The boon for existing product is due to limited new construction in the medical office arena. The buyer of record, 3720 Motor LLC, acquired the asset from Ensemble Investments, an owner of medical properties in Phoenix and Los Angeles.
"It was high-quality construction, with kind of a timeless architecture. I like the fact that the lease rates do not justify any new construction of competitive space," Eric Wichterman, a senior vice president and principal with Grubb & Ellis/BRE Commercial's Phoenix office, tells GlobeSt.com.
Located at 4616 N. 51st Ave., the 24-year-old Parkvale building sits alongside four others of the same product type on the campus of the 239-bed, Vanguard Health Systems-operated Maryvale Hospital. At 96% occupancy, the two-story building has one remaining suite for lease. Rents are closer to the higher end of the spectrum for medical office properties in Phoenix, averaging $20 per sf.
Since Phoenix Memorial Hospital was converted to a surgical center two years ago, Maryvale Hospital has served as the primary hospital for the general area. Many of Phoenix Memorial's services, including its birthing department, were transferred to Maryvale, Wichterman says.
Existing medical office buildings seem to perform better than newer properties, adds Wichterman, as evidenced by a newer building on the Maryvale Hospital campus that presently suffers from low occupancy. 1st London intends to hold onto the building for cash flow and long-term appreciation, with no plan for any immediate improvements. "With limited development, it should be a very strong, stable investment," says Wichterman, the deal's sole broker.
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