Interventional cardiologist Emanuel Shaoulian, founder of Pacific Coast Cardiology & Research treatment center and Pacific Coast Imaging in Newport Beach, calls his long-planned development project his “baby.”
The doctor, who took 15 years to assemble four lots for Newport Harbor Medical Plaza and secure city approval of his development plan—including a hiatus after the city struck down the original condo-medical office design—is sole investor and developer.
Construction will start this month on the two-story class A medical office at 330 Old Newport Blvd.
The site is about a block east of Hoag Memorial Hospital Presbyterian. The development is unusual because Shaoulian has acted alone in putting together the land, financing and construction of the project, said brokers who are marketing the medical offices.
Shaoulian, acting through his development company, Shaoulian Properties, assembled the land piece by piece, starting with a 2,500-square-foot building that he used as his office.
The approximately 26,000-square-foot medical building will be designed for three to four tenants of 6,000 to 7,000 square feet apiece instead of a larger number of small offices, as first envisioned. He said the change resulted from evolving physician independence, or rather, lack thereof. Federal programs requiring doctors to install and use electronic health records systems, along with other changes driven by the Affordable Care Act, have increased operating costs, making the environment more difficult for doctors to work solo or as part of a small-group practice.
“Ten years ago, I would say 75% of physicians were owners of their own practices, and 25% were employed [by health systems]. Today I would say the opposite is true—and even lower than 25%,” he said. “Not many physicians have the desire to compete alone.”
Specialized Design
Newport Harbor Medical Plaza is within walking distance of the 498-bed Hoag Memorial Presbyterian Hospital. The building features ocean-view suites, second-floor patio deck amenities, and surface and underground parking. It also has a gurney-sized elevator that allows the building to accommodate surgical operations, as well as basic medical uses.
“This is not just a medical office building,” said John Scruggs, managing director of Newmark Knight Frank’s global healthcare services group. He and Garth Hogan, executive managing director of the firm’s global healthcare services group, got involved in the project in 2012 and are now responsible for taking it to market for lease.
“[The building is designed] to accommodate ambulatory surgical business … We are looking for high-end specialists and specialty [practices as tenants].”
The property is being marketed at $4.15 per square foot, on par with similar class A medical office buildings in the area, according to Scruggs.
There are few class A products in Newport Beach because it’s difficult to get approval for new construction there. The city’s Greenlight initiative, among other regulations, has made Newport Beach one of OC’s more challenging places to do any new development.
Cathay Bank, a Chinese-American bank based in Los Angeles, provided a bridge loan for the approximately $20 million project.
Bumpy Start
For Shaoulian, a physician-turned-real-estate-developer, the biggest challenge came in 2007 when the city rezoned the land and reduced allowable buildable square footage.
“The sudden realization that the city has overnight changed the designation of the lot, ruling out condos and doing away with the whole project, was very hard,” he said.
He originally planned to develop a mixed-use project comprised of a luxury condo complex on one side and a medical office building on the other.
Shaoulian was able to double the allowed square footage through discussions with city planners. Without the amendment, he said his land would be “worthless” for his purposes.
Construction is on schedule to be complete in approximately a year. Shaoulian said the development is ideally located to serve the more than 86,000 Newport Beach residents, whose average annual household income is $173,772, brokers point out in their marketing materials for the property.
