Cushman & Wakefield closed the $11.5 million sale of a medical office building at Memorial Regional Hospital South, the third time the the Hollywood property has changed hands in four years.
AW Property Co., a North Palm Beach-based real estate investor and operator, bought the 57,815-square-foot, five-story building on 1.8 acres at 3700 Washington St. from SF Partners, a Miami-based real estate investor, on July 24.
The building between Interstate 95 and Florida’s Turnpike and between Hollywood Boulevard and Pembroke Road is considered desirable because most doctors prefer offices on hospital grounds.
“Historically you’ve seen a lot of doctors sharing space in professional office buildings or in medical buildings that are not on campus, and there’s been a shift toward a preference to be on campus by the doctors,” said Scott O’Donnell, an executive director with Cushman & Wakefield capital markets in Boca Raton.
About 75 groups were interested in purchasing, and more than 10 made an offer, according to O’Donnell.
He closed the deal along with Cushman & Wakefield capital markets senior associate Greg Miller, managing director Dominic Montazemi, senior director Jason Hochman, all in Boca Raton, as well as director Miguel Alcivar in Miami and office leasing expert Donna Korn in Fort Lauderdale.
AW Property focuses on medical offices, and this is an addition to a portfolio that’s spread throughout Florida. Other holdings include the 75,374-square-foot Gardens Medical Pavilion in Palm Beach Gardens, the 48,201-square-foot 1250 Medical Plaza in Sarasota and the 30,292-square-foot JFK North Medical Arts in West Palm Beach, according to its website.
The Hollywood medical office building was a value-add investment as AW plans to give it a facelift to push up the 84 percent occupancy rate and rent, O’Donnell said, adding he doesn’t know how much AW plans to put into upgrades.
“Most investors would consider a medical office building on campus like this stabilized at somewhere in the 95 percent range,” he said. “There’s upside to both rental rate increases and occupancy increases.”
O’Donnell, who also was part of the team that closed the past two sales of the building, said both previous owners also saw this as a value-add property as each renovated the building and upped both occupancy and rents.
The steady increase in sale prices is a testament to this.
An affiliate of Tamarac-based Genet Property Group bought the building for $4.5 million in 2014 and sold it to an affiliate of SF Partners for $8.3 million in 2015, according to the Broward County property appraiser’s website and the state Division of Corporations.
The recent sale breaks down to $199 per square foot, higher than the previous sales of $143 per square foot in 2015 and $78 per square foot in 2014.
“As the different owners have put money into the building to improve the aesthetics, they have been able to increase the rental rates they have been achieving at the building,” O’Donnell said. “And there’s still room to go with improvement to the aesthetics and increases to the rent as well as occupancy.”