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RANCHO SANTA MARGARITA, CA—Good operators will understand their market as well as the health systems and providers that deliver the care in order to achieve the right synergies in medical-office buildings, Cypress West Partners partner Chris Cumella tells GlobeSt.com. The firm recently acquired Riverwalk Medical Plaza, a 54,923-square-foot campus-adjacent medical-office building at 9450-9500 Stockdale Hwy. in Bakersfield, CA.
The Southern California-based healthcare investment, leasing and property management firm acquired the property in a joint venture with MedProperties Holdings LLC, a national, healthcare-focused real estate private-equity firm headquartered in Dallas. This transaction marks the team's fifth joint-venture acquisition. Capital One Healthcare Financial Solutions provided the debt for the transaction, as well as the joint venture's previous four acquisitions.
Riverwalk Medical Plaza is a two-story medical office building built in 2005. The property is 94% occupied with major tenants that include Dignity Health, Quest Diagnostics, Children's Hospital of Los Angeles and GEM Physicians Medical Group. The property provides close proximity to the Dignity Health Mercy Hospital Southwest of Bakersfield and offers a rare chance to be within walking distance of the Mercy campus. Bryan McKenney, director at Cypress West, will handle property leasing.
This acquisition brings Cypress West's total portfolio to more than 1.7 million square feet in three major markets in the Southwestern US. We spoke with Cumella about attracting the right tenant mix to medical-office space, vetting potential tenants to determine synergies and the pitfalls to avoid when leasing medical-office space.
GlobeSt.com: What is the strategy owners should apply in attracting the right tenant mix to medical plazas like Riverwalk?
Cumella: The best source is in your building now. Talk with your existing physicians and practice managers to see if they have synergistic practices in other buildings or if they have thought about expansion or additional services.
GlobeSt.com: How do you “vet” potential tenants to determine if there are synergies?
Cumella: This probably comes over time as knowledge grows of the space. For example, a dialysis center would benefit from a nephrologist (kidney specialist) on site. A primary-care practice will send patients to specialists such as a cardiologist, orthopedics and dermatology. Conversely, a podiatrist and a neurologist are more likely to be golfing buddies than referral sources.
GlobeSt.com: What are the pitfalls to avoid?
Cumella: You need to understand market demand and physician gap analysis. This is probably too simple of an analogy, but for illustrative purposes you can see the point: If you have three cardiologists in your building and your market only needs one or two, you may have an at-risk tenant. If you have too many single shingle doctors (solo practitioners), you may see your tenants merging or have potential take-over targets.
GlobeSt.com: What else should our readers know about this topic?
Cumella: At Cypress West, we believe that owning and managing MOBs is a full-contact sport. Good operators will understand their market as well as the health systems and providers that deliver the care.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
