An office asset in Newport Beach primarily serving medical tenants is up for grabs, a property listing from CBRE shows. The building, with a total area of 77,135 square feet, is leased to multiple tenants and could serve as a potential investment opportunity for an owner user or an investor looking to convert the property into a full medical office building.
The property is located at 3300 Irvine Ave. on 3.2 acres and is currently owned by an entity linked to Cress Capital. While CBRE did not disclose guidance pricing for the building, public property records show it was acquired by Cress Capital in 2016 for $21.4 million, or about $277 per square foot.
At 67 percent leased to a mix of tenants, the existing rent roll provides an income stream with annual increases. During the five-year hold period, in-place rents are projected to grow by around 34 percent with in-place rents averaging approximately 42.4 percent below market rates.
With the average remaining lease term totaling less than two years, new ownership could unlock significant value by converting the property into a full medical office, given the tight medical office fundamentals in Newport Beach and the limited new development in the area, according to CBRE.
With the amount of current available space, the property also has potential to be acquired by an owner-user as the property provides lease savings and protection against future rental market uncertainty.
With its location in Newport Beach, the property is closely situated to a number of hospitals, medical centers and other medical offices. According to the marketing brochure, the surrounding healthcare market is home to 14 acute care hospitals totaling 2,912 beds as well as the forthcoming construction of a $1.3 billion medical campus by UCI Health within two miles of the property. The new advanced medical research complex will include 144 hospital beds for acute and ambulatory care.
Demand for healthcare services is on the rise, particularly among residents aged 65 or older, who currently comprise approximately 12.8 percent of the total population within a three-mile radius of the property. This age segment is expected to grow more than 14.7 percent over the next five years, leading to increased demand that has already pushed rents up by approximately 13.9 percent in the past three years. The property presents a unique investment opportunity for investors looking to capitalize on the growth of the healthcare sector in the Newport Beach area.
