the surrounding area include MultiCare Indigo Urgent Care, Bothell Health Care and Pacific Institute of Medical Sciences.

Other Anchor Health investments

Anchor Health kicked off 2024 with the acquisition of a three-building medical office portfolio in the Seattle and Charlotte, N.C., markets. The $62 million deal closed in a joint venture with Australian Retirement Trust.

At the end of last year, the company also broke ground on HonorHealth Medical Campus at Peoria, a 100,000-square-foot medical office center some 20 miles from downtown Phoenix. The project is slated for completion in 2025.

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Hammes Partners has acquired Hudson Medical Center, a 160,000-square-foot medical office building in Hudson, Wis., within the Twin Cities market. Hudson Medical LLC sold the property with help from Transwestern Real Estate Services.

The developer took out a $42.8 million construction loan in 2022 from U.S. Bank, according to CommercialEdge information. The property came online a year later.

The facility features an ambulatory surgery center and orthopedic field house. Tenants at the three-story building include Minnesota Oncology, Twin Cities Orthopedics, Valley Surgery Center and Associated Eye Care.

The Class A property at 2651 Hillcrest Drive is close to several dining and retail options, including a Target. Downtown St. Paul is within 20 miles, downtown Minneapolis is some 29 miles west, while Minneapolis–Saint Paul International Airport is 27 miles away.

In March last year, Hammes acquired a six-building medical office portfolio in Chicago from Twin Building Management. The properties totaled more than 120,000 square feet.

Recent deals in the Twin Cities market

Transwestern’s team that represented the seller included Vice President Frank Richie, Managing Principal Mike Salmen, together with Senior Associate Erik Coglianese and National Managing Director John Huff.

Last fall, Montecito Medical purchased Minnesota Women’s Care, a 32,711-square-foot medical facility in Woodbury, Minn. The deal was backed by a $141 million portfolio loan from Capital One.

According to a Transwestern report, Minneapolis’ medical office vacancy rate clocked in at 6.6 percent in the second quarter of last year, well below the 8.1 percent national average. Additionally, the metro ranked in the top 10 markets nationally in terms of net absorption during the same period.

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Altera Fund Advisors, in a joint venture with Virtus Real Estate Capital, has acquired four medical office properties in Tucson, Ariz. Healthcare Realty sold the 215,571-square-foot portfolio for $43.2 million, with Capital One providing $32 million in acquisition funding, Pima County records show. Newmark arranged the equity placement and advised Altera on the joint venture formation.

The properties came under Healthcare Realty ownership in multiple phases. The company purchased Desert Life Medical Plaza and La Cholla Medical Center for $21.1 million in 2007 from West Coast Capital Partners, according to CommercialEdge. In 2008 the company picked up Academy Medical Center for $8.1 million from a private owner. Lastly, Healthcare Realty bought Gateway Medical Plaza in 2012 for $16.4 million from Rendina, as part of a larger $83.4 million portfolio transaction, according to the same research.

The four outpatient properties came online between 1971 and 2008 and offer between 40,969 and 60,000 square feet. All facilities are low-rise buildings and range between A and C property classes. They offer controlled access, covered parking and a total of 1,257 car parking spaces.

The Newmark team representing Altera included Senior Managing Director John Nero, Executive Managing Director Ben Appel and Senior Managing Directors Jay Miele and Michael Greeley, along with Vice Chairman Alex Foshay. Associates Ron Ott, Conor Hilton and Chad Prescher provided financial analysis.

Properties near hospital campuses

The portfolio was approximately 73 percent leased at the time of the sale and its tenant roster included ATI Physical Therapy, Community Medical Services, Labcorp and Tucson Orthopedic Institute, among others.

The properties are part of or adjacent to hospital campuses, as follows:

• Desert Life Medical Plaza, located at 2001 W. Orange Grove Road, 7 miles North of downtown Tucson and adjacent to Northwest Medical Center
• La Cholla Medical Center, located at 6261 N. La Cholla Blvd., 7 miles North of downtown Tucson and near the Northwest Medical Center
• Gateway Medical Plaza, located at 6320 N. La Cholla Blvd., 7 miles North of downtown Tucson and situated on the Northwest Medical Center campus
• Academy Medical Center, located at 310 N. Wilmot Road, 9 miles West of downtown Tucson and situated on the St. Joseph’s Hospital Campus

This is not Virtus Real Estate Capital’s first medical office acquisition in Arizona. The company purchased Banner Health Center Plus, a 70,000-square-foot property in Phoenix, for $48.5 million. The two-story building is part of The Grove, a $400 million mixed-use project.

