Healthcare Practice Group - 040616

Table of Contents

1. Healthcare Practice GroupHealthcare Expertise

Our CapabilitiesThe Lee & Associates Advantage

Why Hire Lee & Associates?Lee & Associates at a Glance

Local. Regional.

2. Professional ProfilesStephen DokKatie Furey

Properties Sold

3. Market Insight

4. In The News

1. Lee & Associates | Healthcare Practice Group

Healthcare Expertise

At Lee & Associates Commercial Real Estate Services, we measure our success by the service we provide our clients. Lee & Associates Healthcare Practice Group takes its cue from the industry it serves, making the wellbeing of its clients its top priority.

The value that we provide our clients lies within our deep expertise of the healthcare industry, including knowledge of everything from legislation affecting the healthcare industry to the medical-specific building systems that make hospitals and other medical facilities run smoothly. This expertise benefits both healthcare users as well as investors that own medical office assets.

For users, it means managing real estate strategically to optimize operations and patient care. For investors, Lee & Associates’ understanding of medical office assets and its proprietary database of buyers and sellers represent an inside track to prime investment opportunities and successful dispositions. It is through these long-standing relationships and industry insight that our professionals bring the utmost benefits for clients and investments in the near- and long-term.

National Organization, Local Ownership

Established in 1979 in Irvine, California, Lee & Associates has 50 nationwide offices that are individually

owned by the shareholders of that office, thus encouraging an entrepreneurial spirit and allowing more

freedom and creativity to make real estate transactions work.

Explosive Growth

Over the past 35 years, there has been an explosive growth of Lee & Associates offices throughout the

country, making it one of the largest and fastest growing commercial real estate organizations in the

United States.

National Offices

2014 - Cleveland, OH

2013 - Long Island-Queens, NY

2013 - Chesapeake Region, MD

2012 - Edison, NJ

2012 - Orlando, FL

2012 - Charleston, SC

2011 - Fort Myers, FL

2011 - Kansas City, KS

2011 - Manhattan, NY

2011 - Greenville, SC

2010 - Atlanta, GA

2010 - Greenwood, IN

2010 - Indianapolis, IN

2009 - Long Beach, CA

2009 - Elmwood Park, NJ

2008 - Boise, ID

2008 - Investment Services Group,

LA, CA

2008 - Palm Desert, CA

2008 - Santa Barbara, CA

2006 - Antelope Valley, CA

2006 - Dallas, TX

2006 - Madison, WI

2006 - Oakland, CA

2006 - Reno, NV

2006 - San Diego, UTC, CA

2006 - Ventura, CA

2006 - San Luis Obispo, CA

2005 - Southfield, MI

2005 - Los Olivos, CA

2004 - Calabasas, CA

2004 - St. Louis, MO

2002 - Chicago, IL

2001 - Victorville, CA

1999 - Temecula Valley, CA

1996 - Central LA, CA

1994 - Sherman Oaks, CA

1994 - West LA, CA

1993 - Pleasanton, CA

1993 - Stockton, VA

1992 - Las Vegas, NV

1991 - Phoenix, AZ

1990 - Carlsbad, CA

1990 - Industry, CA

1989 - Los Angeles, CA

1989 - Riverside, CA

1987 - Ontario, CA

1984 - Newport Beach, CA

1983 - Orange, CA

1979 - Irvine, CA

50 Locations StrongLee & Associates

Healthcare Practice Group

Hospitals, physicians and medical real estate investors understand the

benefits of working with experts who know the role real estate can play in

navigating the challenges facing the healthcare industry.

Members of Lee & Associates’ Healthcare Practice Group are committed

to assisting medical providers in stabilizing and lowering the cost of

healthcare through more effective and efficient uses of medical real estate.

They devote 100 percent of their time toward managing, leasing and selling

medical office buildings, bringing together capabilities, procedures and

technologies to offer clients an integrated approach to managing their real

estate, resulting in solutions that make sense in the healthcare field, not

just the real estate industry.

Medical Building owners trust Stephen and his colleagues to manage, lease and sell their medical office buildings because of their 100 percent commitment to knowing and assisting the healthcare industry. They’ve carved out a niche and have demonstrated the necessary experience, which allows them to understand how effectively lease and sell medical office buildings and competently manage them.

Kent Twomey, Vice PresidentFirst Citizens BankHealthcare Bankers Group

“

“

Lee & Associates Commercial Real Estate Services

Healthcare Practice GroupIntegrated Real Estate Solutions for the Healthcare Industry

Lee & Associates Commercial Real Estate Services Healthcare Practice GroupIntegrated Real Estate Solutions for the Healthcare Industry

Medical Building owners trust Stephen

and his colleagues to manage, lease and sell

their medical office buildings because of

their 100 percent commitment to knowing

and assisting the healthcare industry. They’ve

carved out a niche and have demonstrated

the necessary experience, which allows them

to understand how to effectively lease and

sell medical office buildings and competently

manage them.

Kent Twomey, Vice President

First Citizens Bank

Healthcare Bankers Group

“

“

Lee & Associates

Healthcare Practice GroupHospitals, physicians and medical real estate investors understand the benefits of working with experts who know the role real estate can play in navigating the challenges facing the healthcare industry.

Members of Lee & Associates Healthcare Practice Group are committed to assisting medical providers in stabilizing and lowering the cost of healthcare through more effective and efficient uses of medical real estate. They devote 100 percent of their time toward managing, leasing and selling medical office buildings, bringing together capabilities, procedures and technologies to offer clients an integrated approach to managing their real estate, resulting in solutions that make sense in the healthcare field, not just the real estate industry.

