Rockwall Medical Office Building, 1005 W. Ralph Hall Pkwy., is an 85,117-sf building constructed in 2006. Houston-based PM Realty developed the building in partnership with Quorum Equities Group LLC of Dallas as part of its 40-acre Horizon Ridge Park, as previously reported by GlobeSt.com. The medical office building is 85% leased with 20% of the building occupied by Lake Pointe Medical Center. The asking lease rate for the building is $26.50 per sf, says Michael Gordon, AVP of acquisitions of Harrison. The building is adjacent to the Presbyterian Hospital of Rockwall, an 80-bed facility which is expected to open later this year.

The Hilo Medical Building, 45 Mohouli St., is a 22,751-sf building built in 1996. Hawaii Health System Corp. has a lease for the entire building through June 30, 2017, Gordon says. Hawaii Health Systems Corp. signed a 10-year, $8-million lease for the medical building space to expand its outpatient facilities, as previously reported by GlobeSt.com. PM Realty had represented then landlord Glacs LLC, in the lease transaction. The average asking lease rate for medical office space in the area is $32.50 per sf triple net, Gordon says. The building is less than one mile from Hilo University Campus. The building reportedly had an asking price of nearly $11.5 million. Glacs had acquired the building in 2004 for $6 million, sources say.

The joint venture between Harrison and Montecito will focus on medical office buildings, particularly those located near hospitals and universities, with a likely geographical focus in the southwest and southeast. It will be a value-add portfolio with properties that the joint venture will lease up and will need capital improvements, Merrill says. Both medical office buildings in Rockwall and Hilo will have improvements such as upgrades to the elevators, lobby and corridors, he says.

Montecito was chosen as a joint venture partner because of "their track record, local market relationships and focus in the medical office field," Gordon said in a released statement. The medical office market "is highly fragmented and tenant demand is not tied to the overall performance of the economy," he says.

Harrison currently has 11 local partners in joint ventures focusing on different sectors such as self-storage, student housing, senior housing and assisted living, medical office and marinas, Merrill says. "We look for great local operators with day-to-day expertise in managing their assets," he says.

Instant Insights /

Harrison, Montecito Form $500M Office JV

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