A $37.5 million deal last month for a pair of decades-old buildings showcased investors’ healthy interest in Pasadena’s medical office market.
Meridian Property Co., a Bay Area developer that specializes in health care-related properties, paid slightly more than $325 a square foot for the two buildings that comprise the Cotton Medical Center at 50 Alessandro Place and 50 Bellefontaine St., according to real estate information firm CoStar Group Inc.
That price was about 20 percent higher than what the group of doctors that sold the complex expected to receive, said Fred Cordova, executive vice president at Beverly Hills brokerage Kennedy Wilson, which represented the doctors.
The deal, which closed Jan. 29, marks the first time the complex has traded hands.
“They go back to an era when doctors really wanted to control their destinies and built these types of buildings,” Cordova said. “When they were first built, they were the best-in-class medical office buildings at the time.”
Despite the age of the two buildings – constructed in 1974 and 1985, respectively – Cordova said the doctors were flooded with about a dozen top-dollar offers. The flurry of demand was fed in part by the Cotton Medical Center’s close proximity to Pasadena’s Huntington Hospital and a Shriners Hospitals for Children project that broke ground last year.
“There’s a lot of room for value growth in Pasadena,” said Cordova. “You look at medical offices on the Westside and we’re looking at deals that could sell for $2,000 a square foot.”
Meridian plans to invest up to $15 million in the medical center, adding infrastructure for modern health care technology and consolidating current tenants to make room for a larger medical group, according to Colliers International brokers Brent Weirick and John Erickson, who represented Meridian.
By the time renovations are complete and the new children’s hospital opens, Cordova said he wouldn’t be surprised to see the buildings’ value climb to about $70 million.
“I think it could sell for $600 or $700 a square foot in three to five years,” he said. “There’s a lot of transformation going on in the marketplace that’s really going to upgrade the medical office stock in Pasadena.”
With so many entertainment options available in Los Angeles, celebrating your birthday with an hourlong drive to the industrial community of Commerce might not be everyone’s idea of a party.
But Carol Taubman, president of Santa Monica real estate firm Westgate Industrial Properties, had a good reason to celebrate there.
The veteran broker had just won a long-fought battle to secure a 140,000-square-foot lease at a newly constructed warehouse at 6021 S. Malt Ave. for her client, NA Trading Co., a food distributor that caters to Asian markets and restaurants around the country.
So she was only too happy to spend her special day meeting with her client and the developers to discuss plans to build out the interior.
The 10-year deal, valued at about $12 million, took about two years to complete, Taubman said, because competition for large industrial sites in L.A.’s central submarket is fierce due to an extreme lack of supply.
In fact, the vacancy rate for industrial space in Commerce was a tiny 1.3 percent last quarter, according to downtown L.A.’s CBRE Group Inc.
“We had actually been following this property since Hill’s Pet Nutrition sold the site (in 2013), way before the new building was even contemplated,” Taubman said. “That’s how limited the supply is.”
A joint venture between Real Estate Development Associates of Newport Beach and Seattle’s Washington Capital Management Inc. demolished the former manufacturing site of Hill’s Pet Nutrition, replacing it a the new state-of-the-art facility that NA Trading will soon call home.
“The company is in about 70,000 square feet now so this is a big expansion,” she said. “The old building has all the inefficiencies of a 1950s warehouse but this is the best of the best.”
Karl Kreutziger has been named president of Pasadena builder C.W. Driver Cos. … New York retail leasing and sales brokerage RKF has named Richard Herschenfeld senior managing director of its Southern California office in Santa Monica. … Century City’s LaTerra Development has named Howard Heitner chief operating officer. … J.C. Casillas has been promoted to vice president in charge of research, marketing and communications at NAI Capital in Encino. … Michelle Paretti has joined West L.A. online real estate investing marketplace RealtyMogul.com as senior managing director and head of originations and underwriting. … Jeff M. Bernards has joined Valencia commercial drywall contractor Sharp Interior Systems as executive vice president.
Staff reporter Cale Ottens can be reached at email@example.com or (323) 549-5225, ext. 221.
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