By Lilly Riddle
Newmark has announced the opportunity to acquire the leasehold interest in the Medical Centre of Santa Monica, a medical office complex situated on the campus of the Providence Saint John’s Health Center. The current asking price is $200 million, or roughly $936 per square foot. It was last sold in 2014 for $125 million.
The center — comprising two medical office buildings located at 2001 and 2021 and totaling 213,581 square feet on Santa Monica Blvd., as well as a parking structure with a ratio of 4.6 to 1,000 square feet — is currently 85 percent leased to a mix of clinical specialists, anchored by Providence Saint John’s Health Center, part of the Providence network. It is currently owned by an entity that shares an address with Held Properties, Inc., a real estate agency and commercial real estate development firm based in Los Angeles.
The complex has seen growth in recent years, according to the Newmark offering brochure, with total patient revenue at Providence Saint John’s Health Center increasing 65 percent over the last ten years. Outpatient cases have increased by 225 percent during the same period.
Located in the heart of Santa Monica, the property benefits from its proximity to Providence Saint John’s Health Center, a Los Angeles hospital situated west of the 405 Freeway. The hospital, which has 266 beds, generated $1.6 billion in total patient revenue in 2022 and has been recognized by U.S. News and World Report for its quality of care.
The property’s existing tenancy, with an average tenant size of 2,840 square feet and in-place rents averaging $5.52 per square foot, presents an opportunity for future rent growth. New ownership may increase rents by 15 to 20 percent in order to align with comparable medical buildings in the area, a move that could be well-received by the tenants due to the building’s location and connectivity to the hospital.
The Medical Centre of Santa Monica attracts physicians across all major medical disciplines due to the nearby Providence Saint John’s Health Center. The center also bills the highest volume of Medicare charges within a three-mile radius, holding a market share of over 22 percent. Additionally, 59 percent of the clinical disciplines operating at the Property are among the top 10 highest-grossing specialties nationwide.
Future development in Santa Monica is constrained due to Proposition U, which limits new commercial development, which could promote strong rents, future growth and limited new supply. This, coupled with the property’s location, existing tenancy and growth potential, makes the Medical Centre of Santa Monica a unique investment opportunity.