Lee & Associates Healthcare Practice GroupOur Capabilities

Lee & Associates Healthcare Practice Group is comprised of professionals who have a long history of creating real estate solutions for national and regional healthcare systems, hospitals, physicians and medical building owners. We have developed a series of proven approaches and methods to fulfill our clients’ needs and prepare them for future opportunities.

Strategic Real Estate PlanningFrom a physician’s office in a single location to a healthcare system with hundreds of master leases and an acquisition strategy, we help doctors, healthcare institutions and corporate entities formulate and implement their real estate objectives. This has become even more important in today’s environment, where healthcare is facing monumental legislative changes as well as economic pressures.

Tenant RepresentationOur professionals have expertise in the unique requirements necessitated by medical use, including zoning, plumbing, water supply, handicap access, parking ratios, accessibility and desired curb exposure. They combine this expertise with a proprietary nationwide database of medical office space, enabling medical providers to make prompt and knowledgeable decisions on market rates and potential locations.

Landlord RepresentationLee & Associates provides coordinated leasing representation that leverages local market intelligence, deep expertise in the healthcare industry and established relationships with healthcare systems, physicians and other users. In addition, our proprietary nationwide database of medical office space enables professionals in the Healthcare Properties Group to differentiate our clients’ assets from competitors, achieving maximum occupancy levels for client properties and quickly securing tenants to fill vacated space.

Capital MarketsThe current healthcare investment sales market is largely dominated by highly sophisticated, specialized and capitalized healthcare REITs. Our specialized healthcare investment sales team has a proven track record of providing clients with selective capital markets services, including acquisitions, dispositions and debt and equity finance solutions, whether they are investors or owner/users of medical properties. We understand the yield requirements as well as the specific needs of those who actively invest in medical office properties. We have assisted hospitals and healthcare systems in the disposition of medical office buildings, land and related real estate, monetizing non-core assets and providing much needed capital for investment into core assets.

By leveraging the resources of Lee & Associates’ Institutional Capital Markets and Private Capital Markets groups, professionals have access to a proprietary investor database, a tool our advisors use to identify qualified buyers and respective investment criteria for medical office buildings and healthcare facilities. As a result, they can market assets appropriately and most effectively for their clients. Additionally, with medical office condominium sales becoming a significant part of the future of healthcare, Lee & Associates’ Healthcare Properties Group offers expertise and advice to both developers and buyers of this property type.

Our professionals can also develop and implement strategic asset monetization strategies, helping owner/users of healthcare or medical office space generate funds that can be reinvested in their core business through sales/leasebacks, synthetic leases and other structures.

Management ServicesLee & Associates is widely known for its award-winning management services capabilities. Whether a client requires full-service property management or comprehensive facility management support, our platform provides the tools and expertise to make it happen.

Lee & Associates provides comprehensive investment property management services to clients nationwide. Our healthcare property management professionals combine our standard best practices with expertise unique to the healthcare industry, including an understanding of the hospital/physician relationship, technical knowledge of medical building systems and experience dealing with regulatory and statutory requirements pertaining to medical facilities. We are trusted to provide the highest level of service through valuable reporting, translating into better decision-making, quicker rent collection and more efficient on-site operations for the properties we manage.

Project ManagementMeeting a client’s project requirements goes far beyond providing a roof and four walls. Whether it is a routine build-out of medical office space or a complex hospital relocation, our experienced professionals and proven process prevents or limits business disruption and lost productivity, and ensures that projects progress is on schedule

and within initial cost criteria. Our goal is to meet or exceed our clients’ expectations and bring a bottom line focus to project delivery.

Operating Expense AnalysisLee & Associates Healthcare Practice Group has demonstrated success in reducing operating expenses for medical office buildings owned by healthcare institutions and hospitals by bringing to light areas where greater efficiencies can be achieved. We understand the unique expense aspects involved with medical office users. Our audit team is well-versed in the trouble spots typical of medical office building management and the appropriate expense levels. We can assist and train hospital finance and accounting personnel on budget development and cost savings procedures.

Lease AdministrationLee & Associates provides comprehensive services for both leased and owned properties that support healthcare systems and other medical office users in identifying, cataloguing and administering their real estate portfolios.

We are familiar with Stark, Safe Harbor and Fraud & Abuse legislation and statutes, which require hospitals to have “arm’s length” transactions with physician tenants who admit patients to the hospital. The end result is tenant-by-tenant detail showing amounts owed and received month-by-month from the beginning of each lease term. This information can then be used to properly collect any past due amounts shown in the report.

Healthcare Group Solution:

The Lee & Associates AdvantageAt Lee & Associates, we measure our success by the service we provide our clients.

Lee & Associates’ Healthcare Practice Group takes its cue from the industry it serves, making the well-being of its clients its top priority.

The value that we provide our clients lies within our deep expertise of the healthcare industry, including knowledge of everything from legislation affecting the healthcare industry to the medical specific building systems that make hospitals and other medical facilities run smoothly. This expertise benefits both healthcare users as well as investors that own medical office assets.

For users, it means managing real estate strategically to optimize operations and patient care. For investors, Lee & Associates’ understanding of medical office assets and its proprietary database of buyers and sellers represent an inside track to prime investment opportunities and successful dispositions. It is through these long-standing relationships and industry insight that our professionals bring the utmost benefits for clients and investments in the near- and long-term.

Expansive FootprintLee & Associates has associations in most major markets, and many secondary and tertiary markets, throughout the country, which means that we can help our clients no matter where they have a real estate need.

Proven Track RecordLee & Associates strives to be the employer of choice in the market, attracting and retaining respected industry experts to its ranks. Clients, too, are loyal to Lee & Associates and many have been working with us for more than a decade – a partnership born on trust and sustained by results.

Integrated Service DeliveryThe company’s business lines work together to deliver the most comprehensive real estate solutions. It is this approach that forms the basis for long-term relationships rather than simply one-off transactions.

