The recent $24.8 million purchase of a multi-tenant Glendale medical office building on the campus of Glendale Memorial Hospital and Health Center marks a growing trend in the region’s commercial real estate market – the value of medical office properties.

While the pandemic’s work-from-home mandates caused a mass exodus from many traditional office workspaces, the market for medical office buildings continues to grow in the San Fernando Valley, fueled by a growing demand by medical practitioners, hospitals and private equity real estate investment firms who perceive medical office as a stable, high-value, long-term, tax-friendly sector.

“Medical office buildings are seen as a highly desirable investment sector in this region,” confirmed Linda Lee, executive vice president at Kidder Mathews, the brokerage that handled the deal, which was finalized on Aug. 27.

MedProperties Realty Advisors, a Dallas-based health care-focused private equity firm, bought the 70,073-square-foot medical office building, located at 1510 S. Central Ave. adjacent to Glendale Memorial Hospital.

A bonus is the building’s proximity and affiliation with the hospital campus. This building functions as a convenient outpatient care facility, which can intake the flow of patients connected to the hospital. The prime location increased its value as an asset to MedProperties.

Kidder Mathews’ Scott Unger, who also worked on the deal, said this value derives from the symbiotic nature of the doctors at the Glendale Memorial Hospital, their patients and the doctors’ private practices next door.

Lee also emphasized the importance of location in the transaction’s success.

“This sale demonstrated the continuing appetite for well-positioned medical office building assets,” she said.

The building was developed in 1989 by Glendale Mob II, a partnership of 39 doctors. The company owned the property until the sale to MedProperties.

Prior to the sale, the owners of the building spent $2 million dollars during the last 18 months updating and improving the building’s system and common areas. Lee said the owners’ investment added value which pushed up its final sale price and increased its tenant base.

“It was very significant that the improvements to the building made by the seller helped achieve the purchase price,” says Lee. Over the course of the past three years, the buildings’ occupancy has grown from 70 percent to 90 percent at the time of sale.

“We took an asset that was undervalued and through a true collaborative effort, where ownership contributed capital to the building improvement, we dramatically increased its value,” Lee said.

According to Lee, medical office buildings are projected to outperform the sales of regular office buildings and even industrial properties in the San Fernando Valley.