Investor buys 69,000sf Rohnert Park medical building

[caption id="attachment_89030" align="alignnone" width="500"] Meridian Property Company of San Ramon purchased this 69,000-square-foot Rohnert Park office building half-occupied by Kaiser Permanente.[/caption]

ROHNERT PARK -- A San Ramon-based developer and owner of medical real estate recently  purchased a 69,000-square-foot medical office building in Rohnert Park and plans to lease up to 35,000 square feet to a new tenant.

The two-story building, built in 1973 on 4.79 acres at 5900 State Farm Dr., was half-vacant at the time of sale, according to Meridian Property Company ( Kaiser Permanente is the only tenant and has had primary care offices on the first-floor space since 2003. The price and terms of the deal weren't disclosed.

State Compensation Insurance Fund vacated more than nearly half the top floor last year during a consolidation of regional offices. Meridian said that created "a rare opportunity in Rohnert Park" for a medical user with a larger square footage requirement.

"The second floor of the building can accommodate a single user that requires approximately 35,000 square feet or up to four users at approximately 7,500 square feet each," said John Pollock, chief operating officer of Meridian, a division of Marcus & Millichap Company.

Because of "shifting demand in health care real estate," Meridian is looking for large-floorplate medical office buildings that need some value-add attention to boost their value, according to the company. For example, Meridian plans to upgrade the lobby of 5900 State Farm.

Mr.  Pollock said  Meridian will be able to provide economical lease rates to future health care providers in the area.

The seller was a partnership between PB&J Acquisitions, LLC, of Petaluma and Investcorp International Inc. of New York. The duo acquired the building in February 2012 for $3.5 million, as part of a 14-building portfolio purchase for $65 million.

Mr. Pollock noted the growing population and surrounding area of Rohnert Park, Sonoma County's third biggest city after Santa Rosa and Petaluma, as well as the seeming lack of physicians compared to the amount of residents.

"We saw that there was a need for more medical service providers in the Rohnert Park market," he said.

The city has a population of about 41,000 but only 53 licensed full- and part-time state-registered physicians registered there, a ratio of 1.29 doctors per 1,000 residents, compared with the national average ration of 2.4, Mr. Pollock noted. Around the property, there are 58,700 residents within five miles and 342,000 within 10 miles.

While Meridian is still seeking a new tenant, Mr. Pollock said interest has been expressed by a number of health care providers. With escrow closed on the property, Meridian said it will now "start an aggressive marketing campaign."

"Based on our market research, we know that the area is underserved by health care providers," he told the Business Journal. The city is a "medical desert," he said, attributing the phrase to City Councilwoman Gina Belforte. "We understand that over the past few months there were tours by doctors from Sutter Health, local community health organizations and independent physicians, initiated by brokers."

Petaluma Health Center, Sonoma County's second biggest federally qualified health center,  has expressed interest in establishing a Rohnert Park location, said to be in the range of about 35,000 square feet, although no deal has been finalized with any specific property.

Meridian Property Company has built more than 1 million square feet of office space, primarily medical, since its inception in 2000.

Mike Thomason of Keegan & Coppin Co., Inc./ONCOR International represented the buyer and seller.

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