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Wednesday, Feb 21, 2024

Medical Office

Demand For Medical Office Space Grows Demand for Medical Office Space is finally following the resurgence seen earlier by other segments in the San Fernando Valley/North LA real estate markets. The medical office market has been slow to recover from the triple whammy it received from the recession, medical reform and the Northridge earthquake. Medical space users have been restructuring their office needs to meet the dynamic changes and economic realities evident in the medical field. Physicians and medical groups are utilizing medical space more efficiently rendering the typical smaller practitioner office obsolete. As medical space users become more comfortable with their ability to compete in the new medical environment, we are seeing a return to the long term lease commitments needed to finance the high cost of tenant improvements. Medical office buildings, in desirable locations, with the capital to contribute towards tenant improvements are able to attract new tenants while others are slowly drained of their occupancy, forcing many medical building owners into bankruptcy. Older bankrupt medical buildings with the old adage of “Location, Location, Location” are being acquired by developers and are being given a second life through major renovations offering build-to-suit opportunities for the tenants at below replacement cost. Two older medical buildings on Ventura Boulevard in Encino are currently going through major renovations, by Rubin-Pachulski Properties, of Los Angeles. They are the Rubio Medical Plaza and Encino Medical Tower, and are scheduled for completion at years end. Medical office projects in less attractive locations continue to suffer from erosion of their occupancy and base rental rates. Clinics, Medical Specialists and Dentists often opt for a visible retail location to stay competitive with the larger HMO providers. Demand and base rental rates high enough to justify new development are scarce but projects are planned next to Saint Joseph’s Medical Center, in Burbank, and next to Henry Mayo Hospital, which is currently under construction in Valencia. Landmark Health Care Facilities, LLC of San Diego, in partnership with the owner of G & L Realty of Beverly Hills, has added a Class A Multi-Tenant 44,000 square foot medical building to the Henry Mayo campus. The project is scheduled for completion by the end of the year and is seventy-five percent leased at rates approaching $2.00 NNN. All this equates to evidence that new medical developments, that are carefully planned, are returning to the area for the first time in almost a decade. Lee & Associates Medical Real Estate Services has focused on assisting both Tenants and Landlords with their medical real estate transactions. The most often given advice is to start the process early. Six to nine months before a planned move or lease renewal is suggested. A commercial real estate broker specializing in medical sales and leasing can assist you with market information and help negotiate a transaction that will achieve your space goals. This article provided by Lee & Associates Medical Real Estate Services.

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