Healthcare Investors Target Tenant Demand, Med Campus Proximity

Stable healthcare employment and strong medical tenant demand have helped buoy the medical office market in Greater Los Angeles and drive modest rent growth in the region, according to CBRE research. Proof of that demand came in the form of a 50,986-square-foot on-campus medical office property in Burbank that recently sold for $23.9 million or $468 per square foot to GPI Companies. The seller was a private real estate investor.

This was the first time the property at 2701 W. Alameda Ave. was for sale since it was built more than 50 years ago. The building is 90.4 percent leased to a mix of 22 medical tenants, with most of the space occupied by doctors on staff at Providence Saint Joseph Medical Center. The medical center is the primary market demand driver and one of the largest employers in the San Fernando Valley.

Mark Shaffer, Anthony DeLorenzo, Chris Bodnar, Lee Asher, Gerard Poutier and Cody Chiarella with CBRE represented the seller.

“The transaction received strong interest and multiple offers,” said Shaffer. “Well-located assets supported by strong underlying fundamentals continue to command robust buyer interest. In this case, the property’s value-add proposition in the near term provides a compelling investment opportunity for the new owner to boost future value.”

The Los Angeles’s medical office vacancy in the first half of 2021 stabilized at 10.5 percent and settled well below the overall office market vacancy, according to CBRE research. Specifically, Burbank has one of the tightest medical office vacancies in Los Angeles, at 4.9 percent.

“Healthcare investors continue to target markets with strong tenant demand and proximity to a dominant hospital campus,” says Bodnar. “The 2701 W. Alameda property is very well positioned for the future.”