SANTA MONICA, CA-As noted in a Sept. 10, 2013, GlobeSt.com article, Santa Barbara, CA-based Montecito Medical Investment Co. recently acquired the UCLA Outpatient Surgery and Oncology Center in Santa Monica, Calif., for $54.57 million. The article also noted that the 51,342-square-foot medical office building at 1223 16th St., across the street from the recently rebuilt, 302-bed UCLA Medical Center, traded for “a very high dollar-per-square-foot number.”
High indeed. As news of the sale has buzzed through the healthcare real estate marketplace, veteran healthcare real estate professionals are marveling at the price, which works out to $1,063 per square foot. The off-market transaction represents the first time a medical office building outside of the New York market has sold for more than $1,000 per square foot, according to the broker, Eric Tompkins, a vice president with CBRE Healthcare Services Group in San Diego.
Compare that to the average price healthcare real estate investors have paid so far in 2013 – about $208 per square foot for transactions of $5 million or more, according to commercial real estate data firm Real Capital Analytics Inc. – and you can see why the deal has raised eyebrows in the healthcare real estate sector.
But Montecito CEO Chip Conk says the asset was well worth the record price.
“This really is not your typical medical office building, as it is built to the quality of newly constructed, higher-grade hospital space,” Conk recently told the trade magazine Healthcare Real Estate Insights. “And while it is not technically on the campus because it is not on a ground lease, it is, for all intents and purposes, on the campus, right across the street from the rebuilt UCLA Hospital there in Santa Monica.
UCLA, which leases the entire building, put tens of millions of dollars into finishing the space, and it acts as the hospital’s main outpatient facility, surgery center and oncology center. They have a long-term commitment and a strong need for the building.”
The UCLA Outpatient Surgery and Oncology Center is packed with high-tech features, Conk says, including eight operating rooms for outpatient surgery, two linear accelerators for radiation oncology, a laboratory and a pharmacy. It also boasts a rooftop photovoltaic system that provides solar power for about 15% of its energy needs, is Leadership in Energy & Environmental Design-certified, and has won numerous architectural awards for the designer, Santa Monica-based Michael W. Folonis Architects.
But perhaps its most notable feature is what is said to be the West Coast’s first fully automated parking system. By using a mechanical valet to park and retrieve vehicles, the system can pack 385 cars into a seven-level parking garage on the relatively small site – about twice as many as would fit in a conventional, self-service garage of the same size.
The developer and seller, San Francisco-based Nautilus Group Inc., opened the building in early 2012.
Murray W. Wolf is the Publisher and Founding Editor of Healthcare Real Estate Insights™, the nation’s first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.