By Meghan Hall
An aging commercial asset in Oakland is attracting attention. In a deal that recently closed, the Oakland Masonic Center sold for $13.5 million, or about $221 per square foot, to Meridian Property Company. In the coming months, Meridian will hash out plans to reposition the asset, which already has nearby organizations talking.
“Meridian acquired 3903 Broadway on a speculative basis without any leases in place and a strong belief in Oakland’s vibrant community,” said Sid Ewing, senior vice president for Colliers. “The property’s proximity to Kaiser and Pill Hill make so much sense for medical offices. We’ve received interest from multiple potential tenants, and at least one of the medical organizations we’re speaking with is interested in leasing the whole building.”
Ewing, along with Colliers’ Matt Nebel, represented both the buyer and seller in the deal, which closed on March 4th.
The property totals 61,000 square feet and is located at 3901-3903 Broadway. An offering document describes the building as the “largest block of contiguous medical space” in the Oakland and I-880 submarkets.
Meridian plans to convert the project into a “first-class” medical office facility, leveraging its proximity to Kaiser and other major medical facilities in the neighborhood, also known as “Pill Hill.” Plans about the project are forthcoming, according to those familiar with the property.
Over the past two years, medical offices have attracted the interest of investors. A report released by SRS National Net Lease Group at the end of 2021 indicates that because of COVID-19 and other healthcare trends, medical assets are beginning to garner higher returns. SRS explains that historically, such assets have had low cap rates.
However, as consumers continue to seek easier access to healthcare, the importance of medical office assets have gained a foothold.
“The increased consumerization on both the retail and virtual healthcare sides improve patient access to healthcare needs…” states SRS.
Now, cap rates for dialysis, urgent care, general practitioner and dental offices range from six to seven percent. In another report, brokerage firm JLL reported that medical office sales totaled $20 billion in 2021, an all-time high for the asset class. Overall, sales activity increased 40.1 percent from 2020, a “dramatic” jump.