7500 West Lane

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STOCKTON, CA—Medical real estate developer and owner, Meridian,continues to purchase and develop healthcare facilities in thewestern region. Most recently, it closed escrow on the purchase ofa 7,500-square-foot building on 2.06 acres located at 7500 WestLn.

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Meridian purchased the property to develop a new ambulatoryoutpatient clinic for its client. The project is directly acrossthe street from Kaiser Permanente's Stockton medical offices and ashort walk to restaurants and retail amenities includingCostco.

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John Pollock, CEO of San Ramon-based Meridian, recentlydiscussed the healthcare landscape, new construction anddevelopment opportunities in the first of a two-partexclusive.

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GlobeSt.com: What have you seen in the healthcarelandscape thus far in 2018?

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Pollock: There has been a tremendous amount ofactivity in the first quarter of 2018. We will have a newdevelopment project commencing in each of the next three months andleasing activity in our existing medical office portfolio has beenrobust. We have major tenant improvement projects that will soonbegin both in Northern California and at our multi-tenantacquisition in Phoenix. Despite some mild headwinds with the risinginterest rates, we are optimistic about 2018.

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GlobeSt.com: What do you see in the future with regardto healthcare development?

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Pollock: I expect to continue to see more newconstruction requirements on the West Coast. Vacancies have reacheda point where there is little or no viable existing space, andrents have reached a rate that makes new construction make moreeconomic sense. Meridian continues to work collaboratively with ourhealthcare clients to find the best possible value whether it is anew build or adaptive reuse of an existing building.

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GlobeSt.com: How critical is the land shortage for newconstruction in the Bay Area?

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Pollock: The scarcity of land and prices haveforced users and developers to challenge conventional thinking onhow to satisfy requirements. For example, in Oakland, we assembledfour parcels with an existing building and merged them into asingle parcel to come up with enough land to create a12,750-square-foot OSHPD 3 outpatient clinic. In Berkeley, wepurchased a well-located vacant office building on Telegraph Avenueand had to reduce the building's footprint in order to accommodatethe required parking for medical use. We subsequently leased thenew building to BayChildren's Medical Group and an urgent careprovider. In late December, we closed escrow on five parcels indowntown Long Beach in order to build a 10,000-square-footoutpatient medical facility. The parcels included two commercialbuildings, a four-plex and a small vacant lot.

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The other challenge that we are noticing is the decliningvacancies in medical office space across the West, where in most ofthe major metropolitan areas vacancies are now below 10%. Theavailability of larger blocks of space is just not available.

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GlobeSt.com: Is your development still focused primarilyon medical centers?

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Pollock: Yes, Meridian has been focused onhealthcare development since early 2000. That being said, with somany users wanting locations that are visible and accessible totheir patients, we are seeing a convergence with retail. Retailerswant the same highly visible and accessible locations thathealthcare providers want. For example, Meridian is currentlyworking with a quick-service restaurant on a site in Livermore andan auto parts store in Jurupa Valley–both are vacant lots and willneed new facilities.

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GlobeSt.com: You are next focused on Modesto andcompleted construction of outpatient facilities in Oakland andCastro Valley. What do those areas have that make them appealingfor healthcare?

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Pollock: Our developments in Modesto, Oaklandand Castro Valley have three things in common: accessibility,visibility and proximity to major healthcare providers. Modesto andOakland are both located very close to major Kaiser facilities andCastro Valley sits at the foot of Sutter's Eden Medical Centerhospital.

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Lisa Brown

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.