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San Ramon-based developer Meridian recently announced the purchase of a 51,150-square-foot medical office building in Arizona, their first major transaction outside California.
Meridian, a commercial real estate developer, bought the two-story Grunow Memorial Medical Center for a little under $5 million from PacVentures, a real estate investment firm. The 40% leased building is located near Banner Health University Medical Center’s Phoenix Campus and Phoenix Children’s Hospital.
“This acquisition is an example of how Meridian is leveraging its medical expertise to expand into new markets,” said Mike Conn, Meridian’s senior vice president. “The iconic Grunow Memorial Medical Center gives us a solid value-add opportunity in the Phoenix market where we can improve the property, increase occupancy, and update second generation medical space for tenants that have specific needs.”
The two-story medical center was built in 1931 and is considered a historic building locally, designed by Arizona architect Lester A. Byron.
“Grunow was one of the first clinics of its kind in Arizona where doctors could be located by a hospital,” Conn said. “It also created the opportunity for patients to see their doctor in more of a residential setting rather than having to go downtown.”
The clinic was named for and constructed in memoriam and Lois Anita Grunow, a seven-year-old who died from a ruptured appendix. The building’s interior design alludes to the building’s use, with stone carvings depicting symbols of the medical profession and memorial plaques hung on the walls for doctors who previously worked at the site.
Conn says that Meridian will focus on re-tenanting the property, updating the ADA requirements for the building and adding new fire sprinklers.
According to Ben Ivory, Meridian’s acquisition manager, the Grunow purchase is emblematic of the real estate developer’s diversity of deals.
“Meridian is looking to acquire healthcare properties across the risk spectrum — from opportunistic value-add to core deals on or near healthcare campuses,” Ivory said. “We will close escrow with signed leases in hand that will significantly increase the occupancy and NOI (net operating income) of the building.”
In other recent Meridian purchases closer to home, earlier this month the developer closed escrow on a nine-story, 175,000-square-foot office building in Concord, for a little over $26 million. And within the last 12 months, Meridian acquired a 115,000-squre-foot medical office complex in Los Angeles County for $37.5 million and a six-story 105,000-squre-foot office building in San Mateo County for a little under $29 million.
