Investors Close On Two Medical Office Buys

"The sale of medical office buildings is definitely picking up locally," says Rudy Hubbard, managing director for Houston-based Transwestern. He and Transwestern associate Leah Gallagher just closed a $15-million sale of the 79,629-sf Sugar Land Medical Pavilion at 14811-14815 Southwest Fwy. to Triple Net Properties Inc.

Hubbard says investors like medical office assets because tenants are long-term and lease roll is almost non-existent. "Doctors either die or retire," he adds. "They're not likely to relocate as often as general businesses." The 96%-leased Sugar Land Medical Pavilion was sold by Park Medical Pavilion Ltd. of Houston in an off-market transaction.

In a listed deal, the 105,143-sf Corpus Christi Medical Tower at 1521 S. Staples St. drew "a significant amount of interest from buyers all over the country," says Alan Grilliette, Transwestern's managing director in San Antonio, who teamed with Tim Gregory, the brokerage house's business manager for a healthcare advisory group. The 22-year-old building, assessed at $3.1 million by the Nueces Central Appraisal District, was sold by Medical Plaza Associates of Corpus Christi.

The Dallas-based private equity group, Provost Partners, ended up with the 97%-occupied Corpus Christi Medical Tower. Confidentiality agreements has the price under wraps, but medical office buildings are trading for between $175 per sf and $200 per sf.

Hubbard says he isn't surprised that assets like Corpus Christi Medical Tower attracted a variety of offers. From the brokerage side, though, getting the listing can be a challenge. "It's a highly competitive market," he adds. "The challenges of selling aren't many. Once you can get the listing, you're fine."