Sophisticated Marketing ApproachWhen the time comes to acquire or dispose of an asset, our professionals will combine local market expertise, industry data and years of industry-specific experience to help clients achieve their organizational and financial goals.

Market IntelligenceWith a reputation for some of the industry’s best research and analyses, Lee & Associates is dedicated to delivering timely market knowledge that clients can use to make informed real estate decisions.

Commitment to SustainabilityLee & Associates recommends to its clients sustainable building alternatives, build-out strategies and operations to help them save money and extend their culture in an environmentally responsible manner.

Why Hire Lee & Associates?The real estate services industry is a competitive sector. There are few firms that can offer a similar complement of nationwide services.

Lee & Associates Overview

At Lee & Associates our reach is national but our expertise is local market implementation. This transalates into seamless, consistent execution and value driven market-to-market services.

Our agents understand real estate and accountability. They provide an integrated approach to leasing, operational efficiencies, capital markets, property management, valuation, disposition, development, research and consulting.

We are creative strategists who provide value and custom solutions, enabling our clients to make profitable decisions.

100%Increase

In TransactionVolume Over 5 Years

$7.9 BillionTransaction Volume

2013

778Agents

and GrowingNationwide

• Office• Industrial• Retail• Investment

• Appraisal• Multi-Family• Land• Property Management

• Facility Services• Valuation & Consulting

National Organization, Local OwnershipEstablished in 1979 in Irvine, California, Lee & Associates has 50 nationwide offices that are individually owned by the shareholders of that office, thus encouraging an entrepreneurial spirit and allowing more freedom and creativity to make real estate transactions work.

Explosive GrowthOver the past 35 years, there has been an explosive growth of Lee & Associates offices throughout the country, making it one of the largest and fastest growing commercial real estate organizations in the United States.

National Offices2014 - Cleveland, OH2013 - Long Island-Queens, NY2013 - Chesapeake Region, MD2012 - Edison, NJ2012 - Orlando, FL2012 - Charleston, SC2011 - Fort Myers, FL2011 - Kansas City, KS2011 - Manhattan, NY2011 - Greenville, SC2010 - Atlanta, GA2010 - Greenwood, IN2010 - Indianapolis, IN2009 - Long Beach, CA2009 - Elmwood Park, NJ2008 - Boise, ID

2008 - Investment Services Group, LA, CA

2008 - Palm Desert, CA2008 - Santa Barbara, CA2006 - Antelope Valley, CA2006 - Dallas, TX2006 - Madison, WI2006 - Oakland, CA2006 - Reno, NV2006 - San Diego, UTC, CA2006 - Ventura, CA2006 - San Luis Obispo, CA2005 - Southfield, MI2005 - Los Olivos, CA2004 - Calabasas, CA2004 - St. Louis, MO2002 - Chicago, IL

2001 - Victorville, CA1999 - Temecula Valley, CA1996 - Central LA, CA1994 - Sherman Oaks, CA1994 - West LA, CA1993 - Pleasanton, CA1993 - Stockton, VA1992 - Las Vegas, NV1991 - Phoenix, AZ1990 - Carlsbad, CA1990 - Industry, CA1989 - Los Angeles, CA1989 - Riverside, CA1987 - Ontario, CA1984 - Newport Beach, CA1983 - Orange, CA1979 - Irvine, CA

50 Locations Strong

Lee & Associates - San Diego, Inc. | Your Local Market Experts | lee-associates.com

healthcare pr actice group

Stephen Dok

PARTIAL CLIENT LIST » UCSD Medical Center

» Rady’s Childrens Hospital

» Sharp Memorial Hospital

» Scripps Mercy Hospital

» Alvarado Hospital

» Sharp Rees Stealy

» San Diego State University

» Imaging Healthcare

» American Red Cross

» Wawanesa Insurance

» Glendale Federal Bank

» Kaiser Permanente

» William Rawlings, D.D.S.

» Paul Styrt, D.M.D.

» Erik Feider, D.D.S.

» William Shoemaker, M.D.

» Michelle Pelle, M.D.

» Howard Dixon, D.D.S.

» Saint Paul’s Senior Services

» San Diego Rescue Mission

PROFILE

As Principal of Lee & Associates Healthcare Practice Group, Stephen Dok is responsible for establishing and maintaining all comprehensive real estate strategies for the Healthcare Practice Group’s select clients.

Mr. Dok has been the leading sales and leasing of medical and dental real estate expert in San Diego for the past twenty-four years. Steve’s experience in advising healthcare systems and hospitals with all aspects of real estate transactions is unmatched. In addition to the sale of over fifty (50) healthcare related property transactions in San Diego, Steve has negotiated over 1,200 lease transactions with doctors, medical groups, hospitals and clinics. When combined, these transactions exceed over 2.5 million square feet of medical office space and $150 million in value.

In 2008, Steve was selected for the San Diego Commercial Transaction of the Year for the successful marketing and sale of The Doctors Hospital in San Diego. During the past five years, Steve has been the exclusive leasing and sales agent of several of the most prestigious medical office facilities in San Diego County. Steve was also recently honored as Top Broker of The Year for 2015 at Lee & Associates - San Diego.

