Healthcare Changes Increase Need for Large MOBs

Pollock: “Having functional space that allows [medical tenants] to reduce their footprint and see more patients while maintaining a great patient experience is vital to their business model.”

LAGUNA HILLS, CA—As the healthcare industry consolidates, it is moving away from the individual practitioner office that was historically housed in woody walk-up facilities and toward product that is consistent with health systems’ brand, Meridian’s CEO John Pollock tells GlobeSt.com. In many cases, this means a move to larger medical-office buildings, clearly a step up for the healthcare real estate sector.

Meridian is responding to this trend with more MOB acquisitions. The firm recently purchased the Laguna, a 57,057-square-foot medical-office building at 24022 Calle de la Plata here from a private investor. While Meridian declined to comment on the purchase price, Garth Hogan, executive managing director of Global Healthcare Services with Newmark Knight Frank in Newport Beach, tells GlobeSt.com, “We are seeing on-campus buildings like this one trade around $350 per square foot to $400 per square foot.”

The acquisition comes on the heels of last year’s purchase of Cotton Medical Center, a 115,000-square-foot, $49-million medical office complex in Pasadena, CA, adjacent to the recently completed Shriners Hospitals for Children and near the Huntington Memorial Hospital. The Laguna medical-office building is on the campus of and adjacent to Saddleback Memorial Hospital, a 325-bed hospital recently designated by Healthgrades as one of the top 50 hospitals in America. The five-story MOB is located across the street from the former Laguna Hills Mall, which is being redeveloped into an indoor-outdoor retail center and urban village called Five Lagunas, and adjacent to the Laguna Woods Village, one of the largest 55-plus communities in Southern California. We spoke with Pollock about the acquisition, the increased demand for large MOBs, what’s changing about how medical-office space is being used in this market and what makes for “top-quality” medical space today.