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Friday, Dec 9, 2022

Kaiser Permanente Has Westminster Plans

Kaiser Permanente recently shelled out $40 million for a 10-acre site at Westminster Mall with plans to build a new medical office facility.

The site, running next to the San Diego (405) Freeway, is expected to become the third local hub for the Oakland, Calif.-based firm and its first Orange County medical property not situated within a larger campus. Its other hubs are in Irvine and Anaheim.

The scope and timing of the Westminster project is still up in the air as the organization reassesses demand in the wake of the coronavirus pandemic.

Preliminary proposals call for a phased construction of a “large medical office with primary and specialty care,” according to Tony Smale, Kaiser’s lead planner for Orange County.

“We are very excited for this project, which we see as a huge win-win for us, our members and the larger community,” Smale told the Business Journal.

Best Buy, JC Penney Site

Kaiser acquired three properties on the northern edge of the 100-acre mall, which counts several ownership groups.

The buildings Kaiser bought total nearly 128,000 square feet.

The sites were sold by private investor Krausz Cos. for about $313 per square foot, and nearly $4 million per acre.

The purchases include two vacant properties—the largest a 67,000-square-foot building formerly occupied by JC Penney—as well as a 55,000-square-foot Best Buy store. That tenant is slated to stay on through at least 2026.

Though plans have yet to be submitted to the city, Kaiser expects to first demolish and develop on the two vacant parcels, and later develop the Best Buy site based on future needs.

“We are evaluating our plans and assessing how COVID-19 could impact the scope and timing of the project,” said Smale. “A lot is up in the air because of the economy and the new demand for virtual care, so we are still assessing which services we want to include at the new facility.”

Smale added that the demand is there with a large membership base in the area, with many currently having to travel to Kaiser’s Anaheim or Irvine facilities.

“This would be one of our bigger medical office buildings not located within a medical center campus, and it’s a very strategic location for us that’s accessible for many of our members,” said Smale.

“It’s a fantastic opportunity, and we are hopeful we will be able to start building soon.”

Mall Redevelopment

The proposal joins a larger redevelopment push at Westminster Mall as the 46-year-old property—whose main enclosed center is owned by Columbus, Ohio-based Washington Prime Group, but includes other buildings under different ownership—looks to refresh and rebrand itself.

Plans are underway for the 100-acre site that would add new retail, restaurant and residential components, and could potentially turn the property into a more modern, open-air lifestyle district.

Washington Prime said this summer it had entered a deal with an undisclosed apartment developer to redevelop a portion of its holdings at the mall, while keeping the main center open as a retail property. That deal is expected to bring in more than $50 million for the landlord.

The mall’s redevelopment effort is included along with other Westminster projects—such as the new mixed-use Bolsa Row in Little Saigon (see story, page 3)—in Project W, a city-wide investment push launched last year to revitalize neighborhoods and drive economic development.

For Kaiser, mixed-use projects such as the plans for Westminster Mall represent a source of opportunity for the company.

“We really emphasize health as part of a larger wellness ecosystem, so this is a great fit for us,” said Smale. “The city of Westminster is working with the larger business community and we are excited to be a part of it.”

Retail Reuse

As the retail sector continues to face headwinds, local investors have been tapping beleaguered retail sites in recent years as a source for development opportunities, converting them into alternative uses like healthcare, industrial and residential.

Kaiser Anaheim

It’s not the first time JC Penney has been the source of this redevelopment; in 2017, CenterPoint Properties acquired the retailer’s former 1.1 million-square-foot distribution center in Buena Park for $131.3 million.

It renovated and rebranded the site into the CenterPoint SoCal Logistics Center, which was later fully leased up by Walnut-based Unis Co., a fulfillment and transportation provider.

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