Colorado Real Estate Journal - November 5, 2014

Medical building trades at $442 per sf

A medical office building full of leading health care providers traded at what is believed to be a record price in Colorado.

Red Rocks Medical Center, a 117,649-square-foot building at 400 Indiana St. in Golden, sold for $52 million, or $442 per sf.

That is believed to be the highest price for a medical office building sold in Colorado and certainly for a building that is not on a hospital campus.

“Medical properties are just in such demand nationally,” said Drew Shearer of Denver-based Development Solutions Group, which developed the building. That and the fact that around 60 percent of the building is leased to hospital tenants – HCA-HealthOne and National Jewish Health – led to a tremendous amount of interest from real estate investment trusts, private equity funds and other players in the health care real estate investment arena.

“It was a feeding frenzy,” said Shearer.

“We received 14 offers in what became a very competitive process from core investors focused on health care,” said Chris Bodnar, senior vice president of investment properties with C B R E ’ s U.S. Healthcare Capital Markets g r o u p .

“The comb i n a t i o n of quality construction, tenant connectivity and hospital occupancy created a rare opportunity for investors throughout the U.S.” While the buyer’s name wasn’t released, the deed lists Northern Holding XV LLC, which is affiliated with Minneapolis-based Olympus Ventures LLC. Olympus declined to comment on the transaction.

The seller was West Side Medical Center LLC, a group that Development Solutions Group put together. The threestory, fully occupied building was completed in 2010.

Red Rocks Surgery Center, HealthOne’s Red Rocks Radiation Oncology, Invision Sally Jobe at Red Rocks, Red Rocks Surgery Center, Surgical Specialists of Colorado and Colorado Retina Associates are among a number of medical tenants occupying space at Red Rocks Medical Center.

Bodnar and Lee Asher of CBRE’s U.S. Healthcare Capital Markets group represented the seller with Dann Burke, vice president in CBRE’s Colorado Healthcare Services group.