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North Bay Business Journal

Monday, July 28, 2014, 7:00 am

Kaiser buys land for Santa Rosa medical office building

‘We want to make sure our facilities are local’

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    Kaiser Permanente wants to have primary medical care offices in southwest Santa Rosa.

    Kaiser Permanente wants to have primary medical care offices in southwest Santa Rosa.

    SANTA ROSA — Kaiser Permanente has put details to plans revealed several months ago for a southwest Santa Rosa medical office building, by purchasing the land and securing a preliminary city green light on the design for a 75,000-square-foot structure there.

    On July 17, the Oakland-based nonprofit health care organization purchased 10.85 acres in four parcels on Mercury Way off Corporate Center Parkway in the Northpoint Corporate Center business park for $5.25 a square foot, or $2.48 million, according to the seller.

    Kaiser wants to build a three-story medical office building for primary care services — family medicine, health education, obstetrics, gynecology, dermatology and podiatry — and supporting imaging, laboratory and pharmacy units, according to the June 19 presentation packet for the Santa Rosa Design Review Board. The board unanimously approved the preliminary design and is set to review the final design soon.

    “We want to make sure our facilities are local,” said Ed Walera, manager for Kaiser’s capital projects and construction team in Marin and Sonoma counties. “We do not want everything compacted in one area. We want to serve southern Santa Rosa and Sebastopol and southwest Santa Rosa.”

    Kaiser’s Santa Rosa facilities are concentrated around its medical center and medical office building at the north end of the city, six miles away from the Northpoint site by highways 12 and 101.

    This would be the newest Sonoma County project for Kaiser since the north tower expansion at the medical center in 2011 and construction of the medical office building several years ago. Kaiser has Sonoma County medical office buildings in Rohnert Park and Petaluma.

    The timeline and estimated cost for the new medical office building haven’t been determined because organizational leadership is still weighing finances and the evolving health reform–driven landscape under the Affordable Care Act, according to Mr. Walera.

    But the need for health care services has grown more acute since the April 28 closure of 37-bed Palm Drive Hospital in Sebastopol. Efforts are underway to return emergency care to that hospital. However, Kaiser has no plans at this time to add emergency or urgent care to the Northpoint building, according to Mr. Walera.

    The new building would be built on 6.2 acres at the northwest corner of the property, at the corner of Mercury Way and Corporate Center Parkway. The rest of the property would remain undeveloped. There are no plans for more buildings there at this time, Mr. Walera said.

    The Northpoint site was one of several pieces of land and existing buildings Kaiser considered, according to Jeff Negri, managing director of Cassidy Turley’s Santa Rosa office and co-representative with Jones Lang LaSalle in this property search.

    “Not a lot of buildings in the built environment have the access and parking needed for medical offices,” he said. Typical office space is configured to have about four spaces for each 1,000 rentable square feet, but medical office space has five or more. The Design Review Board suggested Kaiser use a parking garage — none currently exist in the park — rather than have 375 parking spaces, but Mr. Walera said keeping the project economical precludes such a structure.

    Kaiser purchased the Mercury Way land from AJ Ventures, Inc., a subsidiary of Santa Rosa-based Exchange Bank. The bank received about 30 acres of Northpoint Corporate Center land from CEP Investors IV at the end of 2012 via deed in lieu of foreclosure, according to Jeff Owen, a bank vice president in charge of real estate owned properties, or REOs.

    CEP had purchased that and surrounding property from an insurance company in 1997, later building a 117,000-square-foot office building also on Mercury Way that Nokia briefly occupied. Other buildings CEP built include the current homes of InfoStor and North Coast Builders Exchange.

    The Kaiser land was the first resale of the property and was important to set pricing for the remainder, because nothing had been built in the park in years, Mr. Owen said.

    The Northpoint building design team includes Polytech Associates, Lamphier-Gregory and Santa Rosa-based Brelje & Race.

    Shawn Johnson of Keegan & Coppin, Co., Inc./ONCOR International represented AJ Ventures in the sale.

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