CAREER SUMMARY

Lee & Associates Commercial Real Estate Services 2014 to PresentPrincipal Healthcare Practice Group

Voit Commercial Real Estate Services 2012 – 2014Vice President Healthcare Practice Group

Grubb & Ellis/Commercial Realty Advisors 2007 – 2012Principal Director Healthcare Properties Group

GVA/IPC Commercial Real Estate 2001 – 2002Principal

AREAS OF SPECIALIzATION• Healthcare Real Estate

• Sales and Leasing

• Healthcare Tenant Representation

• All Aspects of Lease Negotiations

• Asset Monetization Strategies

EdUCATION

San Diego State University, San Diego, California BA – Political Science & Economics

PrincipalLicense Id# 01019216

office 858.453.9990direct 858.713.9314

fax [email protected]

5186 Carroll Canyon Road, Suite ASan diego, CA 92121

Lee & Associates - San Diego, Inc. | Your Local Market Experts | lee-associates.com

healthcare pr actice group

Katie Furey

PARTIAL CLIENT LIST » Saint Paul’s Senior Services

» Maria Afan, DDS

» San Diego Rescue Mission

» Village Hillcrest Partners

» Achieve TMS Centers

PROFILE

Katie Furey is an Associate at Lee & Associates in the San Diego office. In her time as a broker she has obtained professional experience by successfully initiating and closing commercial real estate transactions.

Katie specializes in the representation of landlords and tenants in the leasing and sales of medical office buildings in San Diego County.

Katie’s extensive research and analysis of market trends has provided her with an in-depth understanding of the commercial real estate activity in San Diego County. Paired with her partner, Stephen Dok, and his 25 years of commercial real estate expertise, Katie’s fresh drive and persistent work ethic has given her the opportunity to become an established figure within the commercial real estate industry.

CAREER SUMMARY

Lee & Associates Commercial Real Estate Services 2015 to PresentAssociate

AREAS OF SPECIALIzATION• Healthcare Real Estate

• Tenant Relocation

• Tenant Expansion

• Lease Negotiations

• Market Analysis

• Property Marketing

PROFESSIONAL AFFILIATIONS• NAIOP Developing Leaders, Active Member Since 2015

• The Corky McMillian Center for Real Estate, Member Since 2013

EdUCATION

San Diego State University, San Diego, California Bachelor of Science

University of San Diego, San Diego, California Burnham-Moore’s Center for Real Estate Real Estate Finance, Investments, and Development

AssociateLicense Id# 01968169

office 858.453.9990direct 858.713.9352

mobile 925.389.1293fax 858.453.9965

[email protected] Carroll Canyon Road, Suite A

San diego, CA 92121

2. Professional Profiles - Stephen DokHealthcare & Medical Properties Sold

2466 FIRST AVENUE17,850 SF

Improved Building

150 W WASHINGTON ST25,945 SF

Improved Building

3405 KENYON STREET45,000 SF Building

3969 FOURTH AVENUE27,000 SF

2-Story Building

3500 FIFTH AVENUE32,563 SF

3-Story Building

3427 FOURTH AVENUE8,300 SF Building


3211 FIFTH AVENUE26,000 SF Building

1905-27 FIFTH AVENUE20,000 SF Building




739 EL CAJON BLVD26,522 SF Building


530 LOMAS SANTA FE DR27,678 SF Building

5101-5131 GARFIELD ST18,000 SF Building

4065 THIRD AVENUE12,050 SF Building

2542 SECOND AVENUE2,363 SF Building




9855 ERMA ROAD32,768 SF Building

7525 LINDA VISTA ROAD10,746 SF Building

239 LAUREL ST & 2439 THIRD AVE6,368 SF Building

111 ELM STREET28,000 SF Building

1860 SIXTH AVENUE2,000 SF Building



9499 BALBOA AVENUE67,574 SF Building

497 11TH STREET26,011 SF Building

446 26TH STREET114,000 SF Building

926-930 HORNBLEND STMultiple Commercial

Condo Units

2. Professional Profiles - Stephen DokHealthcare & Medical Properties Leased

2918 5th Avenue5,183 SF Leased

1/26/16

6265 Greenwich Drive2,671 SF Leased

8/1/14

501 Washington Street 2,356 SF Leased

3/4/15

111 Elm Street7,251 SF Leased to San Diego Rescue Mission

12/28/15

3. Market Insight

US Office Demand Reaches Pre-recession Peak Net absorption of office space in the third quarter of 2015 was at 29 million square feet, the second-highest quarterly total since 2006 according to CoStar. CoStar’s Randyl Drummer reports that demand for office space during the third quarter of 2015 was roughly double the amount of new office space added by developers. “The 68 million square feet of net office absorption in the first three quarters of 2015 compares with an average of just 30 million square feet during the same periods in 2005 through 2007, considered to be the height of the last office boom,” Drummer adds. “Meanwhile, the national office vacancy rate continued its slow and steady decline, dipping to 11 percent for the third quarter of 2015, down another 20 basis points from midyear and a 60 basis point decline from third quarter 2014.”

Sixty-five percent of U.S. office submarkets saw declining office vacancy in the third quarter; 52 percent now have lower vacancy than they did during the 2006-2007 peak and most are posting solid rent growth.

CoStar also noted “one major difference from previous office market cycles: the average vacancy rate for high-quality 4- and 5-star office space built since 2008 has remained flat, even though the 42 million square feet of new supply delivered in the first three quarters is nearly 40 percent above the same period in 2005-2007.”

A New Era of Health Care Expansion Ahead of an expected boom in new patients, U.S. hospital campuses are adding apartments, retail space and hotels as well as new patient care facilities with more amenities. According to CoStar News, “Nearly $100 billion in construction of new and expanded hospital medical office projects, both on and off the hospital campus, is under way across the U.S.” “With reduced reimbursements for hospital stays from the Center for Medicare/Medicaid (CMS)… health-care systems are focused on building more profitable outpatient facilities near medical center campuses in convenient locations for patients,” according to Jeffrey Cooper of Savills Studley’s health care capital markets group, the article reports. Some aging hospitals are being razed and replaced by state-of-the-art medical facilities in mixed-use environments that also include office, hotel, retail and residential uses.

