[caption id="attachment_93203" align="alignnone" width="500"] A 10,500-square-foot health clinic is set to be built in downtown San Rafael, shown here in an architectural rendering, is part of "new models of care, requiring providers to re-think their delivery of services in a lower-reimbursement environment," the developer said.[/caption]

SAN RAFAEL -- A San Ramon-based developer of medical real estate on Monday said it plans to start construction soon on its second North Bay health clinic project this year, this time in downtown San Rafael.

Meridian Property Company said it intends to build a 10,500 square-foot outpatient center at 1415 Third St.  The purchase price of the property was not disclosed.

The project overcame "many challenges," including collaboration between stakeholders to purchase multiple parcels, selecting a site in a land-constrained setting, combining architectural styles, finding space for parking and permit delays, according to Chief Operating Officer John Pollock.

"The development of the new medical clinic required the purchase of two properties -- the property at 1415 Third St., which formerly housed an office building that was demolished in April, and the other, 814 E St., a turn-of-the-century Victorian that will be reverted to a single-family home from its current state as a triplex," Mr. Pollock said.

Meridian partnered with San Francisco-based architectural design firm Carey & Co., Inc., which specializes in restoration projects throughout the Bay Area, to restore the Victorian home. Once restoration of the Victorian is complete, Meridian said it will be able to reduce the combined parking requirements, create additional underground parking below the clinic, and enable the development of the outpatient center to proceed.

Harriman Kinyon of Walnut Creek is the architect for the outpatient clinic.

Earlier this year, Meridian bought a 69,000-square-foot medical office building at 5900 State Farm Dr. in Rohnert Park and recently leased the entire second floor to Petaluma Health Center.

Mr. Pollock said the implementation of the Affordable Care Act has "paved the way to new models of care, requiring providers to re-think their delivery of services in a lower-reimbursement environment, and requires innovation from across the spectrum from population health management, to administration, physician alignment, and facility utilization."

Meridian's planned outpatient, urban infill facility will provide "the kind of space required to deliver these new models of care in lower-acuity settings with larger contiguous space, which will serve as hubs of care for the community," Mr. Pollock said.

The general office vacancy rate remains at near 20 percent in the area, according to Keegan & Coppin Company's first quarter for 2014. But Mr. Pollack said there is little, if any, contiguous medical space available greater than 10,000 square feet.

Construction on the outpatient center in San Rafael is set to be completed in early 2015, according to Meridian, a division of Marcus & Millichap Company.