Five-Year Search for Dialysis Site is Complete

WATSONVILLE, CA—After a five-year search, Meridian recently purchased two vacant parcels totaling 1.15 acres with the intent to develop an 11,424-square-foot outpatient ambulatory clinic to serve the critical needs of dialysis patients in the area. The land is located at 58 Hanger Way and 5 Neilson St., directly adjacent to the Watsonville Community Hospital and the Watsonville Hospital emergency room.

Construction is expected to commence in April with completion slated for January 2021. The planned investment including land is estimated to total approximately $10 million for the ground-up development project.

"This was a vacant, undeveloped parcel of land that was underutilized and zoned industrial," said Mike Conn, executive vice president of Meridian. "We worked with our seller, the city of Watsonville and the community to process a general plan amendment, special use permit, design review and lot merger to rezone the parcel to N-Institutional, where dialysis and other medical uses are permitted. Thanks to excellent cooperation from the city of Watsonville planning staff, economic development department and council member Lowell Hurst, Meridian was able to process these complicated entitlements in under three months."

Conn says after a five-year search in the Watsonville/Santa Cruz submarkets, this land did not materialize a moment too soon.

"The dialysis patient base in this area often has to commute up to an hour each direction three times per week to receive their treatment," he says. "Our new facility will truly impact the lives of these patients and their loved ones who support them while they undergo this life-saving treatment. Meridian prides itself on enhancing the patient experience by providing greater access to care at a more affordable cost. The project will consist of an 11,424-square-foot building with 49 parking stalls. The facade will include a three-color stucco scheme, decorative steel canopies and Nichiha wood paneling to create depth and articulation in the building elevations. The interior of the building will house up to 36 hemodialysis stations constructed to OSHPD3 I-Occupancy standards."

Randy Parker of JR Parrish in Santa Cruz represented the previous owner/seller in the acquisition of the site and Meridian represented itself. Mark Caston of LaJolla-based Voit Real Estate Services represented the undisclosed new tenant. Walnut Creek-based Harriman Kinyon Architects is the architect and Livermore-based Kier & Wright is the civil engineer.

"This project is another example of the perspective that Meridian brings to the table when partnering with healthcare providers to solve their real estate requirements," John Pollock, Meridian's CEO, tells GlobeSt.com. "Meridian utilized our entitlement, development and community outreach teams to bring this project to fruition. I am proud of the creativity and quick work the team did to allow Meridian to transform this former industrial yard site into a world-class healthcare facility that will provide greater access to care and at a sustainable cost of occupancy for the provider."

According to Conn, Meridian has several other projects in development/redevelopment, with a healthy development pipeline ahead for 2020. Meridian is still actively looking to partner with healthcare providers for more real estate opportunities throughout California, the Pacific Northwest and the Southwest.

"Meridian is an active participant in moving higher acuity treatment out of the bed towers and into a convenient outpatient setting," Conn tells GlobeSt.com. "As a percentage of GDP, the United States is spending too much on healthcare, and needs to find innovative and cost-effective ways to improve care delivery. Patients are the consumers of healthcare services and are driving change. Millennials are demanding greater access to care, convenience and technology. Providers are adjusting their capital strategy plans to remain competitive and retain market share. This includes establishing strong commercial/private payer mixes with the hopes that local consumers will use these specialty service lines in the future, which yield the providers higher reimbursements. Meridian uses its innovative approach to site selection and land use/entitlements as well as its unique ability to repurpose sites to contribute to the solution."

US healthcare spending grew 4.6% in 2018, reaching $3.6 trillion or $11,172 per person. As a share of the nation's gross domestic product, health spending accounted for 17.7%, according to the Centers for Medicare and Medicaid Services.

The National Health Expenditure Accounts/NHEA are the official estimates of total healthcare spending in the United States. Dating back to 1960, the NHEA measures annual US expenditures for healthcare goods and services, public health activities, government administration, the net cost of health insurance and investment related to healthcare. The data are presented by type of service, sources of funding and type of sponsor.

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Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.