3. Market Insight

Survey Finds Commercial Development Optimism Remains Strong By LOU HIRSH Thursday, August 13, 2015 Statewide demand from industries including technology, advertising, media and information services is generating continued optimism among commercial real estate professionals, according to the latest twice-yearly survey by the law firm Allen Matkins and UCLA Anderson Forecast.

Researchers said respondents’ three-year outlook for San Diego and five other regions remains strong in part due to falling property vacancy rates, rising employment and new household formation. California construction activity has risen to its highest level since 2001, fueled by factors including high demand and low financing rates.

“Continued optimism in this survey is supported by job and income growth and a lack of sufficient building supply,” said Jerry Nickelsburg, adjunct professor of economics at UCLA Anderson School of Management, in a statement following the release of survey results.

“While the outlook remains positive through 2018 with no weakening in occupancy rates, a few of the survey panel participants did express slight caution with regard to this next stage of the commercial real estate building cycle,” said Nickelsburg, who is also senior economist at the Anderson school’s forecast center.

The survey, conducted every six months, polls a panel of California real estate professionals in the development and investment markets, and is designed to capture pending potential future activity by commercial real estate developers.

In Southern California, panelists were “very optimistic” about office rental rates’ ability to rise higher than the rate of inflation, with none expecting the market to weaken over the next three years.

3. Market Insight

Survey: Optimism Remains Strong for Commercial Real Estate Demand By LOU HIRSH Wednesday, January 27, 2016 Developers remain confident that demand for California and San Diego County commercial real estate will remain strong through 2018, spurring opportunities for new construction and investment, according to the latest twice-yearly survey by the law firm Allen Matkins and UCLA Anderson Forecast.

“The favorable outlook is supported by job and income growth on the demand side and a lack of sufficient building on the supply side,” said senior economist Jerry Nickelsburg, adjunct professor of economics at UCLA Anderson School of Management, in a Jan. 27 statement announcing survey results.

Researchers said one-third of Southern California respondents, including some from San Diego County, began a new office project during the previous 12 months, up from less than one-quarter of those surveyed in June 2015. Looking ahead, 42 percent of respondents indicated they would start one or more projects within the next 12 months.

The majority of office developers surveyed viewed the outlook as promising for California’s coastal cities. However, respondents were generally more optimistic about prospects for the San Francisco Bay and Silicon Valley regions than for Southern California.

Two-thirds of survey respondents said they were planning new retail construction and significant redevelopment, with retail development showing steady growth across the state. With the exception of those based in Los Angeles, respondents in the multifamily category all anticipated tightening apartment vacancy rates over the next three years.

In the industrial real estate sector, respondents statewide indicated a strong outlook for manufacturing and warehousing facilities that support exports to Asia and Mexico, and consumer goods imported from Asia. Seventy-five percent of the survey’s Southern California and Bay Area industrial developer respondents said they are planning one or more new projects in 2016.

4. In The News

Bosa Buys Downtown Shell Station Property for $8.5 Million

By LOU HIRSH Monday, December 21, 2015

1011 A St. -- Photo courtesy of CoStar Group

Vancouver, B.C.-based Bosa Development Corp. has purchased a downtown San Diego property currently housing a Shell service station for $8.5 million, according to CoStar Group and public data.

The seller of the property at 1011 A St. was Sibbett Trust Limited LP of Visalia, represented by Steve Malley and Stephen Dok of brokerage firm Lee & Associates. Bosa purchased the 0.8-acre site, housing a 1,648-square-foot service station building, to hold for future development, CoStar reported.

Led by President Nat Bosa, the company has developed several high-rise residential condominium projects in the downtown area during the past decade. It is currently at work on Pacific Gate, a 41-story luxury condo tower near the intersection of Broadway and Pacific Highway, with plans in the works for a similar-sized tower at a nearby site.

Also recently, Bosa acquired the downtown Broadway-corridor project site for a planned mixed-use development known as The Block, from local developer Zephyr Partners, for $33 million.

4. In The News

La Jolla Medical Office Building Sold for $7 Million By LOU HIRSH Wednesday, March 11, 2015

7630 Fay Ave. -- Photo courtesy of CoStar

Monarch La Jolla LLC has purchased a La Jolla medical office building for approximately $7 million, with plans to convert the property into an upscale assisted living facility, according to Voit Real Estate Services.

The seller of the 17,800-square-foot property, at 7630 Fay Ave., was Executive Leasing of Nevada LLC, represented by Brandon Keith of Voit and Stephen Dok of Lee & Associates.

Brokers said the two-story property was owned by noted author and alternative medicine advocate Deepak Chopra before being sold to Fay Avenue Properties LLC for $3.3 million in 2002. The property has since housed a surgical center and medical spa.

The building was acquired by Executive Leasing through foreclosure in summer 2012 and listed for sale with Voit in October of that year. The latest buyer, which operates as Monarch Living and Monarch Communities and is led by Chairman Frank Haffner, believes there is strong demand for an upscale assisted living facility in La Jolla, brokers said.

4. In The News

Health Care Reforms Slow to Impact Real Estate GOVERNMENT: Public Sector Has Some Medical Construction Under Way

Photo courtesy of CoStar Group

Among the largest local health care real estate sales transactions of 2010 was the $83 million purchase of Physician’s Medical Center, a two-building medical office complex in Kearny Mesa, by Rady Children’s Hospital-San Diego.

By Lou Hirsh

Monday, March 28, 2011

A year after landmark national health care reforms were signed into law, local observers say the impact on medical-related real estate has yet to be seen on a large scale.

That’s because many provisions of the affordable-care legislation, aiming to provide coverage to as many as 30 million previously uninsured Americans, have not taken effect.

