Colliers has a simple marketing message when leasing the Pacifica Medical Plaza in the Irvine Spectrum.
“High market barriers to entry coupled with virtually no developable land make Pacifica Medical Plaza a unique opportunity for healthcare providers to secure a foothold serving the highly lucrative Irvine and South Orange County communities,” a brochure for the building reads.
Located within a mile are Kaiser Permanente Orange County-Irvine Medical Center and Hoag Memorial Hospital Presbyterian, the latter of which is planning to spend more than $1 billion on an expansion now well underway.
A couple blocks away, City of Hope is constructing a $1.5 billion cancer hospital and clinic complex.
Colliers also noted that 1.2 million people with an average household income of $147,725 per year live within a 5-mile radius of Pacifica Medical.
The building, which originally opened in 1999, was purchased for $43 million in 2020 by medical office developer Meridian and investment firm Harrison Street.
“As they say about real estate, it’s all about location, location, location,” Heidi Duffy, senior asset manager at Meridian, told the Business Journal.
“There’s a huge growing population in Irvine. These doctors are putting in a lot of money.”
The four-story building’s 114,208 square feet is now about half leased; new tenants include Children’s Hospital of Orange County (CHOC) and a pediatric dentistry.
“It’s turning into a pediatric center,” Duffy said.
Reluctance
A big reason for the shortage of medical offices in OC is the reluctance of office owners to invest in higher maintenance costs than typical offices and parking requirements (see story, page 8).
“It was very difficult” to convert, Duffy said. “The biggest obstacle was meeting the parking ratio.”
To convert it to a medical facility, the new owners had to build a four-story parking structure to meet the city requirements of 5.5 parking stalls for every 1,000 square feet of space.
A typical office building is required to have 4 parking stalls per 1,000 square feet.
The owners spent $20 million on tenant improvements, which included the parking structure and gutting the entire building. Among the contractors involved are Ram Construction LLC, JLC Associates Inc. and ConAm Building Co.
“Very little of the legacy office space can be reused for medical office applications,” said John Wadsworth, a Colliers senior vice president who is handling leasing efforts.
Colliers highlights benefits such as large open floor plates and private balconies. It also has “has excellent visibility and accessibility” from Laguna Freeway (SR-133) and signage is available.
“The genesis of this conversion project was based on an extremely tight market for medical offices in Irvine—vacancies are less than 5%,” Wadsworth said.
“Coupled with Hoag’s expansion, what City of Hope is developing and further expansion of the city of Irvine—all the fundamentals are aligned for this conversion project.”