The post Altera, Virtus Pay $43M for Tucson MOB Portfolio appeared first on Commercial Property Executive.

Horizon Equities has acquired Jackson Health Village, a 150,000-square-foot medical office building in Jackson, N.J., for $24 million. JLL Capital Markets worked on behalf of the seller and procured the buyer.

Jackson Health Village came online between 2014 and 2015 in multiple phases at a development cost of $34 million, the Coloradoan reported. The property was designed to include medical services, as well as a 30,000-square-foot fitness center and other amenities such as spin rooms, a recovery zone and a Kids Club childcare.

The three-story building rises on 11.3 acres and has 609 car parking spaces. The physician practice areas include internal medical and family practice, women’s and children’s health and surgical specialties. The facility also offers imaging center, laboratory, urgent care, pharmacy, radiology and conference space. Jackson Health Village was 64 percent occupied at the time of sale, the tenant roster including Hackensack Meridian Urgent Care, Hackensack Meridian Village Pharmacy, Ocean Dermatology and Kent Plaza Pediatrics, among others.

Located at 27 S. Cooks Bridge Road, the property is less than 10 miles from Interstate 195, some 30 miles from Trenton, N.J., and 60 miles from New York City. Additionally, the building has access to the Garden State Parkway and U.S. Route 9. Medical facilities in the surrounding area include Jackson Aesthetics Center, Barnabas Health Medical Group and Howell Jackson Medical Center.

The JLL Capital Markets team included Senior Managing Directors Jeremy Neuer and Jose Cruz, alongside Vice Chairman Dan Loughlin, Managing Director Tom Stanton and Associate Vice President Matt Loughlin.

Investment in medical office buildings

New Jersey was among the markets that surpassed the $1 billion threshold in sales last year through November, with $1.2 billion in office buildings changing hands, a recent CommercialEdge report shows. Assets traded at an average of $144 per square foot. A total of 48 medical office buildings, encompassing 722,910 square feet, sold in the metro throughout last year.

Nationwide, despite a lower transaction volume compared to previous years, the average price per square foot for outpatient facilities stood at $296 in the first half of 2023. The medical office sector continues to thrive, despite economic hardships, due to its low vacancy rate, tenant stability and demand driven by an aging population and medical technological advancement.

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Big Sky Medical has entered the Phoenix market with the purchase of the 252,000-square-foot Blackhawk Medical Center. ViaWest Group sold the three-building medical and office campus for $46 million, according to Maricopa County records; Taconic Capital provided a $39.9 million acquisition loan. Cushman & Wakefield represented the seller.

Blackhawk Medical Center previously changed hands in 2018, when ViaWest purchased it from Cohen Asset Management for $33.8 million, CommercialEdge data shows. The deal involved a $32.1 million acquisition loan originated by Annaly Capital Management.

Completed between 1997 and 1998, the campus comprises Blackhawk Center I, a 138,450-square-foot, Class B office building, alongside Blackhawk Center II and III, which total 113,810 square feet and include medical office space. The campus has floorplates ranging from 29,400 to 84,410 square feet, on-site conference rooms, controlled access and a total of 1,414 car parking spaces.

Situated on 24 acres at 20401 N. 29th Ave. and 2902 W. Agua Fria Freeway, the campus is in the Deer Valley submarket, near the intersection of Arizona State Route 101 and Interstate 17, some 18 miles north of downtown Phoenix. Other medical centers in the surrounding area include Deer Valley Medical Tower, HonorHealth Outpatient Surgery and HonorHealth Sonoran Crossing Medical Center.

Cushman & Wakefield Executive Director Steve Lindley, Executive Managing Director Alexandra Loye, Vice Chairman Eric Wichterman and Managing Director Mike Coover brokered the sale on behalf of ViaWest.

