Real Estate—Meridian Health Care Gets New Digs for Expansion

Like the stock market, which has seen pockets of strength related to certain industries, the quiet in the real estate market has been broken by certain sectors that are experiencing growth despite the economic maelstrom. One of those pockets is health care. Meridian Health Care Management Inc., a company that provides administrative services to hospitals and medical groups, has just inked a deal for 80,000 square feet in Warner Center, a lease that will expand the company’s space more than threefold. The eight-year lease is valued at more than $17 million. Meridian, which has occupied a 24,000-square-foot facility at Warner Center Business Park, will be moving into 6200 Canoga Ave. The new space was needed to accommodate a growth spurt that the company has experienced over the past five years. “The company has done a good job for its customers, and that’s afforded us the opportunity to do more business with our current customers and to bring on some additional ones,” said Michael J. Alper, president of Meridian. The privately held company supplies services such as eligibility verification and claims processing as well as data gathering to help physicians and hospitals manage their businesses. Meridian has grown from 115 employees to 230 in the past five years. In the coming year, officials said, that roster is likely to expand to 265. Alper said the company began looking for new space in July when it became apparent that its needs were outpacing the space available in its current location. Meridian wanted to stay in the Warner Center area because of the employee base in the market and because of the advantages to locating within the health care hub that the community is known for. Though the company could have gotten a better deal with sublet space, Alper said those deals would not have provided the tenant improvements Meridian required. “We could have had a lower rent rate, but we got it back in TI concessions,” Alper said. Health care companies including Blue Cross of California and Blue Shield of California, Health Net and Aetna US Healthcare are all located in the Warner Center area. Brian Forster, co-owner of TOLD Partners Inc., represented Meridian in the transaction. The landlord, TrizecHahn, was represented by Scott Chalmers and Brett Rocheleau. Janss Center Sold Janss Marketplace, a 455,520-square-foot retail center in Thousand Oaks, was sold to NewMark Merrill Cos. LLC and Rubin Pachulski Properties. Terms of the deal were not disclosed, but principals said it was in the $20 million range. Janss Marketplace, built by the family-owned firm whose development efforts in Los Angeles date back to the 1800s, is at Moorpark Road and Hillcrest Drive. It houses a 12-screen Mann Theatre, Rite Aid, Toys ‘R’ Us, Marshalls, Old Navy, Mervyns, Sizzler and TGI Fridays. Although the outlook for retail properties has been somewhat clouded by the current economic downturn, NewMark Merrill officials said their decision to acquire the center was influenced by the types of retailers housed there. “This particular one has a good stable of fairly recession-friendly retailers,” said Sandi Sigal, CEO of NewMark Merrill. “And the property is in a very protected trade area,” said Sandi Sigal, CEO of NewMark Merrill. The only other shopping center in the area is The Oaks, across from the Janss Marketplace. The center currently is about 85-percent occupied. Sigal said he has been in discussions with potential tenants for the remaining space. Activity in Class A retail shopping centers has been brisk, and the demand continues to outpace the supply, according to Sigal. But while there are plenty of deals being floated, Sigal said there are not plenty of good deals. “You have sellers who are still living on the expectation that rents are going to continue to go up and your vacancy level will continue to be nil. Plus, every center you look at these days there’s a retailer or two we’re concerned about and you want to reserve for it.” Sigal and others say that, with the economic uncertainty and the number of retailers that have filed for Chapt. 11 reorganization, they have had to exercise caution in the centers they consider for acquisition as well as the price they pay. While some areas have shown no softness with respect to the availability of strong retail tenants, others are experiencing problems. “There’s no simple answer,” said Sigal. “Right now we have 47 centers across Southern California and Nevada. In certain centers, next to high-volume retailers or well-performing grocery stores, we have no problem getting great rents. Other trade areas, where it’s a little softer where we are relying on future growth, retailers are a little cautious.” Sigal, along with Jim Patton, director of leasing and acquisitions with NewMark Merrill, Stuart Rubin, president of Rubin Pachulski, along with Greg Forester, CFO, represented themselves in the negotiation. The seller, Merged Centers LP, a partnership controlled by Goldman Sachs, was represented by Brad Burton, vice president of Archon Group LP, and Dixie Walker, senior vice president of Grubb & Ellis. Tourney Pointe Action Mercury Insurance Group, a division of Mercury General Corp., has leased 31,461 square feet of office space at Tourney Pointe in Valencia. The company will be relocating its Santa Clarita staff, charged with regional claims and its marketing headquarters, currently housed at the Valencia Industrial Center, into the new space. Arden Realty Inc., which owns the property, also signed a 15,400-square-foot deal with ACT Litigation. Together, the transactions brings the vacancy rate in the 217,000-square-foot building down to 22 percent. Phase Two Starts in Newbury Park Development Partners LLC has begun construction on Phase II of USA Business Center, an 18-building business park in Newbury Park. The company has leased or sold all but one of the 10 buildings in the first phase of the project to companies including Snap-On Tools, Giant Bicycles and R & S; Sales. Occupancy for the second phase is slated for early 2002. Three of the eight buildings have been pre-leased or sold. Senior reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14 or by e-mail at [email protected].