For now, experts say health care real estate in 2011 will see trends similar to 2010. Hospitals, doctors, insurers and other providers will likely be focused on expansion through acquisition and renovation of existing buildings, rather than new construction.

“It’s so much cheaper to take over an existing building than to build from the ground up,” said Stephen Dok, a San Diego-based senior vice president with brokerage firm Grubb & Ellis Co.

Dok said San Diego County’s health care office vacancy rate finished 2010 at about 9 percent, basically unchanged from where it was at the end of 2009. San Diego has among the lowest health care vacancy rates for large U.S. metro areas.

4. In The News

The market will likely stay tight as long as construction of medical-related office buildings remains at its current near standstill, similar to what is happening with other commercial real estate segments.

Currently, most local health care-related construction is taking place in the public sector. For instance, work is under way on a $450 million hospital at Marine Corps Base Camp Pendleton near Oceanside, and there is also expansion in progress at UC San Diego medical facilities.

Large Acquisition

Elsewhere, acquisitions of older existing medical buildings are becoming more common. Dok said one of the past year’s largest health care real estate transactions was Rady Children’s Hospital-San Diego’s $83 million purchase of the two-building Physician’s Medical Center.

The medical office complex, on Frost Street near Rady’s Kearny Mesa campus, has its own parking structure and a total of more than 173,000 square feet of office space. About a quarter of the space in the larger building and 6 percent in the smaller building was unoccupied at the time the sale closed in December, according to CoStar Group.

“We examined all the pros and cons of buying versus building something new,” said Ben Metcalf, public information officer for Rady Children’s Hospital. In addition to saving time and money, he said buying the established property helped the hospital avoid traffic and other disruptions that accompany construction projects.

As health reforms are implemented, potentially bringing new cost and paperwork burdens, Dok said physicians and other providers will be setting up one-stop operations to boost efficiency. For instance, several doctors nationally and locally have already moved to establish their own surgical centers, conducting procedures and administrative duties previously handled only at hospitals.

“The care can actually be better, and it also helps bring down the cost of the procedures, which the insurance companies like very much,” Dok said.

Much of that provider expansion will be done through acquisition and leasing of existing spaces.

Alan Coombe, regional manager in the Del Mar office of construction firm Kitchell, said the challenges of building health care facilities in California will likely play a larger role than health care reform in deciding what gets built locally in the next few years.

4. In The News

Clean Bill of Health for Office Space BY ROGER SHOWLEY , UNION -TRIBUNE SUNDAY, JUNE 6, 2010

San Diego County’s medical office market remains strong

and growing, in contrast to the rest of the office market,

where tenants are downsizing and landlords worry about

foreclosure.

According to Grubb & Ellis Real Estate, the current vacancy

rate for the 12 million-square-foot medical office market

runs at nearly 13 percent, about 3 percentage points below

the overall vacancy rate for all 110.7 million square feet of

office space in the county.

“The health care market is healthy, it’s not in dire straits, and

there appears to be no need for any CPR,” said Stephen Dok,

a Grubb & Ellis vice president specializing in medical offices.

“It’s one of the few bright spots in San Diego, and it’s quite

true nationally.”

Instead of retrenching, dentists, orthopedic surgeons,

dermatologists and other specialists are expanding to treat

the aches and pains of the baby boomers. And as 30 million

uninsured people migrate from emergency rooms to clinical

offices under health care reform passed by Congress this

year, demand for medical offices will inevitably increase.

“We have this wonderful practice that keeps growing,” said

Dr. Myron Schonbrun, 74, an obstetrician/gynecologist in

Hillcrest.

He and his partners have taken over more space in their

building on Fifth Avenue and budgeted $70,000 for

improvements, including the switch to a space-saving,

electronic filing system.

Joshua J. Smith, also at Grubb & Ellis, said successful

doctors are attractive tenants because they sign long-term

leases, attract other related practices around them and don’t

like to move.

“They spend a lot of money on tenant improvements,”

usually two or three times the typical $50 per square foot

spent by accountants, attorneys and other office users, Smith

said.

NE L VI N C. CE P E DA

At their new medical office space in Hillcrest, Dr. Myron Schonbrun (left) and Dr.

Anupam Garg review their patient load with medical assistant Rocio Lizarraga.

The doctors recently moved from the third floor to a larger space on the first

floor. Nelvin C. Cepeda / Union-Tribune photos

Traditionally, medical offices congregate around hospitals,

resulting in about a dozen medical submarkets in the county

— from the Tri-City area in North County to

UCSD/University Towne Centre to H Street in downtown

Chula Vista.

4. In The News

But when the recession hit and housing stagnated, some

markets, such as Eastlake in eastern Chula Vista, were left

with empty buildings, the landlords’ hoped-for doctor

tenants nowhere in sight.

“Build it and they will come,” Dok said developers figured.

“They thought the doctors and patients would show up.”

One medical specialty that’s not too healthy in the economic

downturn is elective surgery — Lasik eye treatments, tummy

tucks, Botox injections and other discretionary procedures.

“Cars, boats, vacations and implants — people stopped

spending,” Dok said.

“It’s an economic thing — but they’ll come back,” Smith said.

One specialty seeing no downturn is dentists. They continue

to proliferate, partly because it costs less to equip, operate

and insure their practices than other types of medical offices,

the Grubb & Ellis experts said. Moreover, patients can still

afford to come in for teeth whitening and other relatively

inexpensive procedures.

To get closer to their potential customers, some doctors are

moving into shopping centers and mixed-use buildings. Dok

cited one example of a dentist who bought an office

condominium in Pacific Beach, where his neighbors include

a landscape architect, a CPA and an insurance broker, as well

as residential tenants upstairs.

In Scripps Ranch, a pediatric dentist is moving next door to a

Chuck E. Cheese restaurant and Trader Joe’s grocery, Smith

said.