The Phoenix market recorded $937 million in office transactions as of November, a recent CommercialEdge report shows, with properties selling at an average of $190 per square foot. A total of 52 medical office buildings, encompassing 1.1 million square feet, changed hands in the metro throughout the year.

Big Sky’s recent activity

Last month, Big Sky Medical received the approval from the Dallas City Council for the rezoning of the 145,000-square-foot Pyramids South Tower, which can now include medical tenants. The property is less than 10 miles from downtown Dallas.

The company also acquired Richardson Medical Center I, a 118,472-square-foot medical office building in Richardson, Texas. The property was converted from an office building into a health-care facility prior to the sale.

The post Big Sky Medical Enters Phoenix With $46M Acquisition appeared first on Commercial Property Executive.

The Auburn, Wash., facility is part of the MultiCare Auburn Hospital Campus. Image courtesy of Newmark

Anchor Health Properties, in a joint venture with Australian Retirement Trust, has acquired a three-property medical office portfolio in the Seattle and Charlotte, N.C., markets for $62 million. Newmark facilitated the transaction.

Known as the Novant & MultiCare On-Campus collection, the portfolio comprises a total of 166,000 square feet, and was 94 percent occupied at the time of the sale. The properties are within regional and flagship hospital campuses, providing a variety of medical services, including primary care, orthopedics, cardiology, pediatrics, heart and vascular, physical therapy, neurology, oncology, cardiac rehabilitation, OB/GYN, bariatrics and urology.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

Anchor Health Properties has more than 9 million square feet of health-care real estate assets under management and it continues to add to its portfolio at a rapid pace. Recently, the firm broke ground on a 100,000-square-foot medical office center in Peoria, Ariz.

Part of medical campuses

The Novant & MultiCare On-Campus portfolio includes a 41,000-square-foot MultiCare Health System property in Auburn, Wash., and two Novant Health outpatient facilities: An 89,000-square-foot building in Matthews, N.C., and a 36,000-square-foot medical office building in Charlotte.

Located at 202 N. Division St., with access to U.S. Route 18, the Auburn facility is some 26 miles south of downtown Seattle. The property is surrounded by other medical providers, including Auburn Regional Medical Plaza and Franciscan Medical Group.

The Matthews facility is adjacent to the Novant Health Matthews Hospital Campus at 1500 Matthews Township Parkway, 12 miles from downtown Charlotte. The third asset in the portfolio is located on the Novant Health Presbyterian Hospital Campus at 200 Hawthorne Lane, less than 2 miles from downtown Charlotte.

The Newmark team that brokered the deal included Executive Managing Director Ben Appel, Senior Managing Directors Jay Miele, John Nero and Michael Greeley, Associate Director Ron Ott and Associate Conor Hilton, alongside Vice Chairman Bert Sanders and Senior Managing Director Cavan O’Keefe.

The post Anchor Health JV Pays $62M for MOB Portfolio appeared first on Commercial Property Executive.

Pyramid Towers comprise a total of 300,000 square feet. Image courtesy of CommercialEdge

Big Sky Medical has received the approval from the Dallas City Council for the rezoning of the roughly 145,000-square-foot Pyramids South Tower, which can now include medical tenants within the property. The adjacent Pyramids North Tower was rezoned to medical use in 2005 and is currently occupied by Baylor Scott & White and Dallas Plastic Surgery Institute.

Big Sky Medical acquired the two-building property near dowtown Dallas last year in October for an estimated $55 million from Healthcare Realty. The asset was described at that time as the largest medical office property to change hands in the U.S. since 2018. The purchase was made through Big Sky’s partnership with Bahrain-based GFH Financial Group.

The Pyramid Towers encompass a total of nearly 300,000 square feet and are set to become one of the largest medical complexes in North Texas. Pyramids South Tower is a six-story Class A building which was completed in 1998 and features three passenger elevators, controlled access and offers 730 car parking spaces. Managing Director Russ Johnson and Senior Vice President Chris Wright with JLL will handle the leasing services at the property.

