Premium Pricing Seen for LA Medical Offices
A cluster of medical-office buildings is expected to attract eye-popping bids due to its
location in the heart of Beverly Hills.
The six buildings, totaling 279,000 square feet, are in one square block near Wilshire Boulevard and Rodeo Drive in the city’s Golden Triangle district. Bids are expected to hit $375 million, or a whopping $1,344/sf, for a capitalization rate of 4% or below. Only a handful of California office properties have ever commanded prices exceeding $900/sf.
Offers for the portfolio are due next month. Jones Lang LaSalle is marketing the package for the owner, medical-office specialist G&L Realty of Beverly Hills.
The buildings are 95% leased. Tenants are mainly private-practice physicians, plastic surgeons, dentists and other medical professionals serving a high-end clientele. The properties are in one of the most exclusive shopping districts in the world — the Golden Triangle, which is formed by Wilshire, South Santa Monica Boulevard and North Beverly Drive. Nearby stores include Cartier, Tiffany & Co. and Barney’s New York. Restaurants include Spago, Mr. Chow’s and McCormick & Schmick’s.
The properties’ estimated value also reflects the high demand and rents for medical-office space in Beverly Hills and limited prospects for future development. City zoning officials are loathe to approve new medical-office projects, in part because of their need for ample parking.
The buildings in the portfolio have 3-5 stories, and some include parking. All but the largest property were developed in the 1940s and 1950s.
The properties are:
78,000 sf at 436 North Bedford Drive (99% occupied). Built in 1989. Includes 325 parking spaces.
51,000 sf at 9675 Brighton Way (100% occupied). Built in 1946 and renovated in 1988.
42,000 sf at 416 North Bedford Drive (97% occupied). Built in 1946 and renovated in 1987.
57,000 sf at 435-439 North Bedford Drive (92% occupied). Built in 1950 and last renovated in 2008.
45,000 sf at 435 North Roxbury (86% occupied). Developed in 1956 and last renovated in 2008. Includes 68 parking spaces.
7,000 sf at 415 North Bedford Drive (83% occupied). Built in 1955. Includes 334 parking spaces.