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WASHINGTON, DC-Marcus & Millichap Real Estate Investment Brokerage Co. has closed or is listing a number of high-profile medical office building properties throughout the US. A significant portion of this activity has been focused in the Washington, DC market, Jim Kornick, senior director of healthcare real estate here tells GlobeSt.com. The reasons include Washington, DC's strong overall fundamentals as well as high costs to entry and regulatory restraints on development.
Right now Marcus & Millichap's DC office is about to come to market with an on-hospital campus trophy-quality building in Montgomery County, he says. "The seller is selling because it perceives pricing to be very attractive in the market right now."
As an example Kornick points to the recent sale of a four-building, 174,756-sf medical office building portfolio for $67 million. At $420 per sf it was the highest price per sf for any major medical office building sold in 2006. Kornick and Gerald Burg, also a senior director in the Washington, DC office's Healthcare Real Estate Group, along with Matt Clinebell, a healthcare real estate investment specialist in the DC office, represented the seller, Medical Center Development Corp. (MCDC). Washington Real Estate Investment Trust acquired the assets in a transaction that is closing in stages to accommodate the debt.
Three of the Montgomery County medical office buildings--Shady Grove Medical Building, Shady Grove Professional Center and Shady Grove Professional Center II--are in Rockville. Encompassing a total of 141,325 sf, the class A assets sold for a cap rate of 5.9%. Since delivery, these properties have been 100% leased to a diverse group of medical office users and now have an active waiting list for tenancy, according to Marcus & Millichap. The fourth building, Plumtree Professional Center, is located in Bel Air. The 33,431-sf facility, which is anchored by a radiology facility, sold for $230 per sf.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