Located at 9101 N. Central Expressway, Pyramid Towers are less than 10 miles from downtown Dallas. Medical facilities in the surrounding area include Texas Health Presbyterian Hospital Dallas, SMU Health Center and First Baptist Medical Center, among others.

Big Sky Medical recently made another purchase in the Dallas-Fort Worth market. The company acquired Richardson Medical Center I, a 118,472-square-foot medical office building in Richardson. The property’s repurposing to medical office use began this year.

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The Professional Building I is at the entrance of the White Rock Medical Center campus. Image courtesy of Ridgeline Capital Partners

Ridgeline Capital Partners has acquired The Professional Building I, a 44,045-square-foot medical office building in Dallas. The seller was 2GR Equity, CommercialEdge data shows. At the time of the deal, the on-campus asset was 94 percent leased.

According to the same source, the property previously traded in 2015, when 2GR Equity purchased the leasehold interest only from Tenet Healthcare, with renovations planned for the newly acquired property. At that point in time, the building was 76 percent leased, according to the Fort Worth Business Press.

The four-story, Class B asset came online in 1976 and underwent cosmetic renovations in 2016. The property is at the entrance of White Rock Medical Center campus and shares parking with City Hospital at White Rock, without a specific number of spaces allotted. The facility offers two passenger elevators, covered parking and controlled access.

Medical services available at the center include Ob/Gyn, primary care, internal medicine, neurology, pediatrics, bariatrics, dental, optometry, lab and pharmacy. The building’s tenant roster includes Dallas Doctors Pain Clinic, Comprehensive Pediatric Care and Plunk & Dragan Smiles.

The property is at 1151 N. Bruckner Blvd., has access to interstates 30 and 635 and is 8 miles northeast of downtown Dallas. Other medical providers in the surrounding area include White Rock Family Health, Care Family Health Center and Sanitas Medical Center, among others.

Year-to-date through December, five medical office buildings changed hands in the Dallas-Fort Worth market totaling of 327,000 square feet, CommercialEdge data shows. Last month, Big Sky Medical acquired Richardson Medical Center I in Richardson, from Pillar Commercial.

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Jackson Medical Plaza includes five procedure rooms and one operating room. Image courtesy of Hammes Partners

Hammes Partners has completed Jackson Medical Plaza, a 43,000-square-foot medical office building and ambulatory surgery center in McAllen, Texas. The developer partnered with Surgery Ventures, HCA Healthcare and Texas Digestive Specialists for this project, according to prepared statements from Hammes Partners’ Principal Justin Shea.

Hammes broke ground on the facility in April 2022, financing its construction with a $13 million loan provided by American State Bank, according to CommercialEdge data. The development team also included Boulder Associates and Vaughn Construction.

The Class A facility was purposely built as a new location for Texas Digestive Specialists and The Advanced Weight Loss Center at TDS. Another tenant is McAllen Surgery Center, a surgical facility for gastroenterological and colorectal care. The medical center features five procedure rooms and one operating room.

The property took shape on 3.8 acres at 4211 N. Jackson Road, providing access to interstates 2 and 69C. Other medical facilities in the surrounding area include Rio Health Medical, Bravo Medical Center, Family Medicine Center and McAllen Medical Plaza, among others.

According to CommercialEdge data, Hammes Partners has a portfolio of 45 medical office properties totaling some 2.3 million square feet. Earlier this year, the company added more than 120,000 square feet to its footprint with the acquisition of a six-building portfolio in Chicago.

Hammes also broke ground on a 48,000-square-foot medical facility in Buckeye, Ariz., in May. Completion is expected early 2024.

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uCity Square is among GI Partners’ medical office buildings. Image courtesy of CommercialEdge

Private alternative investment firm GI Partners is establishing UDLR Healthcare, a venture which will focus on investing in medical outpatient buildings. The platform is a partnership between GI Partners and a team of former executives from Healthcare Trust of America.

The focus of the new partnership will be on medical outpatient buildings located in key markets, near demographic growth centers, as well as adding value through capital improvement. An initial property investment is set to close this month.

Previous HTA CFO Robert Milligan will lead UDRL Healthcare and will serve as the platform’s CEO. He will be joined by former HTA executives Todd Sloan, Olivia Waalboer, Jeff Spiller and Austin Brooker.

