By Meghan Hall
Medical office properties–because of their importance during the pandemic–have fared well as an asset class. Investors are viewing medical office properties less as niche investments, and more as mainstream property types capable of producing healthy returns on investment. Two separate deals in the Puget Sound suburbs of Renton and Puyallup totaling $56.8 million highlight this trend.
The larger of the two transactions occurred in Renton, where Charlottesville, Virg.-based Anchor Health Properties paid $32,326,774, or about $530 per square foot, for a property located at 1412 SW 43rd Street. Public records indicate that the seller was affiliated with a private investor from Kirkland, Wash. The property is occupied by Quest Diagnostics, Hu Smiles and others. The property totals 60,916 square feet and was constructed in 2004.
“The City of Renton has been underserved on quality medical space due to rising development costs and subsequent increase in clinical rental rates,” shared James Schmid, Chief Investment Officer and Managing Partner with Anchor. “This acquisition is a testament to the creativity and perseverance of our investment platform and the strength of our institutional capital capabilities. The IDC Medical Plaza hits the main criteria we look for in an investment – high visibility, stable regional tenancy, excellent patient accessibility, and physician and patient convenience. We are looking forward to building our long-term relationship with Providence Health, Northwest Eye Surgeons, Ready Med Pharmacy, Evergreen Treatment Services, and other building tenancy.”
Anchor Health Properties currently has more than 7 million square feet of space under management, and an additional one million square feet in development. While the company has worked within a multitude of real estate sectors, it devoted itself entirely to healthcare in 2015. The acquisition in Renton makes it one of the largest non-health care system owners in the Seattle metro area, according to the company.
In the second transaction, Chicago-based Remedy may have bought out its joint venture partner at a multitenant medical center in Puyallup for $24.452 million, according to public records. Located at 3801 Fifth St. SE, and is home to Rainier Orthopedic Institute, Multicare and Providence Health & Services.
Remedy specializes in the ownership and management of community-based care or outpatient care facilities across the country. According to its website, the firm has 22.8 million square feet in its portfolio, and it has developed 6 million square feet of space. Since beginning in 2012, it has closed on $7 billion in healthcare acquisitions, making it one of the largest private owners of healthcare properties in the country.
Although healthcare was impacted by the pandemic, healthcare employment has been increasing steadily since mid-2020, and by the fourth quarter of last year was only down 1.5 percent. Data released by CBRE predicts that long-term “outsized growth of the U.S. health care [market]” will pick up in 2021. CBRE also notes that over the last year, net acquisitions for medical office buildings by institutional investors reached a record high, signaling a shift in the way the commercial real estate industry views medical offices as a potential investment type.