HOUSTON-Following a renovation of more than $2 million, a local physician has sold the 11,200-sf Northwest Surgery Center in a sale-leaseback with a private investment group from Southern California.

Dr. Robert S. Bell bought the 5215 Hollister St. property in 2003 and began renovating the former light-industrial building, developed in 1979, into the surgery center. “He gutted it all the way down and redid the entire thing from the ground up,” says Ross Cannizaro in Marcus & Millichap Real Estate Investment Brokerage Co.’s Houston office. He tells GlobeSt.com that the renovation made sense because “to build something brand new can cost approximately $350 per sf. He bought that empty building a few years ago for probably well under a million, gutted it down to the struts, turned it around and made it like new.”

The sale price and the ask weren’t available, but local experts say similar buildings sell for $250 per sf, on average. The property is assessed at $840,000 by Harris County.

Cannizaro says Bell placed the building on the market due to partnership issues. A two-week marketing yielded six legitimate offers, he adds.

Bell and his partners are at the beginning of an existing lease, with 13 years remaining on the term. The space has a market rate of $15 per sf to $18 per sf.

The group of private investors, represented by Katherine Bergh of Marcus & Millichap’s Encino office, acquired the 1.25-acre asset as part of a 1031 exchange. “This is their first Texas entry, but deals of this type is what they look for,” Cannizaro says. “This was perfect for their portfolio and it fit their criteria.”

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