Meridian Buys $81.5M Medical Office Building in Beverly Hills
The property is an example of the strong medical office performance during the pandemic.
Medial office developer and investor Meridian has acquired the Beverly Hills Medical Plaza for $81.5 million in partnership with an unnamed institutional investor. The three-story class-A medical office building is 67,510 square feet and was 88% leased at the time of the sale.
The property is an example of the strong medical office performance during the pandemic. “The medical office sector has outperformed most other commercial property types through the COVID-19 pandemic and is viewed as a safe haven for discerning capital. As a result, there has been a significant increase in interest and investment allocation for the asset class, which has driven cap rates down and prices up. Irreplaceable properties such as Beverly Hills Medical Plaza will continue to be the beneficiaries of this trend and we expect similar assets to be even harder to come by in the future,” R.J. Sommerdyke, VP of Acquisitions at Meridian, tells GlobeSt.com.
Beverly Hills specifically has been positively impacted by the trend. “The Beverly Hills market caters to specialists and is largely a private-pay clientele. It’s critical for these practices to have a Beverly Hills address in order to attract and retain top doctors and patients,” adds Sommerdyke.
Other investors have also taken advantage of the dynamic. In March, LaSalle Investment Management purchased a 49,721-square-foot, class-A medical office building in Beverly Hills, CA, for $74.4 million from UBS Realty Investors. The building, designed by SIM & Associates, offers a world-class surgery center, a full-service pharmacy, valet parking and a rooftop deck. The state-of-the art property was renovated in 2011. Located at 9033 Wilshire Blvd., near several hospitals including Cedars-Sinai Hospital, UCLA Medical Center, St. John’s Hospital and Olympia Medical Center, the medical office building is anchored by USC’s Keck Medical Center.
The Beverly Hills market isn’t unique. Investors have flocked to the medical office market during the pandemic. Marcus & Millichap expects an increase in the number of buyers of sub-$10 million on- and off-campus assets this year, and it projects that a 20 point rise in vacancy to 9.7% and an increase in newly built space should push the national asking rate 1.6% to an average of $21.85 per square foot. This gain represents a ninth consecutive year of positive marketed rent growth for the sector.