|A view of the restroom renovations within Center Pointe.|
A zoning modification was required in order to alter the site to accommodate more parking. Knowing that any form of rezoning can raise concerns from the owners of nearby properties, the Duke Realty team proactively engaged its neighbors in the process to share the long-term vision for the campus and to understand their concerns. Meetings occurred with Johnson Ferry Park Townhomes—the upscale residential neighborhood with its main entrance across from Center Pointe—along with the Sandy Springs Coalition of Neighborhoods, the local city council representative, and staff members from the local municipality.
The result? The various stakeholders reached a consensus and gave their support to the long-term plans for Center Pointe. That included a framework for how future development could occur on the site, as well as entitlement for conversion of the 55,000 additional square feet to medical office use from general office use.
The new owners were also able to put a positive spin on what had been a headache for the property. Center Pointe was the last medical office property in the Pill Hill area that offered free parking. While a nice amenity, the problem was that patients and visitors to other nearby medical facilities were parking at Center Pointe to avoid paying for parking elsewhere. With occupancy steadily on the rise, the owners realized that controlled access would be needed to ensure adequate parking for tenants and visitors. Paid, access-controlled parking was implemented in July 2010, eliminating the trespassing problem while creating an additional revenue stream.
|Paid, access-controlled parking was implemented at the Center Pointe MOB in July 2010.|
Never say never Today, about three years after the acquisition, the effort to reposition Center Pointe for medical office use appears to have paid off. Tenants, patients, and visitors have another convenient, modern option for healthcare services in the Pill Hill area, and Center Pointe has become a more valuable real estate asset for its owners. Increased occupancies coupled with the higher lease rates commanded by medical office space have resulted in steady increases in the property’s overall net operating income. And while few properties were unaffected by the recession, and there was some need to offer lease concessions, rental rates have held steady at Center Pointe.
“No real estate opportunity is ever a sure thing, and a medical office conversion can be even more of a long shot,” acknowledges Deeni Taylor, an executive vice president with Duke Realty. “But if the acquisition and capital improvement costs are reasonable, and the location is exceptional, sometimes it pays to ignore the conventional wisdom.”
Clearly, the prospect of retrofitting a mainstream office building for medical use is not for the faint of heart. But when the right opportunity presents itself, a medical office conversion can be successful for everyone involved. To read the Part 1 of this series, go here . To read Part 2, go here.
Ketan Sanghvi is Executive Director, Business Development, Southeast, for Duke Realty. The company’s healthcare experts offer 20 years of experience specializing in the development of medical office buildings, ambulatory surgery centers, and other outpatient facilities. Ketan can be reached at Ketan.Sanghvi@dukerealty.com.