“They might walk by and walk in for a whitening,” he said.

“The procedure is easier and doesn’t require as much time

and money.”

Some doctors decide to buy office buildings to stabilize their

expenses and improve their estate planning for when they

retire.

Kent Twomey, a vice president at IronStone Bank in the UTC

area, said the typical deal involves a $1.5 million purchase

for a building and equipment. Such a loan, now available at

near-record-low interest rates, appeals to doctors, who can

finance their equipment and spread payments over 20 years.

Furnishings and equipment loans typically must be repaid

within five years.

Twomey said that with the slowdown in commercial rentals

and sales, medical office loans have risen from 50 percent of

his work three years ago to 82 percent so far this year.

P H OTO B Y NE L V IN C . C E P E DA

Dr. Myron Schonbrun looks over the equipment in the examination room where

ultrasound procedures are performed.

“The headlines are that shopping centers, office buildings, all

investment property markets are not doing well,” he said.

“However, medical groups and doctors are now taking

advantage of lower interest rates.”

Dok offered the example of a medical group that he and

Smith represented that shifted from renting to owning.

The California Neuropsychopharmacology Clinical Research

Institute, which conducts clinical trials of new medicines,

bought the former Bayview Medical Center on 26th Street in

Sherman Heights and rehabilitated the space to house its

clinicians, handle outpatient visits and accommodate

volunteers for overnight sleep studies. Initial building

improvements were completed early last year.

4. In The News

Robert Perkovic, senior project manager, said the operation

moved from the Miramar area to be closer to the target

population.

“To find a vacant hospital that has an inpatient capability as

we build our program was a perfect place,” he said.

Being able to house patients overnight also saved the

institute the cost of hotel stays for volunteers.

However, only about 20 percent of physicians own their own

space, Dok said. As tenants, they can avoid the landlord

headache of tenant complaints, vacant space and long-term

maintenance and upkeep.

Dr. William Schoemaker, an orthopedic surgeon in Mission

Valley, said he and his partner, Dr. Blake Thompson, a

podiatrist, considered buying their own space but chose to

stay on Friars Road, where they have been for 15 years.

“We were actually interested in looking at the market just

before the recession,” Schoemaker said. “Fortunately,

nothing was engaged. What I learned from that was my

specialty is orthopedic surgery, and somewhere down the list

… is business. There’s no way I can look in my scope and

know the future.”

The recession provided the doctors a chance to renew their

lease at a lower rate, expand from 3,500 to 5,000 square

feet, modernize operations through digitizing files and

improve the patient experience. The reception area will

resemble a hotel lobby, complete with flat-screen TVs and

computer terminals. Completion is expected by September.

“We want to make it more enjoyable, even an educational

experience for our patients,” Schoemaker said.

As for commercial real estate brokers who might want to

specialize in health care offices, Smith offered one piece of

advice apropos of dealing with doctors: “They require

patience. They’re just real smart guys.”

4. In The News3. In the News

www.sdbj.com

A SAN DIEGO BUSINESS JOURNAL SPECIAL REPORT

HEALTH CARE QUARTERLY

Creating a Patient-Centered Environment

18RELATED STORIES

THE LISTS

Medical Groups24 PPO26

Health care providers have the same basic office needs as most other businesses, whether it’s the right amount of hassle-free

parking, a well-maintained building with good signage that doesn’t confuse or turn off visitors, or ample space to grow with the customer base.

However, they face a crucial limitation when it comes to addressing what experts say is the top priority for many medical practices: locating on or near the campus of a major local hospital.

There are only so many buildings that

HEALING PROPERTIESPROPERTY: MedicalOffice Locations InvolveMany Considerations

meet that description, and much of the new health care related space built re-cently in San Diego County has already been spoken for by the hospitals themselves.

That leaves practitioners having to weigh the costs and benefits of lo-cating adjacent to or a good distance away from hospitals, and the choice often depends on variables like the medical specialty, and where the doctors have practice privileges.

“Some practices will literally require that that they be located within walking distance of a hospital,” said Stephen Dok, vice president in the San Diego health

care division of brokerage firm Voit Real Estate Services.

He said that applies in particular to doctors in obstetrics and gynecology, as well as pediatrics. It applies less so in areas like orthopedics, which has been gravitating steadily in recent years toward the use of outpatient facilities in satellite locations sometimes far from hospital campuses.

Location, Location, LocationThe hospital-adjacent (if not on-cam-

pus) medical building, filled with numer-ous complementary practices, remains the preferred venue for many doctors.

“It’s all about synergy and the ability to make referrals,” Dok said. “You want to be able to send that patient to someone down the hall or down two flights to get something taken care of right away.”

Location also has its costs, however.

Dok noted that providers can expect to pay a 15 percent to 20 percent premium in rents for a location next to a hospital, compared with comparable facilities in another location.

According to the brokerage firm Cush-man & Wakefield, San Diego County’s vacancy rate for medical office buildings located off hospital campuses was 10.2 percent at the midpoint of 2012. The situ-ation was tighter for on-campus build-ings, with a vacancy of 7.6 percent.

Operators of MedDerm Associates Inc., a dermatology practice located on Third Avenue in Hillcrest for the past six years, spent the last two years looking for a new home with better amenities to serve a growing clientele, even coming close at one point to purchasing their own build-ing in another location.

10.2%The vacancy rate for medical office buildings located off

hospital campuses.

HMO28

Medical page 27


www.sdbj.com

Parking Is a Priority“Our patients were complaining about

the parking, so one of our biggest pri-orities was getting more parking,” said MedDerm CEO Christian Hoag, whose wife is the practice’s lead dermatologist, Dr. Michelle T. Pelle.