READ ALSO: MOB Sector Remains Stable, Attractive

Joyce Chow, Principal at GI Partners, said in prepared remarks that the decision to create the platform comes as a result of increasing demand for high-quality medical facilities. In July 2022, HTA merged with Healthcare Realty Trust Inc.

Founded in 2001, GI Partners raised more than $42 billion in capital since its inception and has a real estate strategy that focuses on specialized domains, including technology, sciences and health-care properties.

According to CommercialEdge, the company has a footprint of approximately 11.4 million square feet, with investment mostly focused on office building assets, life science buildings and a few medical office properties acquired before launching the UDLR Healthcare platform. Among those is the 140,913-square-foot uCity Square, a Class A medical office in Philadelphia, purchased in 2021 for $79.5 million.

Investment opportunity in health-care real estate

What used to be an alternative asset class, MOB is now considered a mainstream investment sector. The asset is recession-proof and despite a lower transaction volume compared to the previous years, medical outpatient properties have a low vacancy rate with stable tenants.

In a recent MOB Outlook series, experts weighed in on the state of health-care investment. Owners are looking to broaden their portfolios and despite the influence of macroeconomic factors, there is a general confidence that the sector will continue to fare well in the upcoming year.

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Developed by PMB and partner Santa Clara Valley Healthcare, Valley Health Center San Jose is slated for completion in 2025. Image courtesy of PMB

While the office sector is still far from recovering following the COVID-19 hit, the medical office building market continues to thrive, mainly due to asset specificity. Typically, the sector has a low vacancy rate, with stable tenants occupying the properties for long periods of time. Additionally, the aging population and the advances in medical technology are both supporting demand for such spaces. No wonder that interest from investors in picking up MOB assets is on the rise.

Despite a lower transaction volume compared to previous years, the national average price per square foot stood at $296 in the first half of 2023, according to a CommercialEdge report. From 2017 to 2022, prices consistently hovered between $260 and $290.

For Kevin Smigiel, vice president of Healthcare Advisory Services with the Phoenix office of Transwestern, one of the biggest advantages that an increasing number of investors are now seeing in the health-care real estate sector is tenants’ willingness to sign long-term leases. This has prompted some traditional office owners to turn to this particular type of asset class, despite not pursuing such investments before the pandemic.

READ ALSO: Why MOBs Offer Healthy Investor Appeal

“The number of office owners who previously would not pursue a medical deal in their office building for fear of fending off office users are no longer holding that line and have become willing to chase medical deals in order to increase occupancy in their assets,” said Kenneth Smondrowski, senior vice president of health-care advisory services in the Bethesda, Md., office of Transwestern. “This makes perfect sense because it means longer deals, better credit and stickier tenancy.”

Until recently, MOBs were seen as an alternative asset class, but now they are more of a mainstream investment sector. Rahul Chhajed and Michael Moreno, both senior vice presidents & senior directors of health care with Matthews, agree that medical office buildings are a recession-proof asset class that is not only seen by investors as a way to broaden their portfolios, but also provide opportunities for consolidation in the space.

“You can buy a building leased by a one-practice physician group, which then gets acquired, and now you go from a tenant with $5 million in assets to $5 billion. That is obviously going to increase the value of real estate,” Chhajed said.

MOB sector not immune to challenges

Despite some key elements that work in favor of the health-care real estate sector and that make it resilient in the face of economic uncertainty, Shawn Janus, national director of health care with Colliers, points out that the market did indeed experience a slowdown in transaction activity in 2023.

“Volumes were down, with portfolio transactions being particularly impacted. Smaller transactions and single-tenant transactions held up better,” Janus said. “The broader health-care industry also dealt with the changing macro environment. Key factors included the cost and availability of capital and skyrocketing labor costs. From a real estate perspective, health-care providers focused on their real estate strategy, evaluating lease versus own impacts,” he added.

In the upcoming year, the performance of the health-care real estate sector will likely mirror 2023, according to Mervyn Alphonso, executive vice president of development and acquisitions & partner with Anchor Health Properties. High interest rates and construction costs, as well as uncertainty stemming from the geopolitical context, will continue to have an impact on the sector.

