The Antelope Valley needs more health care providers, according to John Thomas, and the developer plans to meet demand by building a massive wellness campus next to the Palmdale Regional Medical Center. Thomas is proposing to build a 420,000-square-foot complex with the aim of drawing L.A.’s best-known medical providers to set up outpatient services there. He’s sweetening the pot for both providers and future patients with health-oriented retail and restaurants, covered public parking, a gym and a hotel for visiting physicians and families of patients. As a second phase, he plans to include senior housing and luxury condominiums to create a “wellness village.” Thomas, president of L.A. developer Thomas Partners Properties, envisions the Oasis of L.A. County development as a wellness village that will aim to make visits to the doctor more like a trip to a shopping mall. The strategy behind the concept is based on the statistic that about 35 percent of Antelope Valley residents who are insured leave the area for health care, mostly for the top providers in the central L.A. market, Thomas said. He aims to rechannel those health care dollars into the local economy by attracting providers to Oasis. With a projected budget of $200 million, the development will have five facilities for outpatient services adjacent to Palmdale Regional Medical Center as well as a satellite medical school and a high-tech pavilion for future medical conferences. “The key thing is bringing major household-name brands – health care systems – to the campus,” Thomas said. “Patients will have the ability to trust coming to the Oasis because these systems will already be part of their network.” Oasis is set to go before the city’s Planning Commission in the upcoming weeks. Thomas believes it will be a smooth go because the land is zoned for health care and he expects a July ground-breaking with a completion date a year later. Also, the proposal has the blessing of Palmdale’s mayor and the favor of Palmdale Regional’s chief executive if it materializes as planned. “This wellness center fits beautifully in our vision to create a world-class medical center,” said Mayor James Ledford Jr. “This brings economics to our region that I think is going to help our future a lot.” High desert The Thomas family has owned property in Palmdale since the 1950s, when Thomas’ grandfather followed the aerospace industry out to the high desert and bought more than 60 acres in anticipation of future growth. It has taken longer than expected, but the family has held on to the property. Oasis would sit on 17.5 acres bordered by West Palmdale Boulevard and Tierra Subida Avenue. Back in 2004, the family lost part of its original holdings, Thomas said, when Palmdale took a portion through eminent domain to build the existing hospital, which opened in 2010. Now that facility, owned by Universal Health Services Inc. in King of Prussia, Pa., wants to grow its outpatient services. Richard Allen, Palmdale Regional’s chief executive, said he suggested to Thomas and his leasing broker they should build offices for outpatient services as it would help the hospital grow. “Having that type of development gives us the opportunity to have a space that we might be able to avail ourselves to place certain outpatient services close to the hospital,” he said. “They’ve been very attentive to do something in the long range that is supportive of what’s happening in Palmdale and where the regional center is going.” Palmdale and other regional centers are looking to diversify, Allen said, as insurance reimbursements to health care facilities for patients’ medical bills continue to decrease. His hospital is already developing relationships with some of L.A.’s providers to bring complementary services as well as academic affiliations to the Antelope Valley. “One of the reasons (Oasis) makes sense, and one of reasons we’re expanding, is to bring an even higher level of tertiary services, and right now that is being referred out,” he said, referring to highly specialized surgeons – such as colorectal or breast surgeons – who patients currently have to drive to Los Angeles to see. The services Thomas plans for the five buildings – entitled now for 20,000 square feet each with three to four stories – include outpatient surgery, ambulatory care, imaging, primary care and mammography. He’s signed up Irvine’s Manarino Realty to lease the space and said he’s in final discussions with several L.A.-based providers. Vacancy rates for Antelope Valley’s general office market are high, according to data provided by Colliers International. The most recent fourth-quarter vacancy rate was 18.5 percent, an uptick from 18.2 percent year to year. Asking rates in the most recent quarter were $1.65 a square foot. But the picture is much healthier for medical office space. According to Jeremy Barbakow, senior vice president at Encino brokerage NAI Capital Inc., the newest medical office properties in the Palmdale market – a two-story, 58,000-square-foot building built in 2008 in the Palmdale Corporate Center on Trade Center Drive and a three-story, 58,000-square-foot building built in 2009 on Palmdale Regional’s campus – are both asking $2.05 a square foot. More such properties are planned on Trade Center and those are premarketing at $2.25 a square foot. Barbakow forecasts that Thomas’ proposed properties, given their location next to the hospital and the campus setting, could reasonably fetch rent for around $2.50 a square foot. He added that while Palmdale has recently undergone a population influx of young families and senior citizens, some of those new residents have been forced back to their former cities to be treated by doctors offering specialized treatments. “Oasis will be the catalyst to motivate these types of doctors to lease medical office space in the Antelope Valley,” Barbakow said. If the first phase leases up well and is successful, Thomas said he will build a residential component – senior housing and luxury housing – on 45-plus acres he and his family control nearby. “In a first phase, you want to build critical mass and services so people will have a reason to be there,” he said. “That would be followed potentially by residential a year or two after.” Regional impact Aside from attracting medical providers, the new development, if it materializes, could also be a major economic driver for the Antelope Valley. The self-contained village concept combines numerous services in one place where people could potentially spend several hours, said public policy and land-use expert Robert Scott, executive director of the Mulholland Institute in Calabasas. With tenants’ employees, patients and visitors coming to use the gym, walking paths, hotel and medical conference facilities, there are several layers of revenue opportunity for the developer and subsequently, the local economy. “I think the idea now, when we make an investment in this range of $200 million, you’re really talking about a major improvement because these are anchors for bringing the community up and making it stronger,” Scott said. “And it’s a major health care facility in an expansion area for L.A. County.” However, other big projects – such as some large shopping malls – have tried the self-contained concept but haven’t done well in retaining business because of poor circulation plans for getting people around the complex or insufficient parking that turns off visitors, he said. “It has to deliver on the promise,” Scott said. To ensure parking issues won’t threaten the proposed project, Oasis will include two public parking garages with a total of 2,041 spaces, Thomas said, noting visitors will likely have to pay a modest fee. The city has no other parking structures, but is working on a public-private partnership that can help fund the garages, according to Mayor Ledford. Both Ledford and Allen at the hospital said the structures are critically important. “You’ve got to have convenience,” Ledford said. Thomas said the event that spurred his concept for Oasis was an accident his father had about three years ago that required the family to spend extensive time near the facility where his father was rehabilitating. That made him think of Palmdale families who might have to drive to Los Angeles if facing similar situations. “It was a blessing now that the mayor (then) decided to put Palmdale Regional behind us,” he said. “Had we built a major Walmart, we wouldn’t have been able to do this. It’s a perfect opportunity.”
SPECIAL REPORT: Healthy Opportunity
