Industry experts have recognized Orange County as one of the top investment markets in the country in 2023, primarily due to its resilient industries, stable economic fundamentals and sustained rent growth. One property that has recently been put up for sale in the area is the 40,293 square foot medical office building located at 947 S Anaheim Blvd. in Anaheim on approximately 2.2 acres of land. The sale price for the hospital-adjacent property is $16.9 million, or approximately $420 per square foot.
Marketing efforts for this property are led by CBRE’s Vice Chairman Anthony Delorenzo and First Vice President Sammy Cemo. Property records show that the current owner of the property is an entity affiliated with Js Walnut Grove LLC.
The two-story Class B medical office building was originally constructed in 2002. It is currently fully occupied by multiple tenants, some of which include WaveImaging Anaheim and Platinum Orthopaedics. The asset’s marketing materials state that the property currently has a cap rate of 6.57 percent. Existing rents average approximately 4.12 percent below market rates, with a current tenant remaining lease term of around 2.5 years.
The leasehold terms for this medical office building are such that the current ground lease is secured at a rate of $1 per year and has approximately 34 years remaining, expiring at the end of February 2057. The ground lease also includes two additional 10-year options, potentially extending the investment horizon.
The building is situated next to the Anaheim Global Medical Center, a hospital with nearly $300 million in annual revenues. The property is also positioned directly adjacent to the US Interstate Highway 5, has accessibility to California State Routes 22, 57 and 91, in addition to proximity to John Wayne Airport and multiple Metrolink stations. The multi-modal transportation links provided by the surrounding transit hub ensures easy commuting and access to many local amenities such as Disneyland, Anaheim Packing District, Anaheim Garden Walk, Downtown Disney, Angel Stadium and the Honda Center.
CBRE data states that over 30 percent of Orange County residents are either at retirement age (65+ years) or are approaching retirement (50 to 64 years old), demonstrating a growing need for medical services in the future. Healthcare employers are reported to be continually adding jobs, leading to near all-time highs in medical occupancy in Orange County. In the second quarter of 2023, Anaheim’s medical office vacancy rate was only 3.17 percent, one of the lowest in the county, adds the CBRE Orange County Office market report.
Orange County is experiencing accelerated growth in medical office rents, driven by robust demand, which is expected to result in substantial yield increases during future lease renewals. Over the 10-year holding period, in-place rents in the submarket are projected to grow by close to 46 percent.
