South Bay Medical Office In Short Supply

LOS ANGELES—In the South Bay, medical office product is in short supply with a sub 5% vacancy rate. The supply constrain has led to tight competition for any product that becomes available. Recently, a three-building 35,911-square-foot property in Manhattan Beach traded hands off market for $15.65 million or $435 per square foot. The property was sold off-market—shopped only to a select few investors—and still generated multiple offers with strong interest.

“There is very little medical office space in the beach cities, primarily due to the lack of land and thus parking,” Geoffrey P. Ludwig, an EVP at Colliers International, tells GlobeSt.com. “The medical submarket in the beach cities is a very tight market with sub 5% vacancy. Based on the lack of product, when an opportunity arises to purchase one of these rare assets, there is always strong interest.” Ludwig represented the seller, Manhattan Beach Mall LP, in the transaction along with EVP Eric Lastition. Manhattan Beach Mall sold the property to diversify into other investments, according to Ludwig.

Because the South Bay is supply constrained, the sales team chose not to widely market the property. “It was a quite marketing process sent only to a select amount of investors,” adds Ludwig. “With that said, we had multiple offers and a very high level of interest.” The winning bidder was West Ridge Rentals LLC, which is looking into renovating the property—although it has consistently maintained 100% occupancy and was fully occupied at the time of the sale. According to Lastition, the property drew strong interest because it hit every mark: a well-maintained building, full occupancy and a central location.

Located at 500 S. Sepulveda Blvd., the three-building property sits on 1.5 acres, providing parking for 126 cars—a rare commodity in this market. The building also has some retail space and landscaped common areas.