After much searching and waiting, op-erators came across a larger leased space not far from the practice’s current site, in the Village Hillcrest medical building on Washington Street, where it will soon relocate its three practitioners and eight support staffers.

The practice was able to get a bigger space on generally better terms, includ-ing a lower per-square-foot leasing cost compared with its current home. More importantly, it will retain its proximity to other practices and two major Hillcrest hospitals that provide key patient referrals: Scripps Mercy Hospital San Diego and UC San Diego Medical Center.

“A lot of the medical staff at Scripps Mercy are also our patients,” Hoag said.

Travis Ives, a senior associate in the Healthcare Practice Group of Cushman & Wakefield in San Diego, said fed-eral health insurance reforms and other changes in care delivery over the past several years have steadily altered the real estate require-ments of practices.

The latest reforms, recently upheld by the Supreme Court, could accelerate the trend of larger group practices housed in larger facilities, as smaller practices either cease operating or decide to join up with larger care providers.

‘Opposite Agendas’ Some of those larger practices will

still want to be adjacent to hospitals, but others — for instance, providers of

from page 17

Medical:

orthopedic and other outpatient services — will prefer to locate elsewhere to be closer to customers. In fact, hospitals themselves increasingly are setting up off-campus outpatient facilities emphasizing preventive care, in part to lessen traffic in emergency rooms.

“They really have opposite agendas,” Ives said. “The private practitioners de-pend on referrals and want to be located as close to the big hospitals as possible. The big hospitals are looking to establish links with the neighborhoods where their pa-tients live, so their move is toward satellite centers away from their main campuses.”

Cushman & Wakefield’s latest quar-terly medical office report noted that local health care property vacancy rates range from 6.6 percent in San Diego’s high-demand midcity submarket, to 15.3 percent in North County.

Rent costs generally reflect supply and demand dynamics. Average rents

a smoking cessation program with a low-level laser sometime after their move is complete. While the high-level laser therapy uses laser light on patients’ point of pain to help them heal, the low-level laser therapy uses acupuncture points in the ear, face and hands to release the body’s endorphins, epinephrine and se-rotonin to stop the craving for nicotine, Song said.

Newer EquipmentSong said that a nonsurgical decom-

pression machine is one of the newer pieces of equipment that will be moving with them to the new office. Song said the machine essentially pulls the vertebrae

for leases completed in the first half of 2012 ranged from $2.25 per square foot in East County, to $2.77 in South Bay, $2.97 in North County, $2.98 in the I-15 corridor and $3.22 in midcity San Diego.

C u s h m a n & Wakefield noted that the county’s over-all medical property vacancy rate fell during the past year, from 9.8 percent to 9.3 percent, and is expected to continue declining in the coming year. Direct ask-ing rents actually dropped 1.7 percent in the past year, to a countywide average of $2.78 per square foot, but will likely hold steady in the coming year, since the growth of new leasable space will remain slow.

from page 18

Office: apart to create a negative pressure on the disc in the back or the neck.

“It helps with the fluid exchange of that disc and it also helps re-absorb that disc back to the normal state, eventually healing it,” he said.

While all of the equipment and procedures can seem daunting to a pa-tient, Romeo says it’s her job to create a harmonious setting that promotes a sense of well-being. A waterfall in a niche of a wall in the reception area reflects Romeo’s environmental psy-chology and feng shui backgrounds and is intended to have a calming effect on patients.

“It will actually help them to breathe deeply and relax and let go of some of the stress they’re feeling when they walk through the door,” said Romeo, who incorporated as many green and clean

Cushman & Wakefield

noted that the county’s

overall medical property

vacancy rate fell during

the past year, from 9.8

percent to 9.3 percent,

and is expected to

continue declining in the

coming year.

SAN DIEGO CONVENTION CENTER SCHEDULE DATE EVENT TYPE # ATTENDEES

Source: San Diego Convention Center Corp.

Sept. 8-9 Competitor Group Tri-Rock Triathlon Community Event 2,000Sept. 12-15 Emergency Nurses Assoc. Convention 5,200Sept. 13-15 San Diego Quilt Show Consumer Show 6,000Sept. 13-15 Amer Assn of Oral & Maxillofacial Surgeons Annual Convention 4,000Sept. 17-18 Contract Talent Symposium Meeting/Seminar 300

options as the budget would allow.Tying it all together will be a series of

photographs taken with an electron mi-croscope of various aspects of the body from red blood cells to skeletal muscles. Created by scientist Dennis Kunkel of Hawaii, Romeo said the bold artwork will give the staff an opportunity to

speak to the patients about what they’re seeing and make connections with their own treatments.

“It develops a whole artwork scheme for the entire office so it’s cohesive, so there’s an artwork story that unfolds as the patient walks through the hallways,” Romeo said.

UPCOMING SPECIAL REPORTSSept. 10 Banking and Finance QuarterlySept. 17 Residential Real EstateSept. 24 Technology Quarterly: Life Sciences and BiotechOct. 1 Top 50 Private CompaniesOct. 8 Health Care QuarterlyOct. 15 Insurance and Employee BenefitsOct. 22 Employment LawOct. 29 Commercial Real Estate QuarterlyNov. 5 Military CommunityNov. 12 Banking and FinanceNov. 19 Corporate PhilanthropyNov. 26 Media and Marketing

Please contact Special Reports Editor, Stephanie R. Glidden, with any news of interest in the topics listed above. She can be reached at 858-634-4636 or via email at [email protected].

Advertising Feature

LAURA CARPANZANO has joined Home Bank of California as Vice President in charge of originating commercial real estate and business loans. Laura has been in the real estate and fi nance industry in San Diego for 20 years. Home Bank of California opened its doors in San Diego in 1981.

BANKING

4. In The News

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