Success Stories

Allergy and Asthma Medical Group

San Diego, CA
11,532 SF
Cresa San Diego
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Client Objectives

Allergy and Asthma Medical Group wanted to remain in their current submarket while relocating to a building with an upgraded image and increased street/freeway exposure. They also preferred to purchase and occupy their new space while meeting requirements for a SBA loan, but weren’t familiar with the process. The threshold for purchase was an occupancy cost equal to or less than the occupancy cost to lease an alternative facility or renew in their current location. The client preferred to purchase a building in which they could occupy 100% of the building to avoid any “landlord” relationship responsibilities. The client further challenged Cresa as the building needed to be located in a zone appropriate for their medical use in a submarket predominantly zoned for industrial and office uses, with limited opportunities for medical use. Additionally, the submarket is generally comprised of office buildings much larger than the client’s requirement.

Results

Cresa worked with the individual doctors and the financial staff and determined the ownership group should be a separate entity comprised of the individual doctors rather than Allergy & Asthma Medical Group. A local lender specializing in SBA financing was introduced to the client in order to receive pre-qualification. After an unsuccessful market search for appropriate properties, Cresa decided to investigate other product types that could be repositioned for medical use. This investigation uncovered an owner/user building previously used for office and warehouse with an underlying zone that would accommodate a medical use. The building size was within the space requirement. After a tour and consultation with a space designer, the client contracted for a space study comprehensive enough to solicit a preliminary retrofit cost estimate. The cost estimate, perceived purchase strike price, estimated building expenses, and future cost increase projections were modeled against the market lease rate for medical space. The cost savings, through the purchase occupancy, proved to be compelling. With an efficient retrofit design and the installation of an elevator, the client was able to purchase a building smaller than they had projected with an enhanced image in an upgraded location at a more than competitive price.

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