Additionally, Moreno believes that health care will be experiencing the same difficulties as other asset types in terms of financing due to interest rates staying up, and maturing debt potentially leading to lower values and distress in non-core assets.

READ ALSO: Checkup on Health-Care, Life Science Opportunities

“Health care has similar financing to other asset types, and rates have affected everybody. Many of the larger institutional lenders have also pulled out of the space, so it’s not the greatest financing market right now,” Moreno said.

Another challenge that Janus pointed out is related to the labor environment. Even though clinical space requirements are growing, staffing those clinical functions has caused some projects to be delayed.

Originally completed in 1998, Richardson Medical Center I underwent renovations in 2017. Image courtesy of Pillar Commercial

“Administrative space, on the other hand, experienced a decrease in demand as providers looked to downsize or off-load space, due to the effects of remote working and/or flexible work schedules,” Janus said.

Many underused office buildings underwent conversions, including to medical office facilities, according to Smondrowski. One such example is Richardson Medical Center I in Richardson, Texas, a 118,472-square-foot property that Big Sky Medical recently acquired from Pillar Commercial. The new owner has rebranded the asset as a medical office building.

What to keep an eye on in 2024?

In the upcoming year, the health-care real estate sector will most likely continue to be impacted by high interest rates, even though the general consensus in the capital markets is that the Federal Reserve is either done with their tightening cycle, or close to it.

“While the prospect for rate cuts in 2024 is murky, having a more stable interest rate environment will allow pricing and underwriting to gain its footing,” Janus expects. “Unfortunately, the labor environment may continue to be challenging. The cost of labor may stabilize, but supply will continue to be a challenge.”

According to the Colliers expert, physician shortages have begun plaguing the industry as older specialists are retiring and the number of new entrants hasn’t kept up.

Nevertheless, the sector’s prospects are far from completely dire. Experts agree upon one thing: the rise of mental health-care clinics. As Smondrowski explains, there was less funding in the past for these types of clinics, but that is rapidly changing as these facilities become more in demand.

“Mental health providers are booming right now, with private-pay mental health practices opening everywhere,” Smondrowski said.

Janus also believes that behavioral health will have a growing impact on the MOB sector going forward. The specialist noticed that providers, investors, developers and lenders alike are intrigued with the potential opportunities in this space and are increasingly more interested in understanding this sub-sector and its financial viability.

READ ALSO: Medical Office Buildings Shine Bright for Health-Care Investors

From a developer-investor’s perspective, no drastic changes are expected in the market next year. Despite sustained demand, factors such as staff shortages and financing challenges will continue to impact the medical office sector, in Alphonso’s view.

“Medical outpatient construction spending reached a peak in 2023. The volume of projects steadily climbed since early 2022,” Alphonso said. “Given Anchor’s current solid development pipeline and additional pending opportunities in various geographic markets, I would expect the construction volume in the sector to be fairly steady in 2024.”

HonorHealth Medical Campus at Peoria will encompass 100,000 square feet. Image courtesy of Anchor Health Properties

In the past year, Anchor started construction on several health-care real estate projects, with some of them set for completion in either 2024 or 2025. One of the largest developments they broke ground on was HonorHealth Medical Campus at Peoria, a 100,000-square-foot medical office project in Arizona. 

Other health-care real estate developers starting new projects include PMB and its partner Santa Clara Valley Healthcare which broke ground on a 230,000-square-foot medical office building in San Jose, Calif. The 10-story property is slated for delivery in 2025. In the same state, PMB and Sutter Health also began construction on a four-story, 100,000-square-foot medical office building on the Sutter Roseville Medical Center campus in Roseville. Meanwhile, Ryan Cos. broke ground on One Scottsdale Medical, a 101,136-rentable-square-foot medical office building in Scottsdale, Ariz., that is slated for completion next year.

All in all, the health-care real estate sector has remained resilient in the face of adverse conditions and will likely continue to perform well despite the lingering challenges impacting all asset classes.

“I have a positive view of the outlook for health care in 2024, recognizing that the macro environment will still be challenging,” Janus concluded.

Read the February 2024 issue of CPE.

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